People said this was the "best time ever to get funding" for a startup. I disagree. In my view, it was the best time ever if you played a particular game and had the right connections.
I pitched an idea to a VC, which I had a prototype for, looking for $100k. He liked it but wouldn't fund because I didn't have a solid business plan. Fair enough, I need to find a business partner. But then he told me something about how I have to imagine that it's $100k of my money. I need to respect it properly and ask myself: would I give someone this money so easily? Meanwhile he had his hands in various bullshit crypto (not hating on crypto, just the projects) defi startups.
I thought it was absurd, of course I don't respect your money: VC firms throw $250k+ around like candy to people who happen to give a specific quasi-Silicon Valley impression or are in crypto. You're telling me you can't spare $100k? Also, I haven't seen a single "promising" startup actually be profitable, except those ones made without major funding.
This has all been some kind of weird ass circus for years, I'm glad the bubbles are bursting.
That's not how it works. You're not the only person asking this VC for $100k. A thousand other people are, too. A policy where he spares it for (what he considers) a bad investment like yours means sparing it for all the other bad investments, too. That would cost a lot more than just one check.
I'm saying that he was already neck deep in bad investments, which he happily funded. That's the main point I'm talking about. I'm not saying my idea deserved investment, just that this whole industry has been full of bullshit for years.
Maybe you think the investments he made are bad, but obviously he doesn't think so. However, you think your company is good enough to pitch to him to get investment, and he doesn't think so. There's nothing wrong with either side, it's just a difference of opinion. That doesn't necessarily make the "entire industry [...] full of bullshit."
But, it is full of bullshit. Just because it happens to align with my ego doesn't mean I'm wrong to say it. I would say the same thing even if I did get funded.
> Again, that is your specific opinion that is not shared by everyone.
Well, the market agreed with you up until few months ago, now it really does seem like we had quite a few bullshit companies. Not all of them of course, but lots.
Often the company is the product. The customer is big tech companies acquiring small startup companies. The company itself in that scenario might just be some smart people working on an idea but no idea how it will make money.
I hate SV culture, so not one to WK or make excuses for it, but when you have as much money to throw around as he does, you don't have time to deal with requests for pocket change.
Look at your own investment portfolio. Are you investing $1 at a time in fractional shares of a million different stocks, or investing $1000 at a time on a smaller number of stocks/funds you expect to have solid returns? (You think his crypto bids are misguided. Maybe you're right. Not your money though.)
If you're certain about your product, you don't need an investor. You need a small business loan.
The former strategy is actually the better one in the long run. There are a bunch of economics papers showing that on average the vast majority of active fund managers loose out to precisely the strategy you describe (although the instrument used to hold the shares is not usually owning fractional shared personally but rather shares in a mutual fund or an ETF)
What's your project? $100k seems like an odd amount of money to ask for, to me. You can't staff up very much with that, but it seems like a lot of money to pay for AWS/hosting-type bills when you're just starting out ($10-30k should be more than enough). It only makes sense (again, to me) if what you really want is access to the VC and their network. But again, I don't know shit about VC and angel investing.
It was odd, but my envisioned development window was about 3-4 months (planning for 6) and I had potentially high upkeep after launch ($500-$1000pm for production ready servers). I could have found a co-founder or two and funded them for that period as well. So it would have been just enough + a buffer. At least in my mind. I realize you need more runway than to just get to launch and survive 2-3 months now.
The idea is a service that could open the black box of online video content. Right now you search for something and get the whole video as a result; if it's a 3 hour long podcast you're going to be doing a lot of seeking for specific information. I want to index and enable deep visualized search through video libraries and in videos. Basically splitting videos into linguistically salient topics, keywords and entities. That would allow you to analyze and visualize content (YouTube channels, videos, etc.) to find interesting information. Good for researchers and people looking for something specific, or people wanting to find new content (relationship graphs).
That sounds like a moonshot rather than a $100k, unless you already have a working prototype that simply needs to be refined for commercialization. (Meaning: an actual working prototype, not a demo created solely to show off the concept.) What you've suggested is a job that would take a team of developers a few months. I'm not surprised the investor was skeptical that a 1-man team could do it in 6.
And what are your plans for revenue? How do you plan to make money? You'll be dealing with a lot of legal questions related to IP licensing, and the legal fees alone would eat your $100k in a month or two, even before the licensing costs for the videos.
All-in-all, I can't fault the investor for turning you down. You haven't put enough thought into the business aspects of your idea for him to entrust his money to you.
And don't bring up this crypto bullshit. It's irrelevant that he's investing in crypto companies; he already knows he's gambling with those and he's not treating those like real investments. Given crypto's history, he just needs to bail at the right time to come out ahead.
> I want to index and enable deep visualized search through video libraries and in videos
Sounds very interesting. I was thinking about this the other day in the context of golf. Thanks to Youtube, I can learn from watching the swing of any player in the world/history. But while a golf swing takes only 2 seconds or so, they're all "locked up" in lengthy videos. And forget about searching for one person's swing vs another.
I think Google/YouTube is already doing this. For example when you Google search "how to reset a Macbook", the top result is a video that jumps to a particular highlighted section that answers the question.
This isn't the best example of this feature, but it sure has saved me a lot of time in other queries that I can't recall at the moment.
Exactly. Google does this through the video transcripts, and finds the query location in the video for you. The problem is that this isn't part of the video player itself (or YouTube search). It's also very basic, being just a transcript search - I want more data mined insights to be available.
I think there is some notion that VCs are these rational, brilliant people who are making money hand over fist investing in the best projects. The reality is that many VCs do not make money and invest in tons of bad projects all the time.
Why would they invest in bad projects? Because they are humans who happens to have a crap ton of money. As humans, they're susceptible to FOMO and hype. They are susceptible to things like first impressions, a good slide deck, a good sales person, etc.
All this to say is that it might be the VC, it might you, or it might be your project. Who knows. This is why many founders end up pitching to 30-40 VCs because sometimes it's a numbers game.
The whole VC funding thing is a game that you have to learn about and crack. The easiest way to crack it is to show you have growing revenue. The next best thing is to show you have growing users. If you do not have growth, then you'll just have to hustle and put on your best sales game.
The idea that you should treat VC money with the same level of
frugality as as your own personal savings is preposterous. Sounds like a petty, inexperienced VC.
Yes, exactly this. And since you aren't chummy with the VC, even if you had a business model, you would be rejected "because you don't have revenue" yet. Fuck that noise. The V in venture is supposed to mean you're supposed to take risks.
SV has lost its soul. A VC that respected tech nerds would see your technical idea, (maybe) discount the investment, and then get on the phone and help you find a business partner that will take you all the way (and give you first right of refusal on assholes).
All of those things are your job as a founder. VCs don’t have enough time to help everyone who asks them for $100k, nor do they really have time to write $100k checks in general. They should be writing $2-50M checks and hoping for a 20-100x return on one or two companies per fund. That’s the nature of the game they play.
I pitched an idea to a VC, which I had a prototype for, looking for $100k. He liked it but wouldn't fund because I didn't have a solid business plan. Fair enough, I need to find a business partner. But then he told me something about how I have to imagine that it's $100k of my money. I need to respect it properly and ask myself: would I give someone this money so easily? Meanwhile he had his hands in various bullshit crypto (not hating on crypto, just the projects) defi startups.
I thought it was absurd, of course I don't respect your money: VC firms throw $250k+ around like candy to people who happen to give a specific quasi-Silicon Valley impression or are in crypto. You're telling me you can't spare $100k? Also, I haven't seen a single "promising" startup actually be profitable, except those ones made without major funding.
This has all been some kind of weird ass circus for years, I'm glad the bubbles are bursting.