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Comment by js4 | Hacker News Reader

If you really have product/market fit and know how to find and sell to customers most of the risk is gone.

Why not use debt?

The thing to be worried about is competition.

Could someone replicate your product/distribution exactly (which means they have product/market fit) then go raise a ton of money and crush you?

Wow, yeah, this. It is the main reason I want to start taking on funding. At the same time, there are plenty of companies that do that and still don't succeed. I believe (perhaps foolishly) that a handful of motivated, intelligent people can slum it for a bit can accomplish much more than a colossal heap of money can (and whatever trappings come along). I just sometimes get irked by all the money being thrown around on. . . well, I am not all that sure some times. Anywho, I digress. Thanks a bunch for the advice.

Like personal owner debt? I.e. mortage up the house for 300k and fuel some growth?

Let's compare VC to Debt for owner capital

Funded via VC:

* Startup Wins Big: You get 30-70% of big money

* Startup Fails: Walk away with a fresh slate

Funded via personal Debt:

* Startup Wins Big: Get 100% of the big money

* Startup Fails: Declare personal bankruptcy, perhaps lose house, perhaps unable to buy a home for 5 or so years, lose any physical assets

I am a big fan of don't get VC if you don't need VC. But for many many normal founders without a huge pile of cash in a trust fund or from a previous exist, the VC debt looks a whole lot nicer than the person debt story.

No, that would be insane. That's what LLCs are for.

Small business loans and private lenders exist and are usually accessible if you have profits and/or business assets.

You aren’t getting non personal guaranteed loans as a tiny startup with no assets

Most lenders require a personal guarantee even if it is a business loan.

These Win / Fail outcomes are not nearly this binary in reality, so I don't think this is a very helpful comparison. There's a wide distribution of "Winning" and "Failing", and while these extremes do exist, they're actually both outliers (most businesses don't win "big money", also most founders don't lose their house when they fail).

I have pretty decent credit so this is something I have quite recently begun to look into as the rates seem decent enough. Anyone with experience I would love to hear from.

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