

Ask YC/Startups: How has fundraising been going for you? - shafqat

We've all ready the gazillion posts spelling out the doom and gloom for startups (and a few optimistic ones). Just wondering how other entrepreneurs on HN have found the fundraising environment in practice.<p>We're just about done with our seed round and its been really great. We started about a month ago, and have 75% of our round completed (still a couple slots open!). This includes both institutional and friends/family investors. If anything, I've found investors more willing to give a startup investment a try than risk losing more in the financial markets.<p>I've also found the deck works wonders. Not a single investor asked for an old-school biz plan, and only one asked for actual cash-flow projections. Most investors seem to have a team-focused thesis, even in these times. Finally, all of them said they wouldn't touch an investment that's solely ad-driven, even if they would have 1-2 years ago. So diversified biz model with good team still seems to be OK when fundraising.<p>How about others?
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NoBSWebDesign
I didn't think it'd be possible to have this many responses to a question
where not a single one even attempts to answer the question :-)

We've had some interest from a few investors (which is somewhat difficult
being a web-based company in the Midwest), but we are still unsure about
actually accepting any investment, since we are on the verge of profitability
having so far been boot-strapped.

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shafqat
Haha,thanks for getting it back on track!

What company? Couldn't see anything on your profile.

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NoBSWebDesign
No prob. Sorry I couldn't be more help with the investor question. Our company
is RateMyStudentRental.com.

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wschroter
I'm just not seeing the ad dollars add up. I know of sites doing millions of
uniques per month that can barely earn enough in Adsense (not the best model)
to pay the cost of servers and rent. At all of the sites that I've run (Go BIG
Network, Swapalease.com, GotCast.com, etc.) the ad revenues are always an
afterthought. If we had to survive on those $$ alone we would be screwed.

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ram1024
i'm rather disturbed with the comment about "not touching an investment that's
solely ad-driven"

do they not understand that the internet has the eyeballs of more people in
the world than any other medium ever?

you might as well swear off advertising completely if you don't believe in the
power of advertising on the internet. sure "Banner ads" don't give us much to
be confident about, but that doesn't mean that we're not going to innovate our
way out of this slump and do it right soon.

who are these people? i need to give them a stern talking to...

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run4yourlives
Advertising is the first expense most companies cut during a downturn, so it
may be more of a "this point in time" stance than anything else.

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ram1024
i see where that is the case. i just hope it's not idle paranoia at this point
letting people's judgements be clouded. if they have a solid reason, that's
fine. but if they're just being sheeple they need to be educated properly.
advertising is practically the ONLY way to gain traction in a recession.

what needs to be cut is NON revenue generating expenses in companies. not the
ones that actually drive your business

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run4yourlives
_advertising is practically the ONLY way to gain traction in a recession._

That's simply un-true. Advertising is a growth strategy, but you can only grow
when you're sure you've got all your ducks in order. What often happens during
a recession is that the people in charge cut back on growth areas to ensure
they are still focused on the right things. If they find that they are not,
they persue new directions, if they confirm that they are going in the right
directions, they reinvest.

You can rant about it all you want, but that is the reality of the
marketplace. Not reacting to reality is not a smart thing to do, and most
smart investors would rather keep their cash then give it to a (now riskier)
venture.

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ram1024
precisely what i meant by "gaining traction".

of course it's a growth strategy. i would never suggest otherwise. but this IS
the technology age. and i would even go out on a limb to suggest, if you're
not growing and/or innovating, you're dying.

and that's doubly true when financial systems collapse

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run4yourlives
_if you're not growing and/or innovating, you're dying._

If you are traveling without focus on your direction, you will eventually fall
off a cliff.

People start really worrying about their eventual cliff drops (real or
imagined) during a recession. All businesses will need to react to that
perception change if they want to survive.

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ram1024
you are on the right track, bro

if you've got your "ducks in a row" which i guess is the PC version of "shit
together"... then you'll always be prepared for whatever comes. it's when
you're not prepared and have these glaring flaws in your organization that
everything falls apart when cliffs are spotted :D

it takes a true complete meltdown to kill a business that's "properly" run. we
can only dream of that kind of perfection, though. i personally feel that ad-
driven businesses are afforded a little extra cushion in bumpy times because
their revenue is not directly from the consumers. of course sufficiently
mountainous bumps are still felt O_o

thanks for your input

