asanwal

There are a bunch. I know of a couple but don't know how good/bad they are so don't want to "recommend" anyone. But quick google search of revenue-based funding SaaS should turn them up.

I've heard they generally work like this:

- Will lend you money equivalent to 1/4 to 1/2 your monthly or annual revenue/billings

- Take a % of revenue every month as repayment. Your repayment goes up or down with revenue which is a good feature.

- Take some warrant coverage as well (1/3 to 1/5 of the loan value)

Some will want to be hooked into your payment solution to take money right as it comes in but as we've not done it ourselves (have only looked at superficially), I'm not sure if that's all that common.

For B2B SaaS startups who can customer-fund to traction, this is the way of the future IMO. Unfortunately, the revenue-based financing guys aren't doing a great job marketing themselves primarily cuz their funds are quite small so far.

Hope that helps.

Great advice and solid post.

Some data on how long companies typically wait between Seed and Series A rounds. The median is 349 days so raising for 18 months is smart.

https://www.cbinsights.com/blog/days-between-funding-rounds/

A couple of other notes:

- Might want to look at revenue-based financing. More of a debt instrument but if you can't raise or are getting bent over by equity investors, it is an option.

- I wish the funding is required to grow quick meme would die. Our company is revenue funded and growing at a very good clip. If you can make your customers your de facto "investors", life can be very good.

$50M earnout just to founder/CEO if certain milestones are met. Is that size earnout typical in deals of this size?

Curious.

NYC --- CB Insights (www.cbinsights.com)

We're looking for many positions (http://www.cbinsights.com/jobs). A few are listed below:

- Full Stack Dev - http://cbi.vc/1wQCbtc

- Tech Industry Analyst - a Nate Silver of Tech - http://cbi.vc/1wQCcxj

- Digital Marketing Analyst - http://cbi.vc/1tLLZFO

- Inside Sales - http://cbi.vc/1tLLVGi

We're revenue-funded (no angels, VCs) doing millions in revenue. Received a grant from the National Science Foundation but otherwise growing out of cashflow.

We're using data to predict emerging technology trends, breakout private companies and corporate strategy.

Hard problems, awesome team, real company. Would love to talk. My email is in my profile or email career@cbinsights.com

So this guy is single-handedly taking credit for establishing LA's tech scene aka Silicon Beach? I wonder what others in LA think.

We work with a lot of economic dev groups and a hashtag has never come up in the top 100 things of importance. Not sure how access to capital isn't part of the equation?

Nice simple and seemingly incomplete formula for building startup hubs. Prob does sell a lot of consulting however as frameworks like this make hard problems sound easy to solve which is always alluring.

Good stuff. A few other suggestions perhaps in different verticals and some that fit within your current categories.

Marketing

- Inbound.org www.inbound.org

- Growth Hackers www.growthhackers.com

Research, VC, Startup Data

- Dan Primack's newsletter (http://fortune.com/tag/term-sheet/)

- PE Hub www.pehub.com

- CB Insights http://www.cbinsights.com/blog

Blogs by VCs

- Fred Wilson (Union Square Ventures) – avc.com

- Brad Feld (Foundry Group) – feld.com

- Mark Suster (GRP Partners) – bothsidesofthetable.com

- Bill Gurley (Benchmark) – abovethecrowd.com

- Ben Horowitz (A16Z) – bhorowitz.com

- Chris Dixon (A16Z) – cdixon.org

- First Round Capital Blog - firstround.com/blog/

- Hunter Walk (Homebrew) - hunterwalk.com

My company, CB Insights, is involved in this industry so folks who join our team are given the following on-boarding reading list which may be useful - https://www.cbinsights.com/blog/tech-reading-list/

Look forward to seeing how your side project evolves.

If you want the pdf, feel free to send me an email, and I'll send it to you. (email in profile)

Note: I didn't downvote you.

We use an ESP to send the emails and sometimes, the PDF goes instantly and sometimes upto an hour. If you didn't receive for some reason, feel free to ping me directly. Email in profile.

Pud - bring back FuckedCompany. Based on all of our data, it's about that time.

I'm commenting about post we did here - https://www.cbinsights.com/blog/startup-failure-post-mortem/

We're not affiliated with the book.

Hey Jonathan - Anand from CB Insights here. Thx for the comment and for writing a great post-mortem.

One distinction - we didn't republish your post. We linked out to the original post you'd written and quoted a few lines from it which we thought were particularly telling about the reasons behind & process of shutting down.

That was the format we took throughout the post. Original link and a few line excerpt.

Hope that makes sense.

Most of these, given the order, look to be from our original compilation of startup failure post-mortems. We've compiled 101 to date which you can see here.

https://www.cbinsights.com/blog/startup-failure-post-mortem/

Perhaps more useful, we also sifted through and analyzed each post-mortem to identify the top 20 reasons for startup failure. The biggest reasons founders have cited has not been running out of money or the economy but building a solution looking for a problem.

Entrepreneur-friendly is big focus for many investors these days. Witness Techstars equity back guarantee as just one example.

Felicis, based on its exits, is a top-tier micro VC (if you define it as <$100M funds) so this may force the hand of others.

Of course, there are those that feel that "voting along is a unrealistic commercial move that negates the investor's added value to his/her LPs". [1]

[1] From comments here - https://www.cbinsights.com/blog/founder-vs-venture-capitalis...

Max - appreciate the feedback. What other data points / insights would make it more useful? We've been doing these teardowns for various elite firms (Sequoia, Accel, USV, etc)and the reaction has been very good.

In fact, Fred Wilson of USV did a teardown of our teardown - http://avc.com/2014/08/tearing-down-the-teardown/

Let me know. Feel free to ping me directly as well at asanwal(at)cbinsights(dot)com.

Thanks.

I think the point Tren makes about dilution and how the fancy office and Aeron chairs which are funded by investor capital all can be translated into equity given up is spot on. Think founders often forget that especially in our current culture of fundraising being celebrated as a sign of success.

As I read Tren's example, it seemed insanely short-sighted especially when the goal should be not just maximizing the value of the equity but maximizing the amount retained by the people building the company on a day-to-day basis.

CB Insights - http://www.cbinsights.com - New York, NY (full-time)

VP, Engineering - http://cbinsights.com/jobs/vp-engineering

Director, Online Marketing - http://cbinsights.com/jobs/director-online-marketing

Director of Research, Editor-in-Chief - http://cbinsights.com/jobs/director-research

Several other opportunities here - http://cbinsights.com/jobs

We're a revenue-funded company (aka bootstrapped) doing seven-figure revenues and planning to double our team this year.

Awesome team tackling interesting problems. Our office also has a gong.

Your point about fail louder is probably right. We dug into data after Sam made this statement and the data suggests there is not much of a relationship b/w initial funding and successful outcomes.

Data here -- http://www.cbinsights.com/blog/funding-round-exit-valuation-...

New York, NY - CB Insights (www.cbinsights.com)

We're looking for:

- Tech Industry Analysts (think Nate Silver meets tech)

- Data Analysts

- Front-end devs

- Machine learning engineers

- Director of Data Products

We're bootstrapped and will be 30 people by the end of this year. Working on hard problems to assess the health of private companies using public data.

Recognized as one of NYC's top enterprise tech companies.

Most of the job postings here - http://www.cbinsights.com/jobs

I used to work at Kozmo.com during the dot com gold rush. And I remember our escalating battle with UrbanFetch.

Economics went out the window as it was all about customer acquisition and beating and coming up with better deals for customers. Ultimately, the only person who made money from our ridiculousness were bike messengers and other service providers (real estate brokers)

A lot of what I'm seeing with Uber & Lyft reminds me of that time. Some of my observations on it here - http://4044walnut.com/uber-verus-lyft-kozmo-urbanfetch/

I'm skeptical Box can course-correct.

They are in a hyper-competitive space with margin pressure and also seem to have pretty poor SaaS fundamentals (high Customer acquisition costs and illusory LTV)

Fred felt they could slash their cash burn to put the company on better footing but that kills the growth story that they were pitching to public market investors.

The good news in all of this is that it counters to some degree the notion of a bubble as companies with crappy fundamentals are not able to IPO.

The Business Social Graph

It maps relationships between companies, their investors, acquirers, competitors & customers/partners.

http://cbinsights.com/marketing/img/screenshots/business_gra...

I used to work in corporate VC and now I'm co-founder of company that tracks their investments.

Some thoughts:

Corporate VCs are an important part of the ecosystem [1] now as traditional VCs have less money so corporates are helping to fill the gap. Like it or not, if fundraising, they may be in your future.

In good news, on average, they write larger checks [2] and may be less valuation sensitive (esp since they're often focused on a double-bottom line, i.e. returns + strategic benefit).

Things I'd look for:

* What's the quality of their investment syndicate partners? Do they invest frequently with smart money VCs?

* How long have they been doing it? Some corp VCs are fairweather VCs, i.e., they jump in when the market is hot but then bail. This can also be good as these guys tend to overpay

* How painful was it to get the deal done? If the process to get investment was super painful, realizing the "strategic benefits" will probably be harder.

* Have they had successful exits? Success persists in VC. If you're good, you tend to stay good (and vice versa)

With regards to being good or bad, they are a heterogeneous group. So just like with most things in life (VCs, angels, plumbers, recruiters), there are good ones and bad ones.

[1] http://www.cbinsights.com/blog/tech-corporate-venture-capita...

[2] http://www.cbinsights.com/blog/corporate-venture-capital-q3-...

Thanks. I've found having a kid focuses you a lot. They can't eat Ramen noodles :)

Cool. Thx. Will check out and update.

Someone also emailed me and suggested the founder of Balsamiq. FYI.

If I looked at these #s through the lens of a SaaS business, they sound terrible.

1200 leads (pipeline deals) >> 10 closed customers (investments)

A VC wouldn't invest in a SaaS business with those metrics and the SaaS business prob wouldn't be around for long with those metrics. But somehow, this is a good thing in VC. It's good marketing - "we are harder to get funding from then it is to get into Harvard". But the process is ultimately terribly inefficient (and non-scalable) for all parties.

The data on financing to the space referenced in para 2 is here for those interested - http://www.cbinsights.com/blog/wearable-tech-vc-2013

Glad you found it interesting. I'm one of the co-founders of CBI, but the heavy lifting on this analysis one was done by our data team.

These are good questions but unfortunately, they're hard to answer in a data-driven way. Essentially, there is no way to discern from data your points 1 and 2 as it requires judging founder savvy or VC deal flow quality. While both are plausible, it's hard for me to say conclusively either way.

The data doesn't really support the signaling risk narrative.

http://www.cbinsights.com/blog/trends/seed-venture-capital-f...

It's an idea smaller micro-VC funds have propagated as a way to scare startups from taking seed money from larger multi-stage VC investors.

Thanks and yes, we get that a lot.

We're not religious about bootstrapping. We may raise funding at some point but want to do it when we find the perfect partner(s) whose interests are aligned with ours. Ultimately, we think bootstrapping and building the company up to be real gives us leverage down the road, i.e., we're not raising money to survive or test a hypothesis but to put more fuel in the tank so we can accelerate growth.

Because of what we do, our 1 requirement is that they have o have been a customer of the product. We need believers :)

We'll see. Right now, the focus remains squarely on the product, customers and the team. Thanks for the kind words.

We bootstrapped our SaaS company (www.cbinsights.com) and while profitability is not a goal as we reinvest any excess back into hiring, technology, etc, we're doing 7-figures of annual recurring revenue.

We launched 4 years ago with 3 folks and should be 20 by this summer assuming we find the right folks (we're 15 now). Just hired our first biz dev guy a couple of months ago. I'd sold the first couple of million in subscriptions. While I'm not sure if we should have hired a BD guy sooner, my co-founder and I did feel like we needed to understand the sales process first.

The good news is that I'm pretty far from a natural salesperson so if we get this product into the hands of someone who really knows how to sell, we'll be on an even better path. That said, I brought a really solid understanding of the product to sales calls which def helped us.

It's been a great and rocky road. We're about to reach escape velocity I think, and I'm really looking forward to that.

As an aside, I try to convene a group of bootstrapped SaaS entrepreneurs for lunch/dinner periodically to exchange ideas/tips/help one another so if you fit the bill and are based in or near NYC or going to be in NYC, please reach out. (details in profile)