Caterpillar Cowboy

…and we’re back. I hope to get back to regular blogging after the disruptions this last few months. Getting a product out. Family. I have a nice backlog of posts for the coming few weeks which should ease me back into it better than my last attempt to start blogging again. But before I get to…

It’s a HUGE mistake to raise $100k. Turn around, go back, and raise at least $500k. Trust me — I was there. We bootstrapped for 15 months and thought a couple hundred grand was going to last forever. LIES.

Here’s what happens. You’ve spent some of the money, built out the product, and realized you need to hire 1-3 people to help you keep up with demand (competitors are iterating fast!). Your burn would be $30k/month, which you can’t afford, so now you have to go back out and raise again. This time you raise what, $1M on 3M pre? So you diluted 10% the first round and 25% this round? And that’s 3 months of your life when your product has gone no where because you’re the only employee and you’re out fundraising.

Remember that VC firms usually will want to see at least $1M in revenue before they get involved, so you need to have made some serious progress on the angel money you raise. Not just, “Look — users!” but serious brass tacks business metrics and understanding. And if you get that far, the VCs will come in and take their 33%. Are you ready to own less than half your company before you’re even a real company?