Doing something we've never done before and raising a round for @Supercast.
After my Stern post we were mobbed by potential investors.
We initially turned everyone down—we are hardcore bootstrappers—but as we realized the scale of opportunity, we've decided to raise $2MM...
After my Stern post we were mobbed by potential investors.
We initially turned everyone down—we are hardcore bootstrappers—but as we realized the scale of opportunity, we've decided to raise $2MM...
We think there's a massive opportunity to become the default player in subscription podcasting and know we need to spend big on R&D + marketing to grow faster.
Focusing on profitability too early will slow us down. The typical Tiny playbook won't work for this.
Focusing on profitability too early will slow us down. The typical Tiny playbook won't work for this.
Of course, being a hardcore bootstrapper, the idea of losing my own and other people's money (or providing a poor return) makes me somewhat queasy and raising at a high (market) venture valuation only feels fair if our growth assumptions are correct.
So we're structuring the round in an interesting way:
• SAFE note
• Market pre-money venture valuation cap
• Converts in two years, but if revenue of $1MM is not achieved then it converts at 50% of the valuation
• SAFE note
• Market pre-money venture valuation cap
• Converts in two years, but if revenue of $1MM is not achieved then it converts at 50% of the valuation
This way, if we are wrong on our big swing and it's just a normal, profitable, sustainable Tiny business, investors own shares at a valuation where they will still make a nice return.
And if we're right about the opportunity, we'll be diluted less and investors will win big.
And if we're right about the opportunity, we'll be diluted less and investors will win big.
Has anyone else done this? Seems very fair and I wish more companies that I've invested in had been structured this way.
We're calling it a Non-Binary Term Sheet. You can swing big, but you and your investors win either way—you can sleep at night if you don't 100x.
We're calling it a Non-Binary Term Sheet. You can swing big, but you and your investors win either way—you can sleep at night if you don't 100x.
Note: This of course requires raising from people who don't only focus on 20-100x returns and would be happy with profits/2-10x over a longer time horizon. Family offices, angels, wealthy entrepreneurs, friends and family, etc.
