SeedRamp(seedramp.com) |
And want to invest with a $1M valuation (http://goo.gl/2686da).
To my mind, not so interesting. Sounds more like shark loans
Nobody likes to work for sharks and it definitely sounds very aggressive, not the type of people that you would want for long term visioned business startups.
VCs are looking for one thing: return on their capital. They are not your friends.
"Can't you all just run your startup companies and make 220,000 a year like me?"
Some people are overvalued by the market, working in a good space, being attractive and having "reputation" or a lot of online prsence, fame, etc.
It sounds like you personally have a lot of accomplishments, old = "wisdom", and are attractive as a consultant. You have experience doing a lot ofthe things people pay you to consult on but they aren't willing (or you are not) to come on board full time.
tldr, some people can't just make large salaries, but they would take worse terms to bet on themselves.
Edit: to be clear i am being sincere here. If you are older and really really good at what you do, and have a lot of reputation thats great. There is ageism in tech for sure, they want young hungry devs AND older experienced architects to come in and provide advice.
So it is a doubleedged sword, there may be less opportunity for a 50-60 year old programmer to join the team, but opportunity to consult. There also may be a log of spots for a 20 y/o programmer to join, but no room to come in and provide sftwr engineering advice.
I am 26 and a so so dev. Would I take a shitty deal? Depends how shitty. Id give up 10-15% at poor terms, or I would think about it at least. It may end up being less risky than taking a while to build a prototype and trying to build a funding and legal structure with a SAFE and cryptocurrency and other shit.
So yeah, I am leery of deals like this main post, but there is a part of ne that would love beleive it would ve possible to cap up quick and painlessly and with a quick call and application. Terms would be reasonable and I could start working faster, etc.
Hiwever, it would be hard for me to believe that...
The original, year 1 YC program was targeting people who genuinely would struggle to get $6K (at the time) because it was mostly aimed at students.
When I was a student I couldn't afford text books, so the idea I could get $20k together by consulting was laughable.
Now I'm positively ancient the consulting route isn't too hard to do.
I think the bigger issue here is that $20k is insignificant. If you've already got a full-time job and you're working on this venture as a side-hustle you don't need the $20k. If you're working on this venture full-time and it's your only gig you'll need more than $20k. So I'm not entirely sure where this model fits.
Depending how hard I/you try to find consulting work, you can totally make 20k, of course it depends on the month. The best part, is that you can write off business expenses on your taxes. So, you pay significantly less (if any) tax on that 20k.
I've spent 20+ years helping people designing, build & move entire datacenters. Migration of one or two servers is easy. It's exponentially harder when you have to move hundreds or thousands of servers running many apps with minimal downtime.
Still not sure how I ended up specializing in this but there was a need and still is. Turns out a lot of that experience is still applicable for customers moving to the cloud =)
Are there many resources like this anywhere else out there?
So far, they've rejected every single startup except one, which they gave just $5k to.
The idea on paper sounds like a clever way to piggy back for a relatively low risk level on a lot of startups...and as much as contrarian thinking is pontificated, you have to wonder if there is a reason things are done the way they are in the first place.
I am not saying you can't disrupt an industry, but you have to first understand why the industry does it the way they do in the first place. It's not like a bunch of dumb people got together and said lets do this thing as backwards as possible. I have never met an idea for disruption that didn't at some point come to realize that there are often forces beyond control at play and it is very rare to be able to actually disrupt an industry just because intellectually it seems backwards.
I think it's time to dial back the disruption rhetoric and focus on the value creation as defined by people willing to pay more than it costs to make, sign, seal, and delivered.
If so, all power to them. They obviously know something others don't.
Not necessarily saying it's bad. Payday lending to poor consumers is scummy because you're addicting them to high interest debt, but corporate finance is different. A SAFE is not debt -- at least not to an individual -- and this might rescue a few good companies with a high enough probability that it would be worth it to the investors, founders, and economy as a whole. You're gonna take some dilution but if you believe in your venture and persevere then... well... as they say it's better to own 1% of success than 100% of failure. :)
There's a dissolution clause that requires payback before any other distribution of company assets. So, not an individual debt, but effectively the same if there are any assets.
This is pretty clever though, can't wait to see where it goes.
This particular thumbnail caught my eye...ouch: http://i.imgur.com/03f63JZ.png
I skimmed the agreement, but I don't quite know how to interpret it.
TLDR: No way to tell what they might get for their investment until they offer you a valuation cap (and even then it still depends on the future valuation put on the company by the next equity round).
Why do I feel like this is a leading indicator of imminent bubble collapse?
I actually think this model fills an important need, but it's kind of a scam as is.
http://www.yegor256.com/2015/12/16/investors-are-too-scared....
'The "Valuation Cap" is [Cap]'
All of the important info is "fill in the blank" :)
Gapjumpers, Stripe-o-Auth, and analytics viewing requests should be the defacto standard for quick due diligence in the early stages.
Hell, give email access to the investors if it's not delicate info. "o-auth"-ing in to see metrics etc,,, I think that will be the future of VC investing. Also, more of the 1-10 founding team will have much more equity.
I'm sure if something legit started brewing they would shut off the camera and head to the fine dining spot.
Though maybe what you are saying is that the VC who wins is the one who invests in a product that makes being a VC obsolete?
Otherwise, I completely agree.
Most of these startups could have the operating costs of the following:
1) $100/mo good, solid servers 2) $500/mo freelance illustrators and designers (if that) 3) Time of the founder (if he's a programmer)
I know because I've made plenty of web apps for that. The difference is the programmer's time was mine, so I got paid.
5k-20k investments almost seem silly... Why not just bootstrap it yourself?
You don't know everyone's situation, why do you assume to?
Later on, sure, you'll have to raise more money. Immediately, even $1k can help you a lot depending on your situation...
Why not let the market take care of it?
It's absolutely awesome that they post all their interviews, such a great idea.
As I noted elsewhere, the devil is in the details and the SAFE could be a good deal or an awful deal depending on the relationship between the SAFE's valuation cap (which is left blank and would be negotiated with each company) and the eventual pre-money valuation at the equity financing. I'd be surprised if SR is giving very high valuation caps.
I couldn't watch any of the videos for more than 2 minutes because of the rambling, and the hosts "Uh huh. Uh huh." responses to irrelevant details from the applicants.
Interesting idea, polish the execution.
What could you possibly do with 20,000? Buy Adwords? Hire someone for 3 months? Does it lead to more people investing?
Looks like they are just spraying 20k across the board in hopes to find something that sticks.
You could easily get $20,000 to invest by working or even asking your family or friends. Then you would have a far better chance of raising money with a viable business that you won't have to get into bed with someone looking for hockey stick growth that ultimately kills startups.
Their goal, for better or worse, seems to be to circumvent the relationship-building part of fundraising at the earliest stages of startup development.
As far as the terms - I didn't look it over closely to see if it's a fair or predatory deal. Anybody know if it's a fair deal?
I guess I am not everyone, so some people can find value where I might not. So, take everything I say with a grain of salt.
You have a point, but I've seen many non-polished, no pitch deck pitches that as rough as they were you walked away with a sense that they are on to something. They have some epiphany or insight and are attempting to turn it into something real. These videos (i didn't watch all) come off as people that have no idea what they are doing or even thinking other than, "I am going to make an app and be a founder."
The problem this guy has is that most serious entrepreneuers won't partake in his process, and this leaves over the large portion of people who don't have access to capital for a very good reason. Not to say there aren't many serious people who struggle with connections and who this guys offering is a good fit for, but his content strategy of sharing all these videos, even if a few have nuggets of gold is going to annoy viewers much like a listicle does after you click through to page 2 or 3 of a slide.
It's time to kill off this mantra of content, content content. We don't need more content, we need content that can't be found anywhere else. (admittedly, this guys content cant be found elsewhere, so that is a plus unless the content continues to be boring and lacking insights.
If you can hire a content writer to run a few searches and write a well written article...THAT IS NOT CONTENT WORTHY OF ROYALTY.
The only content that is king is content that you have to work hard to produce that cannot be found by reading half a dozen articles you found with 2-3 google searches.
If you raise a next round the SAFE never gets paid off - it converts into equity in the round. None of the equity investors' money is at risk of being used to pay off the SAFE.
I rather thought the videos were examples of what not to do, along with constructive criticism explaining why.
It turns out that their thesis was correct (that giving young, hungry founders small amounts of capital would work well). That's why we've seen tons of copycats, which have largely fulfilled that demand.
I suspect SeedRamp is going to suffer from some serious adverse selection problems. I can't imagine anyone with better funding options turning to it.
If you have to start a company instead of getting a job for some reason, a tech startup isn't the best choice for immediate cash flow. Particularly one that requires investment to get off the ground.
There are knowledge, skills, and savviness gaps to bridge, unless you're a serial entrepreneur, you won't have done this when you start. You need the stability to weather through the failures caused by those gaps.
If you're a developer, you need time to understand the business world and the business mindset. Alternatively, you can find someone who does, but in that case you need to be able to properly vet business cofounders. You also need to have the social skills to not blow up the relationship.
Asking an investor to fund you while you learn these lessons is unreasonable. He has no clue how long it's going to take. If you approach one with an idea, he is going to be looking at you as much as the idea, and they see dozens of hopefuls just like you every day.
The problem is, an investor needs these people more than the other way around. There this general pretense that when you're funded you've been blessed by 'angels', but they need the big hit more than you do. And yet, they won't budge. They refuse to see that it's a two-way relationship and so everyone loses.
In other words, we don't have the innovation we all want partly because we are so bad at figuring out how to connect funding to innovation. Currently, we use inane heuristics, ego and bankrupt intuition -- and it's not working.
I think what they do is entirely based upon intuition and ego. If it was just about making sure that things 'add up' a computer could do it and banks would make big bucks. They need to be sure that the idea really can be big in society, and that the founder is the type of person who will drive it there.
I just think this site/concept is a gimmick designed to rise up hacker news/twitter and attract attention to this particular VC. Sort of like... "look at me other VCs and real opportunities". The videos are basically displaying... "Look how much of an ace investor I am, come to me on the side with legit stuff please and I can help you out."
Mainly because investing is about hype as much as anything else. From a VC point of view: If an idea is not worth 1 million right now ... how could it ever be worth a billion? How could it ever attract the market?
There are many amazing developers who have mental problems, or other disabilities, that prevent them from working full time.
Nothing is wrong with these people. Some of them are even on government disability. They essentially have no money.
Are they or their ideas worthless?
I found $20 on the ground once. Doesn't mean I can just go outside and start bending over till I get to 20k.
If you join a bunch of the freelance marketplaces it's really not hard. I literally receive offers for jobs every day or so, most aren't that good, but probably once every month or two it is as described.
The problem is, I have no idea going in if a code review is going to be easy, or if the bugs are easy to fix. That's somewhat just luck.
Hmm I've always heard the exact opposite. I haven't seen a freelance type of marketplace that isn't a huge race to the bottom. Whenever I've done consulting it's always been through contacts that I know; I've never found a way to actually make decent money through other means.
It wasn't supposed to be gloating, it was more - it's not as hard as you think.
