Coming soon to many seed rounds and Series A near you, and also likely to much of the bootstrapping community: cap tables where literally all of the money comes from software people, not traditional sources (VC funds with non-tech LPs).
Why? A confluence of reasons:
The *money* has always been fungible, but the *networks* are increasingly weighted less to “I, a financial services provider, am tight with the firms you’ll raise your next round from” and more “Of course I can pick up a phone and call Google.”
The *money* has always been fungible, but the *networks* are increasingly weighted less to “I, a financial services provider, am tight with the firms you’ll raise your next round from” and more “Of course I can pick up a phone and call Google.”
Bluntly, the community can afford it. Napkin math how many accredited investors get how much direct deposited every single payday from AppAmaGooBookSoft alone. 5% of 20% of that is seed rounds for N startups.
Angel investing continues to be seen as heavily prosocial in the tech community, and it is a status marker in both directions.
Any rotation away from the SFBA disadvantages firms who don’t want to have to explain to their LPs “Actually we never strictly speaking met this founder we gave $5M of your money to.” and advantages people who can say “Would I spend $50k after Zoom call? Why would that be odd?”
Tech people get substantial non-pecuniary advantages from investing which traditional investors don’t capture.
It can be totally rational to invest in such a way you lose money.
It can be totally rational to invest in such a way you lose money.
That is probably *deeply* controversial, but here’s a sketch of the intuition:
In 1970, you could reasonably join a golf course hoping to meet other people who played golf for career purposes. Golf balls never return capital.
In 1970, you could reasonably join a golf course hoping to meet other people who played golf for career purposes. Golf balls never return capital.
Tech people ultimately care about knowing other tech people approximately as much as people who play golf care about knowing other people who play golf.
So, what can you spend $X0k on in a socially acceptable manner to repeatedly get close to interesting people in tech?
So, what can you spend $X0k on in a socially acceptable manner to repeatedly get close to interesting people in tech?
And finally, at the end of the day: In a capital rich environment, the cap table is the people the founders enjoy having on the cap table.
Who do founders break bread with when they’re *not* raising money? Who do they look up to? Who do they want in their lives for 10+ years?
Who do founders break bread with when they’re *not* raising money? Who do they look up to? Who do they want in their lives for 10+ years?
