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Are you an indie, angel or venture company? (gabrielweinberg.com)
50 points by dwynings 1996 days ago | hide | past | web | 10 comments | favorite

I think Tarsnap falls best into the "indie" category, but not for the reason Gabriel suggests. There's no way I'd take an "acqui-hire" offer for Tarsnap -- for one thing, it feels rather insulting to have someone say "we think you're so fantastic that we want to throw away the work you've been doing".

Perhaps we need four categories instead of three -- are you an indie, angel or venture company, or a king?

I find the funding side of the tech world is a bit like loan insanity around higher education. The price-to-benefit ratio is going up when it should be going down.

One would image tech startups are experiencing progressively lower capital requirements to reach market, yet we (seem to) see funding numbers going up in size and frequency.

Higher education costs keep going up while the marginal benefit of those extra dollars are lost. Is a university that raises prices 8% in one year giving you an 8% better education?

I suppose thats what happens when money becomes available in a system. It gets spent and the benchmark is moved up. One is driven by VC's and the other is by government backed loans.

As of right now, today, I'd say angel for Fogbeam Labs. And I say that mainly because we strongly desire to avoid taking outside money to the greatest possible extent, for a variety of reasons... dilution of equity, loss of control, getting on the "funding carousel," the additional burden of managing the investors, etc. But in terms of end goal, yeah, we absolutely intend to reach the kind of heights (eg, an IPO) that would justify venture investment. We just aim to go as far as we can without going to those guys. And, if we could pull of the amazing feat of bootstrapping and never taking outside money (even angel money) and make it to where we want to go, so much the better.

Realistically though, we probably will have to raise at least some angel money at some point; but we're not even actively seeking that yet. Once we have a product shipping, and have it in the hands of a customer or two, we'll know a lot more about what needs to happen next. Who knows, maybe we can get that first big deal, and stick purely to organic growth, funded by actual revenue. Wouldn't that be great?

I'm not so sure it's possible to tell whether you are an angel or VC company at such an early stage. It's like asking if I would risk my life to save someone else's. I know what I'd like to think I would do but will never know the true answer unless I'm placed in that situation.

Then you are an angel company, for now.

FTA: I don't know what Chris was referring to exactly, but as an angel investor this statement resonates with me right now. I've been seeing some really high valuations floating around.

Don't get me wrong -- there is nothing inherently wrong with high valuations if everyone is aligned in exit expectations. The problem is I don't think the alignment is there in many cases.

Keynes' quote is appropos: Worldly wisdom teaches that it is better for reputation to fail conventionally then to succeed unconventionally.

Many of the insane valuation is herding instinct. When the market crashed in 2000-2, lots of shrugs and expressions of "Hoocoodanode?"

I think it should be your company's success that decides if you're an indie/angel/VC company, and not some personal predisposition. By the time people are ready to offer series A term sheets, you should know if your company is in the right market, etc. If you're growing quickly and have a clear path to revenue, why not swing for the fences? Obviously, if the first 12 months are a total roller coaster and you haven't derisked your business sufficiently, in that case it makes sense to keep valuations where they need to be for smaller exits.

Given how many startups have received venture capital (especially recently), I was somewhat surprised when I read a comment from pg: "VCs will only invest in a startup if they think it has a chance of an IPO."


If that's the case, it seems VCs have relaxed their criteria for what makes a startup a potential IPO candidate.

Seed rounds are very different than series A rounds.

What about a venture bootstrapped company? ala Atlassian.

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