[ciordia9]

Posted on the site, and have further thoughts.

"Work hard for a year, save enough, be diligent, and you too can fund your own startup.", was the basic summation of the article in the end.

The tools I'm working on require partnerships with different service carriers which can run as much as 10k a month, then you have contractors, lawyers, designers to pay. You'd have to have one helluva job to pay for all that. My partner and I have been using our salaries, equity lines, savings, for a year and it's not enough.

Playing the slow-goer, almost like a casual gamer, won't always work. In a years time maybe you'll get married. Maybe you'll have a kid. Maybe you'll get fired. Maybe you'll want to go live on an island and harvest coconuts. Not to mention the market might be radically different by the time you even launch.

If you have an idea, and you want to see it birthed, and you know what it will take, and you can write a plan that shows it--because you did the hard work to see it through--then birth that bad boy.

Term sheets aren't all horrible. Don't ask for the moon, be realistic, get what you need and make sure you don't have to go get more. Don't get an office, be frugal, hire the best, negotiate well, partner with those who are assets and share the love.

This isn't rocket science but it does take careful thought and solid reasons. Do your homework and make the right decision for you and your product.

-a

[BitGeek]

If a term sheet isn't horrible, then the lawyer you're using is the one the VC firm hooked you up with!

Sounds like you believe you need to spend it all before you make anything.. I think you've got it backwards. If someone wants to charge you $10k a month, find their competition and get the same service from them at a higher unit rate but paid for out of actual usage. Negotiate.

"Not to mention the market might be radically different by the time you even launch."

you're making an erronous assumption-- the VC treadmill has you betting the farm on the state of the market at some point in the future.

Building a viable business means that you are less dependant on the state of the market, not more.

One company I worked for was profitably doing consulting when we took VC funding. They insisted that we close that business to "focus" on the product... the result was, when all was said and done th company ended up selling for less than the consultancy was worth and the founders got a fraction of it -- because the VC business took most of the money due to their preferences. Venture Capital killed that business. Now a decade later, the market that company was in is a huge multi-billion dollar market... if they'd kept the consulting business and kept at it for another three years-- they would have been in it when it finally did take off.

Bottom line-- you can't be frugal when taking venture capital. Keeping a viable consultancy was percieved as a threat to the business-- even though it would have allowed us to hire more engineers on the commercial side. ITs almost as if VCs want you completely dependant on further funding from them. (Or they are just totaly incompetant at business.)

[ciordia9]

Above and beyond you have to have advanced common sense. If a VC wants X, but you're not a moron, and you want to do Y, don't go with the firm that is selling you bad advice. If it's too late then you didn't do enough due diligence before it was too late. That's not anyones fault but those who signed the papers.

Time to market is deeply important. Not to find a herring to point at but go create another Youtube or Twitter today and tell me how the post market absorbs it. If a market grabs enough momentum to get to a kool-aid point getting the weight of the market is going to be difficult.

While I don't believe our product is so important, I believe some of the deals and ideas we have are. If delivered properly placement has concrete potential which locks a company in for a good term, not to mention a good vector for growth. They don't say strike the iron when it's cold.

Like you've said in your other funding YC talk, cases may be different. There are thousands of variants that can effect ones viability, needs, realities, and needs.

As well I'm not making any assumptions on VC's talking points. They are our own from our own market research, trends, and skull sessions. We're seeking more angels than VC's anyhow since VC's play a game we're not really interested in. Not that good VC firm's don't exist. The funded is showing us that the cloth isn't always equal.

Good contemplative stuff though, none the less!

[siberianfruit]

To be fair, in the middle of the post Udi does mention that there are capital-intensive businesses that do require funding. His main point is in regards to building web applications and web businesses.

For many new companies funding is essential. If you want to build a new type of electric car, then you need a ton of money for manufacturing and R&D. If you want to open a restaurant, then you need money for rent, food, waiters and a chef. If you want to build a video sharing website then you’ll probably need some money because of bandwidth and storage concerns. If you’re doing something like this, then funding is a necessary evil.