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Comment by il | Hacker News Reader

I think it's really cool that Web 2.0 entrepreneurs actually want to build businesses that have a clear business model, sell a product that people want, and have a clear path to long-term, sustainable profitability.

That said, I don't know how well this type of business correlates with raising such a large angel round- are all of those angel investors on board with that plan?

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what they say in public doesn't always match what they say in private.(i.e. just take the whole demandmedia "we are super profitable...HONEST!")

in private, I'd bet that they are looking to build this up for 4-5 years, then sell it off to intuit.

There is middle cases to where they build it up for 4-5 years and most of the investors cashout to a big player like intuit buying a sizeable chunk.

I wouldn't immediately assume Intuit is automatically the most likely acquirer.

They seem the most likely....who else might be in the mix? A large progressive bank?

Inuit already bought Mint, why would they need inDinero? Mint has way more users, and already does the hard part - syncing with banks securely and categorizing expenses. Mint/Inuit could add a cash-flow module to their product and be done with it.

Depending on how Jessica decides to position it, I could see it exiting to a buyer like Freshbooks, where the combination product makes a suite of small-business finance tools. Like a mini-Microsoft Financal-Office (except in the cloud).

Seems strange to say that investors would be unhappy with having a clear business model, selling products people want, and having a clear path to long-term, sustainable profitability!

(Some) investors dislike the above when it comes at the expense of growth, and I think InDinero will be also focusing on growth.

If you're saying that investors would be unhappy that InDinero is not planning to flip in a couple years - if anything there are many more investors who dislike companies who seem designed around selling early instead of shooting for the moon (ie, an IPO).

Yeah, I was wondering if investors knew they were in it for the long haul when they were investing.

The secondary markets for great companies are very liquid -- it's not an issue today for investors.

I ask this question out of ignorance. An angel investment in a startup would seem to me like a very illiquid asset. Do they just go down to a cocktail party and sell away their "angel shares" or is there some sort of structured market for this sort of thing?

Not that I really know either, but I found this useful:

http://www.kalzumeus.com/2010/09/02/new-trends-in-startup-in...

“You owe me $20, with interest. Don’t worry about paying me back right now. Instead, next time you raise money or sell the company, we’re going to pretend that I’m either investing with the other guy or selling with you."

So if indinero takes more money, the early investors could sell their hypothetical convertible notes to the new investors.

Typically you would not be selling the convertible note: that second clause is for the case where you sell the company without taking additional outside investment, in which case the convertible note owner participates in that sale as if they had an equity interest.

Angel investments are generally illiquid, modulo "you invested in Facebook or some other company which is so hot there is a secondary market and a term sheet practically causes fusion of surrounding hydrogen atoms."

There is a structured market, and most angels are allowed to sell into future rounds (in addition to being able to sell more generally, with minimal restrictions usually being a ROFO and No Competitors clause)

There is certainly a structured market (secondmarket) for this. Also, many angels are now selling their shares in later stage financing. So its certainly more liquid now than a few years ago.

Jess being in for the long haul doesn't necessarily mean investors are in for the long haul. They can get bought out in subsequent rounds and there's always the option of an IPO. Intuit is itself a nearly 30 year company (1983) and I highly doubt the original investors are still around.

Do you have any evidence that investors want short-term returns?

This is a common misconception, and I'm not sure where it stems from. Investors would MUCH rather back Facebook than Mint, that is, investment dollars in a long-term success that becomes essential to the industry goes much further than a product that's acquired relatively early in the company's life.

If they're not, she's certainly put them on notice. Interesting.

What if they already had dozens of paying customers by the time they were raising capital?

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