think27: Austin Startup Community Vision - true alpha
Julie Gomoll
· 1 year ago
I would *so* love for someone to figure out the microfund thing. Some of the problems with that:
* whether you're investing 25K, 250K, or 2.5mil, you still have to jump through all sorts of legal and regulatory hoops. Half of the 25K gets sucked up getting all that set up. * so you do a pool, right? 250K for 10 startups. But then the investor has to keep track of 10 companies - can't really do that effectively.
I've done several startups, but never gone the VC route. Back in the day, AV wouldn't even touch a company who needed less than a million - too much work for not enough profit. The couple times I looked for investors in the 90s, I found the 250K I was looking for was *not enough* for anyone to be interested, even if I gave them a good sized chunk of my profitable business.
That said - I'd be all over doing my part to help someone figure it out. So many talented people need that small boost to get started - it would pay of in so many ways other than financial. Hard to get investors to think that way though.
mattrepl
· 1 year ago
@Julie - By legal and regulatory hoops, do you mean incorporating and related tasks? That should be under $2k.
The quintessential (and only a few years old!) seed-funding group is YC, the members are startup veterans that have made their millions. Because the startup veterans relate to new founders, they decide who to invest in based on the {creativity, intelligence, potential} of a team. There's a certain amount of trust given and the amount of investment is small enough that babysitting is not necessary.
Traditional VC folks are in the business of choosing investments from the analysis of numbers and many do not yet realize without early investment there will be no startups that can take a couple million and output a figure with more zeros attached.
Julie Gomoll
· 1 year ago
The hoops I'm referring to are the agreements that need to be set up for investors and partners. Incorporating is not a big deal, agreed. I'm referring to the nuts and bolts of the investment. Is it an equity deal or a loan instrument? How are funds distributed? Will there be additional rounds? How do you avoid too much eventual dilution? None of this is rocket science, but someone has to figure this stuff out. I have a hard time envisioning a company that can be set up with investors for just 2K.
I'd be happy if you proved me wrong, though! And I'd definitely like to hear more about YC.
@Julie - I was referring to the cost for individuals to incorporate, open up a bank account, and get a couple hours of a lawyer's time when I threw out the $2k figure.
Even the investment and operation points you mentioned can be streamlined by providing would-be founders with a agreement templates that allow them to fill in the blanks. With fewer choices, the more optimized (in both time and money) the process becomes.
All Comments
* whether you're investing 25K, 250K, or 2.5mil, you still have to jump through all sorts of legal and regulatory hoops. Half of the 25K gets sucked up getting all that set up.
* so you do a pool, right? 250K for 10 startups. But then the investor has to keep track of 10 companies - can't really do that effectively.
I've done several startups, but never gone the VC route. Back in the day, AV wouldn't even touch a company who needed less than a million - too much work for not enough profit. The couple times I looked for investors in the 90s, I found the 250K I was looking for was *not enough* for anyone to be interested, even if I gave them a good sized chunk of my profitable business.
That said - I'd be all over doing my part to help someone figure it out. So many talented people need that small boost to get started - it would pay of in so many ways other than financial. Hard to get investors to think that way though.
The quintessential (and only a few years old!) seed-funding group is YC, the members are startup veterans that have made their millions. Because the startup veterans relate to new founders, they decide who to invest in based on the {creativity, intelligence, potential} of a team. There's a certain amount of trust given and the amount of investment is small enough that babysitting is not necessary.
Traditional VC folks are in the business of choosing investments from the analysis of numbers and many do not yet realize without early investment there will be no startups that can take a couple million and output a figure with more zeros attached.
I'd be happy if you proved me wrong, though! And I'd definitely like to hear more about YC.
@Julie - I was referring to the cost for individuals to incorporate, open up a bank account, and get a couple hours of a lawyer's time when I threw out the $2k figure.
Even the investment and operation points you mentioned can be streamlined by providing would-be founders with a agreement templates that allow them to fill in the blanks. With fewer choices, the more optimized (in both time and money) the process becomes.