
(draft) John Furrier on the Coming Entreprenurial Counter Culture - rizzn
http://siliconangle.com/ver2/sabackchan/2009/08/26/an-entrepreneurial-counter-culture-is/
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mmt
The mention of $250k at the end is, I believe, telling. This size of deal
isn't really available, yet it could well be the most useful to modern
startups, especially as a seed round.

YC, despite being compelling to young entrepreneurs, presents too high an
opportunity cost for a season professional, yet a megabuck is too much for an
initial build.

~~~
jf781
For technical folks bootstrapping say a iphone or fb app is very little money
and 25-150k could be used for market validation - another very important part
of the startup cycle. If the entrepreneur is say a business person who can't
code anymore then a prototype cost will be roughly 25k or so just to get an
initial build this still isn't enough to launch. So getting a customer
immediately is very important and working capital to service and grow.

There are only two ways to get money for a startup: 1) top line revenue from a
product or service or 2) sell equity or do a debt note. That's it.

I've estimated that the required amount for a "real" seed round in today's
open source environment for tech ventures is about 200-300k. That is unless
you are young and can do the coding yourself. However technology isn't the
driver any more for startups. The scarce talent is business model engineering
and product marketing - building for scale isn't the problem anymore. I can
build a hack protytype that works well into the "validation" stage to
establish a funding event or customer revenue stream then use the new capital
to rebuild, hire and grow.

~~~
mmt
Obviously (I hope, based on my original comment), I don't disagree with your
estimate, but I'm curious as to what it's based on.

I think YC has demonstrated that a $10-$20k initial seed round is enough for a
software-only prototype in a few months, assuming technical founders.
Presumably there's a comparable cost to your "rebuild," though please correct
me if I'm wrong.

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rizzn
John's jotted down some thoughts on how VC is breaking - he and I had a phone
conversation on it this morning - I agree with a lot of what he's saying.

If you have any thoughts or quibbles, I'm interested in hearing them - we're
trying to get a wide array of input before we do a long-ish post on it.

~~~
goodgoblin
One thing about the post that seems a little odd is that it talks about an
alternate view of wealth creation - some company that presumably could never
IPO though is still valuable - yet ends on a note which yields to the
assumption that a company is not a success unless it becomes an Apple or HP
type behemoth.

~~~
jf781
I was just making the point that the possibility of creating a huge "home run"
which is the desired VC outcome (eg like an Apple or HP) is difficult when VCs
"pass" on what looks like a few guys making an iphone app or something.

My other point is that many entrepreneurs need more than 25k to build their
prototype yet fail to do it do to the clutter in the funding market hence two
guys building in a garage for a customer project might not get funded in
today's climate.

To me if an entrepreneur can create a product get it to market and get
profitable they are a success and possibly could be a big "home run". If the
investment thesis is to get the home run then it most likely will overlook two
guys in a garage.

