
Ask HN: Did anyone's life ever gotten more comfortable after accepting funding? - tehayj
We have an unfair advantage in a fast growing market and could now get outside capital for this. As an alternative we could just keep rolling with our little team, scale like we already do and make good money and don&#x27;t blow this whole thing up like our investors would want us to do. We will be financially independent either way in a few months. We just want to be happy and don&#x27;t have a more busy life. We don&#x27;t have experience with outside investments. Is a scenario in which we use the funding to hire a great team that more or less replaces us unrealistic? Sure, its nice to see our project at the next level but only if this doesn&#x27;t make life even more busy.
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jacquesm
Investor goals and founder goals are _rarely_ aligned. If you want to go for
world domination and would rather risk everything to achieve that and possibly
end up with nothing at all then go the investor route. That will increase your
chances of ending up with nothing, but it will (perversely) _also_ increase
your chances of success.

If you're already happy at your current level just grow it organically and
don't look back.

Remember: happiness is the ability to be content with what you already have,
not with what you could do.

I wrote about this years ago, shameless blog post plug:

[http://jacquesmattheij.com/three-roads-to-the-top-of-the-
mou...](http://jacquesmattheij.com/three-roads-to-the-top-of-the-mountain)

Best of luck, whichever path you decide to take.

~~~
tehayj
Thanks a lot! I also spoke with a friend who already received funding and we
will simply keep growing our own way but also work with some lawyers who go
out and find a buyer for the company.

~~~
jacquesm
> also work with some lawyers who go out and find a buyer for the company.

Hm. You realize that this may be a bit premature?

You're in the midst of your growth curve, I'd go a bit further before thinking
about selling the company, _especially_ if you want to remain 'happy'. Selling
a company usually means there will be some strings attached, for instance, you
might end up working for the acquiring party for a set period (possibly
years...), and you will lose autonomy, which is one surefire way of becoming
less happy.

On top of all that you'll have to negotiate a deal (preferably one which does
not leave you with a bunch of illiquid stock but with a nice pile of cash),
and that too will take a lot of organization and knowledge.

I'd suggest you do everything you can to read up on your situation and what
your options are before you commit to any moves.

~~~
tehayj
Yes you are absolutely right. We just put things into place step by step to
make it more sellable. We still have team members that can't be replaced but
work on changing this.

------
togilvie
I think you've answered your own question. Taking outside money will make life
busier, increase pressure, and create investor expectations that may be
different from your own.

Bringing in an investor that would be willing to replace you with a new
management team is a Bad Idea(tm). It's also a bad idea to try to mislead your
investors and replace yourselves.

Outside money can be great if you want to build a really big business and need
the capital to win the market. But there are tons of businesses that are
better off using revenue as funding.

One of the drawbacks of the tech media is how few people talk publicly about
the businesses where the founders would have been much better off if they'd
only avoided funding.

~~~
asifjamil
> But there are tons of businesses that are better off using revenue as
> funding.

Any specific examples?

~~~
tim333
Fog Creek is an interesting example partly because it's written up and also
because it's kind of a hybrid where they've remained self funded but spun off
VC funded ventures in Trello and in some ways Stack Exchange
[http://www.foundersatwork.com/joel-
spolksy.html](http://www.foundersatwork.com/joel-spolksy.html)

~~~
StavrosK
Interesting how that page has misspelt Spolsky's last name in half the places.

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matiasp
This mentality is not compatible with venture capital.

You want a life-style business. And that is absolutely fine. Investors want
you to be very busy, scale the business and build a large company. Is the only
way they can make their money back.

(I work for a venture fund in Dubai)

~~~
jacquesm
> You want a life-style business.

A non-funded company is not by definition a 'life-style business'. That's
pretending there are only two choices whereas in fact there is a huge
continuum ranging from mom-and-pop operations all the way to enormous
privately held conglomerates.

If you work for a venture fund you should know that the choice is slightly
more complicated than funded and life-style businesses.

Being 'happy' does not mean someone wants a 'life-style' business, it simply
means they want a healthy work-life balance and that says nothing about the
eventual size of the company.

~~~
emorse
I don't think he was commenting on the non-funded company nature making it a
'life-style business', but on the OP comment that he didn't want to be busier
as a result of funding.

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jventura
I'm running a one-man show trying to reach profitability on a niche market so
that I can later do some serious research in the area. As it is a very small
niche, quite uninteresting for investors, it's good for me since I would never
have the freedom to do independent research if I was to accept their money..
The downside is that I'm burning my own money, but I can do whatever I want
and even quit if I get bored!

What I'm saying is that you should align your "strategy" with your own goals.
If you guys are growing organically, are profitable and don't have crazy goals
like trying to conquer the world, then welcome to the sane side of the
equation! Leave the crazy working hours and unrealistic goals to those with
the big egos.. If lots of money and being powerful is what matters to you (I
think it should be considered a disease), then go for it as well..

------
joelrunyon
"Outside money is expensive" \-
[http://nathanbarry.com/profit/](http://nathanbarry.com/profit/)

~~~
elmar
this is a great real life bootstrapping example. I personally think the best
of both worlds is to take funding but still continue with the mindset of a
bootstraped company, but you have to choose your VC's carefully.

~~~
elmar
looks like the article now as is own discussion thread

[https://news.ycombinator.com/item?id=12000311](https://news.ycombinator.com/item?id=12000311)

------
twidlit
Why not just take a loan from a bank? That way you can spend that hiring and
managers to let you off the hook of day to day operations.

~~~
forgetsusername
> _Why not just take a loan from a bank?_

Precisely. Is the startup world so financially uneducated that they see taking
venture capital as the only means of raising capital, or worst yet, some sort
of _duty_?

The post practically says the company is awash in money, which would mean
there are multiple ways to raise cash. The _real_ question is _why_ are you
raising money?

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FlyingSnake
>We will be financially independent either way in a few months. We just want
to be happy and don't have a more busy life.

I think you answered it yourself. Investor money is like a debt, and try to
avoid it as much as you can.

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xando
I've been / I am in similar place right now. Since I don't have anything solid
as an answer. Few comments. Please read this.

[http://www.aaronkharris.com/investors-and-their-
incentives](http://www.aaronkharris.com/investors-and-their-incentives)

As few people noticed, The content of the question displays way of thinking
that is incompatible with VC.

My approach right now is to find an angel investor who could spend reasonable
amount of time with me. Effectively a mentor, to help me with answers for
question like yours.

~~~
tehayj
Thanks, that was interesting.

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womitt
In the scenario you've described, I would never take the funding.

Investors have an insatiable appetite for more money and they tend to push
founders to work more even if they are exceeding expectations...

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DelaneyM
tl;dr: Know what you're going to do with every dollar before you raise it
(early). Also, VC investment isn't the only investment; if you won't have
breakneck growth consider private equity.

I dislike having investors, as a general rule. They meddle. However, when you
take investment it's important to do so intentionally and purposefully.

Good fundraising: "With X thousand dollars we can hire Y developers to build Z
feature, which we project to generate a positive net return within N months."

Bad fundraising: "Who-hoo, we're funded! Let's buy some Aeron chairs and
kitchen snacks and move to The Mission!"

In your situation: if you have an unfair advantage in a fast-growing market,
and you can increase your edge and get more customers/revenue/value with
investment quickly enough that the investment pays for itself, then consider
it. If the features/hires/investments you could make with that money also fill
you with excitement and anticipation, then do it.

If you don't want to be busier and you're happy with what you have, stay far
away from investors for both of your sakes. They'll get frustrated by having a
"zombie company", you'll get frustrated by their frustration.

Finally, consider pursuing alternative investors. There are many smaller-scale
private equity firms (or individuals) which are more comfortable with making
investments to generate steady, predictable & consistent cashflow. They might
be better aligned with your personal goals.

~~~
tehayj
Thank you. Everyone who seeks funding should probably understand this.

We are fine in terms of money, I just had this (misguided) idea that getting
funding now helps me to be even less involved in the project but since my
decisions made this a success I think we really look to sell the whole thing.

Before we do this we will keep growing it for a little longer and try to make
everyone replaceable. It doesnt matter much for us anyway. We just want to get
done with the making money part of our life and will get there regardless if
we sell or not until the end of the year.

------
julius
Sounds like you want to profit from your unfair advantage, but you are not
interested/motivated (any more) in doing the work (eg. more interested in
focusing on private life and/or other projects to be more happy).

So you need to find someone who is interested enough in your unfair advantage
that he is willing to be responsible for investment AND operations (AND giving
you some money now).

In case your unfair advantage is really that good, have you considered selling
the company. Keeping some shares.

------
jagtodeath
Raising money will, without a doubt, make your lives more busy.

I've never heard of anyone successfully using investor money to hire people
which replace them. Even so, hiring people is incredibly time consuming, and
you will have to manage them.

If you're profitable and your goal is to reach financial independence, in this
market I would not raise. If your goal is to make as much money as possible
and lose all sense of work life balance, then raising money may be for you.

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diziet
If you're going to be financially independent in a few months -- ie, the
founding members of the team will have a bank balance of >5 million us
dollars, great! Don't take funding (or take it for very little dilution on
your own terms).

If your definition means being able to afford some level of living expenses,
you're in a different boat.

------
avifreedman
If you take outside investment to grow faster and are coming from a $300-500k+
job, you'll be getting less cash compensation for years unless you're in the
VP Sales role or a senior seller.

If you grow more slowly you can avoid most investment, especially VC, you can
pay yourself whatever you/the team/the board approves, which will likely be
more if you build a great business.

And if you're not coming from a higher-paying job, you should be able to pay
yourself over $100k post A, then high $hundreds (to rough market/at least cost
of living) and perhaps a little higher, depending on city, stage, health of
business.

We decided on the VC path and have been thrilled with it so far. A number of
us will be taking permanently lower liquid comp packages for the next 5-7
years but the upside is the equity and fun of building and dominating a stale
but important space...

------
logicallee
Given this situation, you could potentially raise money from your users, which
would be the best of both trade-offs you seem to have. They're not going to
strong-arm you into work 120 hour weeks, can appreciate sane and modest
returns, and you can do whatever you like. On the other hand, one thing they
DON'T have is experience keeping companies from dying. Your institutional
investors have that in spades. They've seen dozens of companies die, and
they've seen why and exactly how. The reason they need to push you for an
outsize return, at the expense of your comfort, is to make up for these. Your
outcome and end game is good. Rather than ask if anyone's life ever became
more comfortable, perhaps you should ask whether anyone regretted their exit,
getting paid off after working hard and driven in part by an institutional
investor?

As far as raising money from your users (which I don't recommend, but would
unlock what you seem to see as the best of both worlds), I literally got an
email about a service I use doing this today. When I got the email I didn't
click the "Get shares today" button from the email (which wasn't spam and
which I read carefully), but just now I did re-open that email and clicked the
button to see where the "get shares now" went, as part of writing this
comment.

Where they sent me was:
[https://www.seedinvest.com](https://www.seedinvest.com) and which presumably
you can find that coverage easily online (Forbes covered it, they claimed).

Personally, I don't know how I feel about having users invest. Regulation D
and the idea of accredited investors had existed for very, very good reason.
But there are examples for you to follow. I'm not sure if I can recommend it.
It doesn't seem to be a good direction for most companies, and leads to poor
outcomes for companies and for users. It also seems very ripe for scams, which
a high level of transparency would help you prevent. At any rate it's an
option. Personally, I recommend going with the institutional investor.

------
wslh
If organic growth is working it says a lot about your startup and you are in a
rare position. Plenty of startups can't even exist or run without outside
capital. This includes the ones in news you read every day. But if you insist
and like hyper growth I would recommend to try YC.

And, as a vendor witnessing a lot of startups for 14 years, I would also
recommend to follow the organic route. You can see a lot of geniuses and
killer products crash. Even one nine figure acquisition was not so great for
the founders and they didn't get that much after working a few years as part
of the retention.

If you want to be acquired in the future, follow the growth route too, since
your valuation will be a multiplier of your revenue.

------
smoyer
You imply you want a lifestyle business ... Continue to bootstrap the company.
Investors want a home run which means you'll work in at an insane pace for
some period of time so the investor' goals don't line up with your own.

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eli
We have great investors who have made the company stronger and allowed us to
hire a bigger team faster. But they are more like angels, only gave a
relatively small amount, and share our vision and especially our (long,
indefinite) timeline for an exit. Very different from traditional VC.

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puranjay
Similar boat as you.

I've decided to not take investment any time soon (if ever)

The very fact that you're having doubts about this says that you really don't
want outside investors.

If you're making statements like this:

> We just want to be happy and don't have a more busy life

Outside investment will just make you utterly miserable.

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harel
You sound like you're in a good position to begin with. Taking money is giving
a bit of your soul for it. You'll end up infinitely more busy than you already
are. Reach financial independence and keep at it as you are. It sounds like
you are already making it.

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saluki
@DHH has the answer(s) and sounds like you already do as well.

Startup School Talk
[https://www.youtube.com/watch?v=0CDXJ6bMkMY](https://www.youtube.com/watch?v=0CDXJ6bMkMY)

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mszcz
This question reminds me of a scene from Silicon Valley ;)

[https://www.youtube.com/watch?v=4rmqJZCCFVI](https://www.youtube.com/watch?v=4rmqJZCCFVI)

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chemcoder
I have just recieved funding for my non IT startup. I think pressure to
deliver has increased manifold.

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NetTechM
Fiscal pressure declines, investor pressure increases exponentially.

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Bromskloss
When it is all over, please come back and tell us what company it is.

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jgill
What is your company? Is it a product we'd use here?

