I'm not surprised. The default for starting a startup seems to be that you need VC funding because you need to monopolize as fast as possible and having extra cash will allow you to get there sooner than if you were to bootstrap.<p>What we're seeing is that growth is able to happen in spite of the frothy VC environment, not because of it. So if it is possible, then why would you <i>have to</i> seek funding? If you think getting VC money is good because you should get VC funding (or because getting some will get you press in TechCrunch) then you're thinking about it all wrong.<p>You should seek VC money if you need the money (with a very serious definition of "need"). If you don't, why would you:<p>* Have a boss (outside of your customers)<p>* Give up a board seat<p>* Give up control of your company (and possibly eventually a majority of that control)<p>If you need enough money that doing the above 3 things is less painful than basically your business dying, then yes, you should seek funding. Actually I want to emphasize the "less painful" part. Don't read this as "if your business will die otherwise, seek funding."<p>Sometimes you <i>should</i> let a business die. If family is important to you and raising VC money and working even harder to keep someone else happy will possibly end your marriage, and ending your marriage is more painful than keeping this startup alive, you should probably let the startup die.<p>And that's okay!<p>What matters is you seek VC money for a very specific reason, and it is vital for you and your business for the right reasons.
One of the things I really like about this article is the story of Tuft & Needle. One of the biggest reasons (imo) why there are relatively few minority founders is because of the lack of access to inter-generational wealth. If you are poor or come from a poor background it's hard to build the requisite capital necessary from a friends and family round because often times they just don't have it. Now as a founder you find a way, but still it's nice seeing a success story of a company that started with only $6k. That's money that most engineers could save up relatively easily.
I think it's stupid to overuse the term "startup" where it doesn't make sense. At what point is something just a new small business? Is there an arbitrary set of lines that differentiate between "startups" and every other new enterprise? The vast majority of new businesses are funded solely by personal savings, friends & family, and SBA loans.<p>Conflating something like a deodorant company with a pure play tech startup just doesn't make any sense to me, especially when the intent is to analyze and compare funding models, performance and exits. And even if you consider new SaaS companies, there are thousands more Bingo Card Creators out there than [insert unicorn here].
I think this is a great thing. The VC influence has caused product quality to slip a lot, the customer needs to be ignored, and has focused on preferring engineering to rush things. That's a long-term focus on undermining the economy. (Being quick to build something, and only being quick isn't a feature)
I took VC for my last company. I'm choosing not to do it this time around. What I'm working on has at least a planned ten year horizon at the outset, hopefully it extends beyond that (the cost is so low to do it, I can stay in it perpetually without concern, and have decided the end goal is worth it). It requires long-term planning and thinking, there will be no exit pursued. Venture capital is a mediocre option in that environment, they almost always need an exit (there are some prominent angels that will stay in long-term, be sure to filter for that upfront). Most venture capitalists will burn your corporate house down or drive you into a wall at 120mph in the pursuit of <i>their</i> homerun, whereas I'm willing to eat my time in the pursuit of getting where I want to go with it. If it takes years to get it right, that's ok. The other reason: I won't allow liquidity preferences, VC gets to ride in the same boat as every other share owner (or not at all). The last VC I took on met those terms, it's very difficult to find however.<p>If there's one thing all start-ups should conspire to abolish, it's liquidity preferences. Somewhere along the line, they all decided that putting their capital at risk in exchange for a potentially large return, wasn't a good enough arrangement. At that point they stopped being real investors and became financial engineers looking to play the angles to remove risk from their position and shift their risk to everyone else. You don't need venture capital that bad, such that shooting yourself in the face is the only way to go. Just say no.
This headline is misleading.<p>Native raised venture capital, it wasn't disclosed but there's plenty of PR surrounding it.<p>Tuft and Needle was started by engineers that had a good bit of personal cash saved in the bank, then later borrowed $500,000.<p>MVNT raised Money.<p>It's not like these companies didn't raise a bunch of money, they just didn't use VC $$ supposedly.<p>The common denominator here is the direct to consumer model with the use of growth hacking via social media campaigns and the rise of such social media platforms.<p>I.E. Make product that people want to buy and market it efficiently on social channels.
I met the native guy recently at a conference. He's seriously one of the most impressive stories I've ever heard - 2 years, 1 product, only sold on their site, 100M exit, vast majority going to him. He talked about testing a ton of variations (over 100 overall) of their product by selling batches of a couple thousand and tracking return rate, reviews, and reorder rate. Get the best product after extensive customer testing, get the best ads after extensive a/b ad testing, scale up profitable ad spend.
I was sad to see Tuft and Needle get acquired by Serta. I bought 3 TN mattresses from their post here, and I love them. I vociferously recommended them to anyone I know. I really doubt their quality will continue to be maintained now that they are in the grips of Serta, but I guess next time I am in the need for a mattress in about 10 years, I'll check.
We're following a very similar philosophy of bootstrapping a set of businesses we're working on [1].<p>reasons are :<p>1. we want to stay flexible and put out a variety of businesses that might not be similar except in that we're leveraging our skills to build them. From my experience in venture funded startups - once you take funding for that business - radically changing direction or adding unrelated businesses seems impractical.<p>2. we want to keep full control and ownership - so that if an opportunity arises to sell the business we can do it with minimal hassle.<p>4. we're skeptical of our own ability to raise vc; and worried about all that that exercise entails - especially the potential distractions.<p>[1] "Yukon Data Solutions" is our first; we have a few other analytics related businesses in the pipeline; but also, interestingly some direct to consumer products that sort of fall into the "fashion" category.
refreshing article, i have what i consider to be a potential small business, it's not as attractive i'd assume to investors as most things these days that have something to do with blockchain, machine-learning, self-driving cars, or billion dollar valuations, but i think there's potential for a very nice business that could potentially evolve into a lifestyle business and it doesn't need hordes of employees, i've been doing everything from development of backend services, platform, and front end mobile app, to marketing, testing, product management all on my own. obviously having a couple more people to help with sales and development would speed things up, but i don't need a 50 person team at the moment.<p>having read this article and buffer.com's recent buyout of investors, it shows that there are potential alternate routes to success. i can understand the nature owner not feeling good in the beginning when everyone around him's talking about billion dollar valuations and series a, b, c funding, but it seems he sold for several hundred million which seems like sweet vindication. obviously most small businesses fail and eventually need some sort of funding whether from a small business loan or bootstrapping, etc, but it's manageable.<p><a href="https://madsportslab.com" rel="nofollow">https://madsportslab.com</a>
I've been reading about VC and all it entails for years now, and it always leaves me with a sketchy feeling. Pouring so much time and effort into chasing capital, and then giving up so much ownership and being on the hook for big returns once it's finally attained... seems like a sure way to suck the soul out of any business.<p>Not saying VC doesn't have a place in the world, but I get the sense that a lot of founders pursue VC just because that's what startups are "supposed" to do.
Related to this - there is a podcast ep on "How I built this" with the Wayfair people. I find it very interesting that they built several businesses - and <i>then</i> got investment to build the Wayfair brand and bring those businesses under that brand.<p><a href="https://www.npr.org/2018/06/07/601985854/wayfair-niraj-shah-steve-conine" rel="nofollow">https://www.npr.org/2018/06/07/601985854/wayfair-niraj-shah-...</a>