Using own startup capital or using outside investors?

[slighted]

Investors can be annoying af. We don't have any but the resturant I work at does. They don't understand the resturant biz. Not my company though so I don't care.

Agreed, but when you have skin in the game, you'd want to make sure everything is alright. Very tricky, especially if you willingly choose investors who don't know about a specific industry/sector.

First L was investing in a restaurant.

Sad, but true.

 

[mplsdunk]

Investors can be annoying af. We don't have any but the resturant I work at does. They don't understand the resturant biz. Not my company though so I don't care.

Agreed, but when you have skin in the game, you'd want to make sure everything is alright. Very tricky, especially if you willingly choose investors who don't know about a specific industry/sector.

First L was investing in a restaurant.

Sad, but true.

Really is a stupid investment for them. Luckily for them we're savages in the kitchen but they didn't know that going into it... Just idiots with money but we'll take it. I will not deal with someone like these two investors though. I don't have the patience for that.

 

[Fong$tarr]

but they have a ton of monthly active users and a model that can be monetized. so you can get around the lack of profit in the interim by that user base and intention to monetize in the future. regardless, snap chat is a bubble that will burst just like yelp has slowly deflated.

Pretty much. I don't see how people can't see this is a bubble. All these kids getting into the tech industry has to know they will only be there for a short period of time. Even doing a start up is such a big gamble. Your product could be perfect but if there are no users, you are just one of the many app companies that are struggling out there. I knew so many people working at Zynga here in SF thinking they will be set for life working there. Almost all of them got laid off and shares are just crap. Zynga will eventually die and so will many other companies out there. It's just a matter of time.

 

[trojanrock]

I have experience in both and my sentiment has evolved (between bootstrapping and raising VC/outside capital) through the years and it is really a case by case basis dependent on your personal financial situation, goals/vision, the valuation that you can get, growth needs, etc. 

I started an import/eCommerce business in college (soph/Junior) and pretty much bootstrapped the whole operation because I was a student and didn't have much expenses.  Since importing is a capital intensive business,  I sold my jordan collection, maxed out my credit cards, made some creative deals, and all the money I made from internships and work went towards buying inventory.  Didn't really take any money out, and lived like a college student as a college student and a few years after.  Control was very important to me and I knew I would be much more motivated if I own more of the company so I had no desire to share equity.  I would rather grow slowly and gain more shares than grow faster and lose share/control.  I had a friend that started a few years earlier than I, grew faster, but had to give 40% of his company away.  He didn't regret his decision, and I didn't regret mine.  So it worked out for both of us.  So flash forward about 7 years, and now I am able to own the company 100%, have full control, and can probably retire.  It wasn't easy but wouldn't have changed a thing.

1-2 years ago, recruited and built a team of partners for a new start up idea.  We went the crowd source route on Kickstarter and raised about 1/2 a million dollars on one of the brands/products.  That is probably one of the most effective and cost efficient way to validate your idea/product/brand.  Potentially may launch another campaign this year for another brand.  We didn't have to give up any equity and able to pre-sell/acquire customers/build brand, etc.  Now that we are in the post-kickstarter phase, we are considering raising an angel round or Series A even though we are able to sustain the business through cash flow.  Reason being?  The market is so frothy and valuations are astronomical for pre-revenue/unproven business that we should raise a good amount base on our track record and "projection" It's almost like free money assuming you have the team, growth/business model, and a good story of how disruptive your business is. 

I would personally recommend bootstrapping until you are in a position to scale, which means that you should have at least a minimal viable product, solid grasp of your business model, a solid team with technical/business/marketing expertise, and a solid plan for growth based on track record/hypothesis. 

 

[johnnyredstorm]

KING will probably buy ZNGA in a take under. My guess. ZNGA is deadweight either way.

YELP will be bought by someone soon. They can't stay on their own for much longer. For what price, Idk, to me that's a really overpriced piece of **** even at these levels.

Pandora is an interesting one, but I think eventually it gets bought out.

Snap Chat, while it has some big money in it (Yahoo and Ali Baba) I just don't see how that is anything more than a fad.

With FB, you have a brand, Oculus Rift and a genius CEO with a vision for the future. With Twitter, you have one of the best resources for news/education/entertainment/etc. if you know how to use it correctly. I'm on Twitter all day long and I get the most out of it because I follow quality people/traders/reporters.

A lot of these tech startups nowadays are bubbly. Now I wasn't old enough to really grasp the original tech bubble, but from reading and talking to people that traded during that time, there's some similarities with the two on a smaller scale.

Uber has a $40 billion valuation....a little excessive, no? Great product, solid growth potential, but that's a bit rich. I won't call Uber a bubble, though, since it at least offers a tangible service.

If you're gonna invest in a tech company you need to ask yourself: Is there a vision? How easily can it be monetized? How brilliant is the CEO? Does it offer a tangible good/service? Is it just a fad?

Check out SharesPost and take a look at some of these companies you can invest in on the private market. How many do you think will actually have a future out of the 100?

http://sharespost.com/private-market-insights/sharespost-100-list/

Tell you one thing, I wanna own some Space X but I don't have enough capital to get them to give me shares. They turned down my request for the few hundred I wanted. And I only want a piece because of Elon Musk—an established CEO with a brilliant vision.

 

[suburbanguy]

That Dame interview though...

Launched my first venture technically 1st Qtr of 2014, but truly got it off the ground just a few months back. As of right now, it's solely my very own capital being put into the business itself...a little scary since we just closed on a home in the fall of 2014. Because I've been designing websites since I was in college basically, I was able to eliminate the overhead costs with that...for the time being of course. So I'm sticking to using my own $$$ at least until I turn a consistent profit because I don't want to answer to ANYONE other than the clients and members that I serve.

The whole point of a startup/small business is being your own boss and becoming self-made. I still work my 9/5 for a healthcare company and will do so until I reach a certain profit/loss margin with my own company. If that takes 15 years to achieve or 5, so be it. Hoping for the later of course. I've said this since college, by the time I turn 40, I do not want to work for a company that is not my very own. Seriously. I'm blessed that even though I have a demanding 9/5, I have so much autonomy with my schedule that allows me to leave the office early when need be, take PTO without approval, etc. I left Wells Fargo last year to be able to have that clout with the new 9/5 company. True blessing y0.

 

[slighted]

Launched my first venture technically 1st Qtr of 2014, but truly got it off the ground just a few months back. As of right now, it's solely my very own capital being put into the business itself...a little scary since we just closed on a home in the fall of 2014. Because I've been designing websites since I was in college basically, I was able to eliminate the overhead costs with that...for the time being of course. So I'm sticking to using my own $$$ at least until I turn a consistent profit because I don't want to answer to ANYONE other than the clients and members that I serve.

The whole point of a startup/small business is being your own boss and becoming self-made. I still work my 9/5 for a healthcare company and will do so until I reach a certain profit/loss margin with my own company. If that takes 15 years to achieve or 5, so be it. Hoping for the later of course. I've said this since college, by the time I turn 40, I do not want to work for a company that is not my very own. Seriously. I'm blessed that even though I have a demanding 9/5, I have so much autonomy with my schedule that allows me to leave the office early when need be, take PTO without approval, etc. I left Wells Fargo last year to be able to have that clout with the new 9/5 company. True blessing y0.

Lesson to learn: always have a side gig that has the potential to increase your cash flow.

 

[sixfootnathan]

try to build capital yourself, 2nd choice is get a small loan from the bank but be sure you can pay it off somehow

last resort is reaching out for investors and thats only if/when their network extends yours

 

[fontaine]

try to build capital yourself, 2nd choice is get a small loan from the bank but be sure you can pay it off somehow
last resort is reaching out for investors and thats only if/when their network extends yours

No.

Dame dash really got y'all tweaking. Lol

 

[flyny]

Dame Dash got everyone on NT thinking they could be a businessman.
Dudes could barely put a well thought out sentence together but suddenly everyone working on a start up.

 

[Xennial]

KING will probably buy ZNGA in a take under. My guess. ZNGA is deadweight either way.

YELP will be bought by someone soon. They can't stay on their own for much longer. For what price, Idk, to me that's a really overpriced piece of **** even at these levels.

Pandora is an interesting one, but I think eventually it gets bought out.

Snap Chat, while it has some big money in it (Yahoo and Ali Baba) I just don't see how that is anything more than a fad.

With FB, you have a brand, Oculus Rift and a genius CEO with a vision for the future. With Twitter, you have one of the best resources for news/education/entertainment/etc. if you know how to use it correctly. I'm on Twitter all day long and I get the most out of it because I follow quality people/traders/reporters.

A lot of these tech startups nowadays are bubbly. Now I wasn't old enough to really grasp the original tech bubble, but from reading and talking to people that traded during that time, there's some similarities with the two on a smaller scale.

Uber has a $40 billion valuation....a little excessive, no? Great product, solid growth potential, but that's a bit rich. I won't call Uber a bubble, though, since it at least offers a tangible service.

If you're gonna invest in a tech company you need to ask yourself: Is there a vision? How easily can it be monetized? How brilliant is the CEO? Does it offer a tangible good/service? Is it just a fad?

Check out SharesPost and take a look at some of these companies you can invest in on the private market. How many do you think will actually have a future out of the 100?

http://sharespost.com/private-market-insights/sharespost-100-list/

Tell you one thing, I wanna own some Space X but I don't have enough capital to get them to give me shares. They turned down my request for the few hundred I wanted. And I only want a piece because of Elon Musk—an established CEO with a brilliant vision.

Snapchat has got the younger demographic.  Uber has potential to do so much more than give rides, and Travis Kalanick is ruthless.  

 

[dman14]

these investors are gonna wise up and stop letting these companies burn through their money
i think the bigger companies like fb/uber will survive but the smaller ones...good luck
seen this happen already with the dot-com

 

[Xennial]

these investors are gonna wise up and stop letting these companies burn through their money
i think the bigger companies like fb/uber will survive but the smaller ones...good luck
seen this happen already with the dot-com

You can't compare to the 1st dot-com boom.  These companies are way different, Airbnb is not Pets.com

 

[dman14]

these investors are gonna wise up and stop letting these companies burn through their money

i think the bigger companies like fb/uber will survive but the smaller ones...good luck

seen this happen already with the dot-com

You can't compare to the 1st dot-com boom.  These companies are way different, Airbnb is not Pets.com

how many food delivery startups are there popping up? what makes them different from a company like kozmo? i've worked in tech briefly and our company did online gms. the fact that we were able to get 50M investment and not even make a dime

like i said, the bigger companies may survive. airbnb valuation is near $20B. think about that. you dont see the bubble that's formed?

 

[Xennial]

how many food delivery startups are there popping up? what makes them different from a company like kozmo? i've worked in tech briefly and our company did online gms. the fact that we were able to get 50M investment and not even make a dime

like i said, the bigger companies may survive. airbnb valuation is near $20B. think about that. you dont see the bubble that's formed?

Eat Club, spoon rocket, sprig, munchery, caviar, zesty, seamless, grubhub, orderahead, etc.  Airbnb Valuation is half of that $20 billion valuation.  A lot of these startups are not looking to ever ipo, they're looking to get acquired.  Eat 24 cashed out for $134 mil

 

[johnnyredstorm]

if you're only looking to get acquired that's even more bubbly imo. lot of take under possibilities.

 

[dman14]

how many food delivery startups are there popping up? what makes them different from a company like kozmo? i've worked in tech briefly and our company did online gms. the fact that we were able to get 50M investment and not even make a dime


like i said, the bigger companies may survive. airbnb valuation is near $20B. think about that. you dont see the bubble that's formed?

Eat Club, spoon rocket, sprig, munchery, caviar, zesty, seamless, grubhub, orderahead, etc.  Airbnb Valuation is half of that $20 billion valuation.  A lot of these startups are not looking to ever ipo, they're looking to get acquired.  Eat 24 cashed out for $134 mil

that's the thing. what happens when they don't get acquired (a lot of these companies won't) after burning through all their seed money? what is yelp gonna do with their acquisition of eat24?
it's funny, cause when i worked for a tech company, i would joke with a couple co-workers and countdown how much money they got left to spend if they werent getting bought out

yelp burns through so much money hiring/firing sales people to target small businesses. seriously, who actually uses yelp?

 

[johnnyredstorm]

was some chatter this morning that YELP might have a scathing 60 minutes piece soon. idk how true that is.

and snap chat is dominated by people that'll grow tired of using it in a couple of years. fickle user base, i sure as hell wouldnt trust them.

 

[Fong$tarr]

was some chatter this morning that YELP might have a scathing 60 minutes piece soon. idk how true that is.

and snap chat is dominated by people that'll grow tired of using it in a couple of years. fickle user base, i sure as hell wouldnt trust them.

Seriously. Kids are hardly a demographic to be dependent on. One day they'll be all over something and the next day, they'll be over it.

 

[Coromanti]

I think AirBnB and Uber aren't overvalued at all. They can easily become bigger than any discount hotel site because they cater to personal homes as well. Uber is literally the same concept except its people using their cars as taxis.

As for SnapChat i doubt it will last.  They havent cemented themselves yet. They dont have a niche appeal. For example facebook and tumblr at this point have very similar functions except tumblr is more creative, anonymous (unless you choose not to be), and has a very liberal oriented culture.  So though I would personally call them direct competitors with FB or Wordpress and the like, they have a nice set of people who would be attracted to what they do.  Snapchat doesn't have that. Its a passing tech fad that will fade when newer technology comes around.

The only market they probably have truly cornered is the "nudes" market.  And even then screenshots have neutralized that quite a bit.  Also how are you gonna monetize it? snapcash? really?  like wtf. no one in their right mind is passing  money on snapchat.  And you cant really put adds on the product without blocking the screen which defeats the purpose...

There literally is no reason to buy in.

 

[Xennial]

 
I think AirBnB and Uber aren't overvalued at all. They can easily become bigger than any discount hotel site because they cater to personal homes as well. Uber is literally the same concept except its people using their cars as taxis.

As for SnapChat i doubt it will last.  They havent cemented themselves yet. They dont have a niche appeal. For example facebook and tumblr at this point have very similar functions except tumblr is more creative, anonymous (unless you choose not to be), and has a very liberal oriented culture.  So though I would personally call them direct competitors with FB or Wordpress and the like, they have a nice set of people who would be attracted to what they do.  Snapchat doesn't have that. Its a passing tech fad that will fade when newer technology comes around.

The only market they probably have truly cornered is the "nudes" market.  And even then screenshots have neutralized that quite a bit.  Also how are you gonna monetize it? snapcash? really?  like wtf. no one in their right mind is passing  money on snapchat.  And you cant really put adds on the product without blocking the screen which defeats the purpose...

There literally is no reason to buy in.

Why wouldn't they Snapcash be able to do electronic payments just like Venmo?  

 

[johnnyredstorm]

FB is doing the cash thing now. users will be able to send cash to friends. FB is also trying to utilize its users posting reviews on local businesses as well.

FB is a brand with a brilliant CEO that's gonna change the way people communicate with each other/experience tv if he properly uses the Oculus Rift.

Yahoo owns Tumblr, btw, but it's not monetized yet.

 

[mr jordan04]

Dame Dash got everyone on NT thinking they could be a businessman.
Dudes could barely put a well thought out sentence together but suddenly everyone working on a start up.

What good is it to own a business when the person with a boss making more money than you?

Owning a buisness isn't always what it's caked up to be. Most people just see that business owner in their new Mercedes, going on vacation, and spending money. Little do they know a ton of these guys have everything on credit and have just a couple thousand dollars in a bank account, but people would think they have millions.

Many people wanna "be their own boss," but to what extent? To the extent of working 5am-9 pm daily, 7 days a week? To each their own

 

[Coromanti]

 

 
I think AirBnB and Uber aren't overvalued at all. They can easily become bigger than any discount hotel site because they cater to personal homes as well. Uber is literally the same concept except its people using their cars as taxis.

As for SnapChat i doubt it will last.  They havent cemented themselves yet. They dont have a niche appeal. For example facebook and tumblr at this point have very similar functions except tumblr is more creative, anonymous (unless you choose not to be), and has a very liberal oriented culture.  So though I would personally call them direct competitors with FB or Wordpress and the like, they have a nice set of people who would be attracted to what they do.  Snapchat doesn't have that. Its a passing tech fad that will fade when newer technology comes around.

The only market they probably have truly cornered is the "nudes" market.  And even then screenshots have neutralized that quite a bit.  Also how are you gonna monetize it? snapcash? really?  like wtf. no one in their right mind is passing  money on snapchat.  And you cant really put adds on the product without blocking the screen which defeats the purpose...

There literally is no reason to buy in.

Why wouldn't they Snapcash be able to do electronic payments just like Venmo?  

They have the service up and running. I just dont think people will use it enough to make it a valid source of revenue.  It just doesnt fit in with what they're main function is. Also I wouldn't trust it seeing as their primary product was hacked last year when a whole bunch of pics were stolen due to a loop hole in their coding.

FB is doing the cash thing now. users will be able to send cash to friends. FB is also trying to utilize its users posting reviews on local businesses as well.

FB is a brand with a brilliant CEO that's gonna change the way people communicate with each other/experience tv if he properly uses the Oculus Rift.

Yahoo owns Tumblr, btw, but it's not monetized yet.

Yea..trust me..we're not happy about Yahoo buying it. A lot of Tumblr users are expecting to migrate within a year or two once Yahoo starts putting more eyes on the site.

I think FB is smart to add in the money transfer option especially amid declining usage among the youth and the fact that more of their active base is in their 30s and 40s and older.

 

[socalofsd]

There are so many variables to consider when making the decision to use your own money and grind it out or seek investors.

If you use your own money, you reap more financial benefits but your overall risk(failure, lawsuits, overhead) are higher. And you'll be working a lot harder for a lot longer.

If you seek and gain an investor, you're now partners. You may not like their methods, or lack of knowledge in the particular industry you're in but that's something you need to consider before seeking financial support in exchange for equity. And now all your ideas are now OUR ideas and you don't make a move without my approval.

Either way, it's a marathon not a race. Most small businesses fail within the first 5 years of startup b/c ppl don't consider some of the basic factors like long term cost, understanding and accepting that you're going to be putting in a lot more that you'll receive in the beginning, or biting off more than you can chew. Shark Tank on the other hand is the record label, the biz owners are the artist looking for a deal and their ideas are their fans. If they have enough fans they're offered upfront dough. If not they can kick rocks. And they their goals are to make ALL their invested money back + interest for as long as possible. 

Even a place like Youtube is having trouble pulling in revenue and look how it's shaping our culture