[crdb]

We were rejected last year after doing a very late application and probably because we hadn't quit our jobs nor built a prototype, or even lived in the same city (I hired my co-founder on a remote team before, and took him with me when I left). We probably ticked all the reject boxes.

We kept pitching other investors for a while, then quit and bootstrapped the prototype by taking on consulting work. Pitching was hard and most APAC investors just wanted too much control for our comfort. Bootstrapping was actually easier than we thought, so when we got term sheets from local investors, we turned them down and kept getting consulting gigs (mostly data warehousing work - boring but necessary).

5 months later, and I think the product has gone into much more interesting directions without time and investor pressure than it might have otherwise, whilst we are closer as co-founders having worked together on the gigs and been through a few "client bumps". Some of the work actually helped clarify our own data model and understand our target market better.

It's quite freeing not to have a boss at last; I'd say that was the main factor in not taking money (the banker who thought he might "quit the bank and join you guys to help out with management" was particularly scary). But YC's terms - even excluding all the advantages that come with the network, coaching, reputation etc. - were by far the most generous and founder friendly, especially in their lack of protective provisions.

Not sure what this thread is for, but throwing the story in there since there are so few tales of bootstrapping and it's discouraged by PG in one of his money essays (he argues that it delays the launch). I think our story is most relevant for non-US-based founders who cannot as easily tap into the Valley money, and for more experienced founders who can command a high enough market value to make part time work.

[tyang]

Exactly. $1.7M premoney valuation and a chance to get advice from PG and others who have helped 6 unicorns come about and, per @sama, 22 others who can get there is pretty darn good, IMO.

[crdb]

On top of that:

- the brand is enormous. All my funding discussions have been warm intros or a network I built myself, slowly (same for client work with one exception). Saying "we're YC" enables cold emails to actually get read. Same as having candidates to a job ad from MIT, Stanford, Harvard... it gets them a phone call and some attention. It helps not just with funding, but with hiring and even B2B sales (I personally looked at Heap's product for a client and talked to their sales team, only because I heard it was YC funded).

- valuation, according to a better connected and experienced friend, jumps around 4x post-acceptance on any future funding rounds. Related to first point. If our valuation had gone up that much, the maths wouldn't work out in favour of bootstrapping.

But what makes it really special is the lack of control. For example, I went into the final stages (10+ meetings, legal docs being drafted) of a $400k round... for 30%, with veto rights on practically everything and someone injected into management. It was tempting, especially pre-launch, but would have guaranteed no further rounds and misaligned incentives between us and investors.

Even the <10% offers wanted things like vetos and RFR on any further funding round, that removed virtually all control we had, and would make it a lot harder to raise an A round when the time came.

This, I think, was the major innovation brought about by YC. We're far from the days of Georges Doriot and DEC...

(As an aside Terrence, since you're reading this - you American angels should pop over to other countries some time, valuations are much friendlier!)

[tyang]

Great points, thank you.