

Bootstrapping a Software Company - down-to-earth common sense from 10 years ago. - dean
http://www.klhess.com/sef_spch.html

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ekanes
Some interesting ideas in there but the table showing ownership is a bit
misleading. It compares owning 85% of a $10 million dollar company
(bootstrapping) to owning just 15% of a similar $10 million dollar company
(outside investment).

Nowhere does it acknowledge the value of the investment - in this table it's
as if the investor hands the entrepreneur a wad of cash, the entrepreneur
lights the cash on fire, and when it's all burnt out they draw up the table.
:P

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joeguilmette
yea, and i'm by no means an expert, but is it commonplace to see VCs owning
70% of a company?

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ekanes
I'm no expert either, but from what I've read by the end of multiple rounds,
they could own that much. Right out of the gate a 20% or 30% is more common.

As a company comes back for more rounds of funding, the founders get diluted.
The VCs often have anti-dilution provisions in there to protect against this -
something to watch for.

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gruseom
I'm surprised this article didn't receive more attention here. Its author
could hardly be more qualified to speak on the topic of software startups: he
built a multi-million-dollar software product not once, but twice. I found the
article to be densely packed with insights, as if he were trying to dump
everything he'd learned in one session. I intend to return to it and try to
absorb more.

