
Kima Ventures Will Allow Startups to Raise $150K Within 15 Days Via AngelList - adelivet
http://techcrunch.com/2013/12/04/kima-ventures-will-allow-startups-to-raise-150k-within-15-days-via-angellist/
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adambenayoun
I am a co-founder at a startup that just graduated from 500startups and as
part of my fundraising process, I decided to approach Jeremie.

I think what's this post is missing is some context, Jeremie is running one of
the most active seed fund in the world (200 investments is no feat) and they
have a stellar reputation which is why I approached him - I did some due
diligence with other entrepreneurs who provided me great recommendations as
well.

Jeremie turned us down for various reasons but did in a timely manner and was
being very honest about it (no sugar-coating or stalling the process to keep
the door open like most VCs do).

I think if you're looking to take money from an unknown investor (who has made
almost no investment), you should be doing your due diligence. However with a
network of 200 backed companies - making a due diligence can be fast and take
just a few days and I also think you should do that prior applying to Kima15
via Angellist.

Some cite the valuation not being favorable, however there are stages when
your company is so immature and early that you shouldn't worry about over-
optimizing for valuation and rather take some money at a lower valuation and
move fast in order to make great progress that will let you close more money
at a significantly higher valuation. If you are looking to build a company
which might be the $100M-$1B valuation range then that low valuation will not
have any significant impact on your outcome.

It is also very refreshing to see a seed fund publishing a SLA - I am looking
at this as a very clever marketing feature - now people will remember Kima as
the first seed fund that agreed to commit for a SLA for giving you an answer -
one of the biggest pain in raising funds.

~~~
throwaway893
I've heard mostly negative things about Kima.

There's Jeremie's public negative statements about a company they invested in
(Sparrow):
[https://news.ycombinator.com/item?id=4277331](https://news.ycombinator.com/item?id=4277331).

They're also very price sensitive, which can create resentment even in
companies that take their money.

~~~
adambenayoun
They're price sensitive and are quite open about it - I don't see why it would
create resentment?

If they are approaching you and are trying to negotiate a lower price while
other investors are on board on a higher valuation (I saw this happens quite a
lot), I think that would be the kind of behavior that would create resentment
both on the other investors and founders side.

However I haven't experienced it and my experience was that they turned me
down because my valuation was too high for them and out of their comfort zone
- did they try to negotiate me to a lower valuation? No.

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rubbingalcohol
To dismiss fund raising as a "distraction" as they do belies the importance
and seriousness of choosing good investors that benefit your company, on terms
that won't hamstring your growth later.

A "one size fits all" approach like what they're pushing sounds more like a
pay day loan than a legitimate business partnership.

I worked with a startup that took a $150k seed-stage investment on a $1m
valuation, but the terms and the investors were terrible. My partners and I
were too inexperience to know we were being ripped off until the time came to
raise real money and our first investors were blocking every funding attempt
and giving us "counter offers" at significantly worse terms.

I'm not saying these people are doing this, or even that it's a bad deal, but
I would advise serious caution and diligence in matters of fund-raising. It's
worth spending more than 15 days to get a deal right. Properly funding a
business is not a "distraction;" it's a primary component in running a
business.

~~~
jber
Hello

Nope, we are not doing it ;-) Check my Angellist profile:
[http://angel.co/jberrebi](http://angel.co/jberrebi)

We have a very good reputation in this market and are helpful! You can check!

~~~
acemtp
The good url is: [https://angel.co/jberrebi](https://angel.co/jberrebi)

~~~
jber
Thanks, corrected.

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acgourley
I think it's an interesting move. I can tell most of HN seems to dislike this
idea but I believe it's basically what incubators are offering without the
usual smokescreen of "advice + intros"

I know nothing of Kima itself, they could be great or terrible investors - but
that seems orthogonal to this idea which could makes sense for both parties in
many cases.

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malandrew
I can see this as being great for inexperienced founders looking at getting
funding for their first stab at being an entrepreneur. However, any founders
that are talented and have worked as an engineer at at least one moderately or
highly successful company should be able to raise money on much better terms.
Giving up 15% for $150k seems pretty steep, especially when the investor in
question is spread so thin. Money and maybe occasional introductions are going
to be pretty much the only forms of involvement that the investor could
realistically invest in you.

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wellboy
To the naysayers, the biggest downside of fundraising is just the insane
distraction and time it takes to get through that process.

Kima Ventures has simply understood that and has solved that problem.

There are a lot of startups for whom it would be detrimental to have investors
who want to have a say in their startup, but who would have a lot of benefit
make big progress by getting $150k fast.

If you position yourself as the brand to get all these startups, you will
inevitably scoop up some of the really big hitters.

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lettergram
I know I wouldn't invest or accept an investment without being able to meet
the founders face-to-face. That is part of why Y Combinator has been as
successful as it has been, it offers less funding and more networking. The
later being what a founder needs just as much OR MORE.

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josh_fyi
These terms are so good that Kima may have put itself in a strange position of
looking "too good to be true."

Standoffish arrogance in VCs is unpleasant, but it can signal that the VC is
so successful that he or she doesn't _need_ to be nice.

If only the straightforward approach worked!

~~~
jber
Ok, so the good strategy is to give a bad deal to entrepreneurs ? ;-)

~~~
josh_fyi
No, my point was not that. My point is that sometimes, showing how tough you
are makes you appear more successful and more desirable--a type of signaling.

I'd certainly prefer a situation where no one has to do this, much less VCs!

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deathflute
What do you guys think about the terms of the deal? Isn't 15% a lot to give
out for just 150k?

~~~
minimaxir
Y Combinator is $20k (+ $80k maybe) for ~6% equity.

~~~
jahewson
The $80k is a convertible note though, so expect it to be converted into
another ~25% equity at that valuation.

~~~
pg
It doesn't convert at that valuation. It converts in a future equity round,
usually the series A, valuations for which are on average over $10 million
lately.

~~~
deathflute
Thanks for the clarification. Thats what I thought. So convertible note is
much better for the entrepreneur. It retains the optionality of doing well and
consequently giving out less equity.

~~~
pg
Notes aren't always better. It depends on the valuation cap at which they
convert. A note with a low cap is just as dilutive as an equity investment at
a low valuation. The YCVC note is uncapped, however, which means it's like
getting part of your eventual equity round in advance.

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arikrak
I wondered why no firms were doing that:
[https://news.ycombinator.com/item?id=6730152](https://news.ycombinator.com/item?id=6730152)

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tocomment
Any advice for someone in the early idea phase? What steps would one do before
applying to this?

~~~
liamgooding
GSD (Get Shit Done) and get some traction. Without traction, you're just a guy
with an idea in a queue of thousands...

~~~
tocomment
I thought the purpose of this type of funding was to fund the idea stage, so
you wouldn't need traction yet.

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jaredmck
Terrible terms will attract terrible companies.

~~~
jber
Why do you think our terms are "terrible"?

~~~
jhartmann
Terrible is a strong word, but I don't think these terms are good for lots of
companies. Each company is at a different stage when they first start raising
seed funding. Some companies might just be worth 1 MM, but if you have a
strong team, great technology, a workable plan, and early customer
interest/revenue 1 MM is a horrible deal. In my opinion these terms are great
for some ventures and absolutely horrible for others. I think the quick
decisions are great, but I would think it would be more fair and equitable for
you not to box the valuations. Perhaps offering a tiered option where higher
value ventures take a little longer to evaluate, but I think boxing the
valuation will have you miss the best companies. My two cents anyhow.

~~~
jber
Agree with you that for it's not for everyone but for most early stage
startups, it's a great deal.

For the others, Kima Ventures still exists and we are investing at differents
valuations (lower and higher)

~~~
jaredmck
I think it's best for _super_ early stage ventures. If you're much further
along, it's going to be a bad deal and possibly deter any future investment in
your company due to the dead money (lack of follow-on).

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taskstrike
We raised money from Kima after our incubator. They have a fast process and
understand technology well.

This is much better than incubator terms, and if I had this before committing
to a incubator, I would have done this instead.

