[caseymarquis]

> In today’s startup environment, raising money might be easy

I hear this a lot, but it seems like it's only true for people in specific geographic locations, who are well connected, and willing to pretend their problem benefits from blockchain or ML.

I scratch my head in confusion wondering how some of the VC funded start ups I see got millions of dollars for vague and likely unprofitable ideas. Meanwhile, my software company has an established customer base, has set up contracts that practically guarantee 10x growth in the next two years, and our options for funding that growth are effectively bank loans or working longer hours. At the same time, our VC funded competitors have spent millions of dollars just on office space, and have 15 times our development staff. The world seems absurd at times.

[martindbp]

I have the same feeling when people talk about salaries, like 500k would be normal for a senior engineer. You could hire 5 people for that price tag who were equal or better in western Europe, let alone eastern Europe...

[throw_me_up]

Maybe a few engineers are making that in SV, but the vast majority are under $200k for salary. With public companies that are doing well in the stock market, total compensation can certainly be $500k. But I think it is an important distinction to make that more than half is from equity and that equity is only lucrative while the company stock is doing well. If the stock market crashes or the company's stock gets in trouble, most of those engineers won't be making $500k.

[hw]

This. A lot of compensation is tied to equity. Also adjusted for cost of living so naturally CA engineers are paid more over eastern europe.

Dont get me wrong - I would love to hire engineers from eastern europe there are rock stars there but without a local office or presence there it is difficult and there are risks (trust, enforceability of laws) as well as operational overhead with remote in a completely separate TZ

[mavelikara]

> Maybe a few engineers are making that in SV, but the vast majority are under $200k for salary.

There is a poll on Blind running right now asking "What's your BASE salary?". 13442 people responded, as of right now, and the responses are:

    < 100K  : 11.1% (1493) 
    100-149K: 33.4% (4487)
    150-199K: 34.9% (4699)
    200-249K: 13.9% (1871)
    250-299K:  4.0%  (533)
    300-399K:  1.5%  (203)
    >= 400K :  1.2%  (159)

So ~80% of the people who responded to that poll seem to be making under $200K base salary.

[gnicholas]

Interesting! Is Blind representative, or would it skew junior? I would imagine the most senior engineers wouldn't be as likely to be on platforms like Blind, but I could be wrong.

[mavelikara]

I suspect the sample at Blind is representative.

My guess is that only 20% (or less) of engineers are senior in any geography. The ~20% of the people polled who earn 200K+ would be senior engineers, I’d think. But even of those, 70% are in the 200-250K range base, which matches my experience.

[throw_me_up]

Thanks for the stats!

[ekanes]

It doesn't sound like you really tried to get this funding, but are mildly peeved it wasn't offered? If you want it, go get it. Unrelated: VCs aren't looking for 10x growth in the next 2 years. That's not a VC playbook.

[caseymarquis]

Mostly I'm amused, but otherwise you're pretty on point. As an outsider acquiring VC funding seems very challenging and time consuming. We perform on parity with our VC funded competitors, and 10x growth will make us about 10 times their size. We're pulling this off without the advantages of their funding. I'd imagine we could shoot a little higher than 10x growth if we had millions of dollars to spend. Despite being better positioned with a significantly more effective growth strategy, we are not well connected, and so actually getting that VC money seems like more time and effort than we have on reserve.

[gumby]

If you can do it without them you’re better off. You’ll own more of your business.

Some businesses simply cannot operate that way (e.g. require a large cap ex) and so do need the outside money; for them the trade offs are worth it.

If you already have significant traction and really can grow 10X in two years (where 10X isn’t 200K->2MM) then there should be plenty of investors interested, if you know where to find them.

[dasil003]

Hard to judge your numbers without knowing the baseline since 10x growth means very very different things at 100k MRR vs 1M MRR, but you are right that fundraising takes a lot of energy, and frankly there are strings attached whether you are connected or not. If you are already profitable and have good momentum there is huge value in controlling your own destiny.

[ekanes]

Awesome. You don't want VC, and you don't need VC! Stick to it and it sounds like you'll have a great outcome, entirely under your control.

[hw]

Why are folks so high on VC money, aside from having the network effects of a VC? Wouldn’t you rather get a bank loan if you have access to it without diluting equity?

[gumby]

In the US debt financing is really only available for small businesses or well established ones.

There is an exception: there are specialized debt providers who lend specifically to venture funded businesses. I’m not sure if this is even an option outside the west coast.

[lmeyerov]

Most are: The mantra 3, 3, 2, 2 (annual) adds up to 9x revenue growth in first 2 years, and presumably, higher growth in upstream metrics to feed that . They will invest at 20-100x (and even 1000x+) multiples of revenue if they believe it.

[andi999]

Can you explain the 3,3,2,2 in more detail?

[mavelikara]

https://techcrunch.com/2015/02/01/the-saas-travel-adventure/

There is more recent content written on this framework - Google for T2D3.

[gnicholas]

Ah, good to see the context — which apparently requires having $2M of ARR before you start.

[gnicholas]

This means tripling revenue growth for the first two years and then doubling for the next two years.

[ss108]

What do you mean? What is a VC play?

[leetrout]

The more I see the more I believe connections / networking are the only thing that matters.

[marcus_holmes]

I has always been about who you know, not what you know.

[bryanrasmussen]

That first word reads a lot differently without a t at the end of I.

[smackeyacky]

I feel much in the same boat. I think all the noise that VCs make about demonstrating revenue and traction and all the other rubbish they talk about on their blogs about why they invest in particular companies is more about having convenient excuses for not engaging. It's a list they use for letting you down easy rather than things they are actually interested in investing in i.e. in Australia it's their mates, who they went to school with, what social circle you happen to circulate in. Nothing to do with making a sound business or doing something truly innovative. They'll fund 100 dog shit fintech businesses "revolutionising real estate / supply chain / insurance / banking" by "putting it on the blockchain / reducing friction in finding a provider" etc. None of them are worth a damn yet they hoover up money like a Sydney socialite hoovers up coke. I have given up trying to raise money here.

[peter_l_downs]

Forgive me for shilling, but have you taken a look at Pipe or any of the other revenue receivables companies? If you have contracts with customers, Pipe can often help you sell the future value of those contracts to investors in exchange for cash today, without needing to know the right VC or spend two months sweet talking a bank. I'm an early employee and therefore a bit biased, but I'd be curious if we can work for your use case -- our whole goal is to be a growth partner to healthy businesses. Feel free to email me peter @ pipe if you'd like to get in touch, or check out our home page https://pipe.com

[ensemblehq]

The VC market is based on power laws and hype, much less to do with the actual business fundamentals itself. PE might be more suitable as a funding option for businesses that are stable and have demonstrated decent (but not astronomical) growth.

[gumby]

Not sure what you mean: VC is a small corner of the PE market.

Are you thinking of a VC crossover fund or late stage only fund?