
Why We're Not Raising Funds - MateuszMucha
http://blog.omnicalculator.com/not-raising/
======
afandian
Genuinely non-snarky question.

It looks like a standard calculator and conversion app, and it looks like most
of the implementation I could imagine being in a calculator app is already
done.

Why would you even think of raising funds? You thought it was a good idea to
write the blog post, so it obviously crossed your mind.

~~~
CookWithMe
Because he went through an accelerator. He'll be told for months that the demo
day and the pitch will be super-duper important, because investors.

I attended a different accelerator than him (but also corporate and in
Berlin), and the idea that bootstrapping may be viable, or even that waiting
for another 6 to 12 months when one has real feedback from the market, was
never brought up. This is especially sad, because the situation in Berlin is
basically inverted to the one in SV: Living costs are cheap, raising (seed)
money is hard.

Our Demo Day... afaik no startup got an investment because they met an
investor there :-) Afaik, some proceeded to later (>12 months) raise money,
one did have success with crowd-funding. But we all wasted a serious amount of
time training our pitch...

~~~
MateuszMucha
I agree with most things and that's been the general sentiment in our
accelerator, too. However, I don't consider it a waste of time. Pitching is
great in a way that it forces you to have a clear vision of what you want to
do. And boy, I needed it. Every time I pitched, I got questions I knew I
didn't have good answers to. These were the biggest holes in my business plan
and pitching alone made me think harder about them.

As for the demo day, we were told early on that it's a big thing, but it's
unlikely that we'll be discovered then. I got in touch with a pretty great
investor who's kinda interested, but I think they're way out of our league now
(series A/B level), so we'll wait. Also, on that day we initiated a B2B deal
which just might turn out to be what we need at this stage (we're building a
prototype now).

I love the Berlin-SV comparison and your conclusion!

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nvk
It really resonated with me, at Coinkite.com we chose to bootstrap and have
been turning away offers for 18 months now. I'm not fully opposed to taking
money, It's just been great to focus 100% of our time on Product.

We've managed to get 160,000 active wallets (funded), 1000+ devs using the
API, 8000 debit cards and terminals in over 30 countries with very little
money.

it's amazing how far you can stretch your own money specially if your business
has some revenue form day one.

I don't rule out eventually raising for accelerating growth.

_Note: I'm a terrible ESL writer._

~~~
jxm262
Reading your comment is a huge inspiration to me. Do you plan to do any
writeups/blog posts of your experience. I love to hear stories from successful
bootstrapped companies. I too would love to start something in the bitcoin
space :)

~~~
nvk
The main thing I can say is build something and charge for it, if people are
willing to pay, you might have something :)

I'm a terrible writer, so unlikely, but happy to chat anytime. We are not
"successful" yet, long road ahead. Look for @nvk on twitter, can give you my
email there.

~~~
MateuszMucha
I'd love to hear about your experiences, too. Hope you can change your mind.

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CPLX
The idea that a couple kids that programmed a fairly trivial, albeit useful,
calculator application feel like they _should_ be raising multiple millions of
dollars is what's wrong with the present state of affairs. In my humble
opinion only of course.

~~~
MateuszMucha
CPLX, the whole point is I don't think I should. And yes, we want to make it a
big thing, just wait and see :-)

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paskster
I love the first reason "Because I can’t afford to allocate the time needed".
Soooo true. You have really high upfront cost if you start fundraising and it
might be that you end up with no real good offer at the end.

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pla3rhat3r
A lot of people believe that raising capital is completely necessary for your
business to succeed. However, many do it and achieve great success. Not
raising money slows growth in most cases but what you gain in control and
complete ownership outweigh the the risk. It's not for everyone but I feel
like raising money is the benchmark for success in people's minds. Which to me
has always been silly. Raising funds is not for every business. Good read.
Wish you guys all the luck.

~~~
MateuszMucha
Thanks. While I agree for the most part, I do think that raising money is an
important validation. Often you hear about a project you wouldn't even
consider interesting, but when it's accompanied by "raised X MM from Y", your
perception changes.

Also, it's that head-turning thing. They say "we raised X" and you start
listening. I had something similar with my downloads count. Honestly, I didn't
think 1 million is all that special, but over time I learned I should start
most of my pitches with. People just start to listen.

~~~
pla3rhat3r
Yeah and I'm not saying it's a bad choice. I just think too many people put so
much importance on whether or not a company raised money as a measurement of
success. When the reality is many companies can do it on their own, control
complete ownership, and still achieve a level of success that many companies
that raise money see. It's really just based on where your company is headed
and whether or not you're eyeing an exit for your company. If you are looking
to sell, be acquired, or go IPO then raising funds makes complete sense.

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gphil
My opinion is that you probably shouldn't raise money unless you need money to
execute your business plan. Some business plans aren't capital intensive, so
why give a big chunk of your company away if you don't need additional capital
to execute your vision. I don't think mere "growth acceleration" is enough to
warrant it. You need to be doing something with the money that you couldn't
accomplish otherwise.

~~~
MateuszMucha
That's exactly what I'm thinking now. And what smart people have been advising
me all along... it took me a while to hear them, though.

------
pistoriusp
I also made a calculator and I'm not raising funds either:

[https://itunes.apple.com/fi/app/calcable-spreadsheet-
calcula...](https://itunes.apple.com/fi/app/calcable-spreadsheet-
calculator/id529571185?mt=8)

------
MCRed
We're not raising money either. We took a small amount (< $6,000!) from an
angel, and that's it.

I've been working for startups for 25 years, both as early stage employee and
as founder.

I feel that the general sentiment really underestimates the cost of VCs.

There's several reasons I'm inclined to pass on VCs:

1\. In the early stages it is a huge distraction, and worse, while you're
still figuring out what your company really is-- finding product/market fit,
etc, having a VC in there pushing the flavor of the day is not a good thing.
The VC is looking in the rearview mirror, not at the market and not forward,
but chasing whatever's hitting right now.

Notice how many Video sites got funded when YouTube got bought? How many of
them are around now? When the latest news means "you gotta have a video
story!!@!!" thats just a distraction your startup doesn't need.

When you're at the point that you have a profitable engine and need to scale
it, then VC money can be taken and poured into customer acquisition, capital
needs to scale production, etc.

But when you're just figuring it out, an accelerator or angel money is the way
to go. Or go without if you can, even better.

I'm concerned that Accelerators have been "demo day bootcamps" that focus too
much on pitching and not enough on business development (or customer
development) ... and slot you right into thaking a big VC round when your
company is only a few months old and not ready to scale.

In fact, given my experience, I'd bet if you analyzed the failures of
companies that came out of great accelerators, you'd find that a lot of them
got VC money (and influence, distractions, etc.) too early.

2\. The cost of money from VCs is always too high. They have way too many
"hostile" deal terms that they "need because they're taking such a huge risk",
but this ignores the fact that you're taking even more risk. Their shares
should not be more valuable than your shares that you put actual sweat into.
They want special incentives because they are "early money", but you're even
earlier money, and worse you spent TIME which is more valuable than money.

Thus the situations where taking VC money makes sense are the ones where you
get a rather good deal from them, yet still can't get by with ploughing
profits back in, or taking a loan from a bank or some other funding source.

In fact, now that there are angel.co syndicates, why should you take money
from VCs? You can raise a couple million from a syndicate of angels, get
better terms, and spend less time on angel.co than running around the bay area
for half a year.

3\. VCs are always pitched as "it's not the money, it's the connections". I've
seen very few anecdotes where this turned out to be true, but I've directly
experienced many situations where the VCs killed the company. In fact, every
VC backed company I've been involved with that failed, and a lot of the early
(lower) exits, were caused by VCs. Sometimes these are seen as "fights between
the founders" but even then it's because the VCs are trying to force the
company to do the wrong thing ("What's your video story?!") and half the
founders see it or want to just go along to minimize conflict and the other
half of the founders realize it is a company-killing idea. Other times when a
founder is too strong the VCs have worked to undermine him, push him out, etc.

VCs meddle too much, and I've seen very little actual productive help.

------
afandian
Looks like this isn't connected with Omni Group (who are a long-established
software company). Isn't the naming a bit confusing?
[https://www.omnigroup.com/about/](https://www.omnigroup.com/about/)

~~~
MateuszMucha
There's more than a few companies and projects with "omni" in their names.
It's a pretty generic word. If I called it "Awesome Calculator" or something
like that we'd surely find a lot of similarl names, too.

------
MateuszMucha
The decision is far from undisputable, I'd love to hear what you think.

------
lewispb
Why does your app ask for my location even when i'm not using the app?

~~~
MateuszMucha
It's a bit embarasing, but I'm not sure. I released it in June or July and
didn't notice it for a long time (wasn't an iOS user). Then we've been working
on a complete rewrite for a long time. The new release awaits App Store
review.

~~~
psionides
You might find this useful: [http://mackuba.eu/2015/03/17/accessing-user-
location-data-in...](http://mackuba.eu/2015/03/17/accessing-user-location-
data-in-ios8/) :)

------
zura
Did you use any cross-platform frameworks for developing this?

~~~
MateuszMucha
@zura: yes, it's running on Cordova, but we'll move to React Native as soon as
we're comfortable with it (we're using React right now, although the iOS
version is still on Angular).

------
mdekkers
Very nice read, I can relate to everything you write.

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codegeek
Good read but it may be nice to add the word "yet" to the end. The author
clearly says at the end that 'So, if it's going to happen, it will be because
they will have knocked on our door, not me knocking on 50 of their doors"

I have a very small web based business that has the potential to be a $50MM
business as well but I am always worried about the same thing if investors
even care to blink unless we promise a $1B return/exit ?

~~~
pxlpshr
$50MM isn't big enough. It just doesn't support most funds' basic economics.
It's nothing personal about you or your idea.

Furthermore, why would you want to raise money if your market cap is $50MM? If
you were to raise, you'd likely have to exit for upwards of $300-500M to have
the same exact returns as not raising. A bootstrapped, $50MM company is
absolutely nothing to scoff at.

------
biot

      9. Because it's just a freakin calculator

