Tbh I was sleeping on the world of "calm funding"...
- Early-stage investing focused on value
- Outperforms 95% of traditional VC
- Firms: @earnestcapital, @indievc, @collab_capital
Had a lot of fun learning about this with @tylertringas.
readthegeneralist.com/briefing/calmf…
- Early-stage investing focused on value
- Outperforms 95% of traditional VC
- Firms: @earnestcapital, @indievc, @collab_capital
Had a lot of fun learning about this with @tylertringas.
readthegeneralist.com/briefing/calmf…
1/
What is "calm funding" (CFs)?
There's some disagreement over terminology. Some prefer "funds for bootstrappers" or "indie venture."
In short: investing in co's that don't risk survival for growth. Instead, calm businesses look to achieve sustainability and independence.
What is "calm funding" (CFs)?
There's some disagreement over terminology. Some prefer "funds for bootstrappers" or "indie venture."
In short: investing in co's that don't risk survival for growth. Instead, calm businesses look to achieve sustainability and independence.
2/
Who are some "calm companies"?
They can be profitable "lifestyle" businesses, or become massive public companies.
- @zapier: $5B val, raised $1.3M
- @atlassian: $58B val, raised after 9 yrs
- @1Password: $1B, raised after 14 years
Scores of others
Who are some "calm companies"?
They can be profitable "lifestyle" businesses, or become massive public companies.
- @zapier: $5B val, raised $1.3M
- @atlassian: $58B val, raised after 9 yrs
- @1Password: $1B, raised after 14 years
Scores of others
3/
How does CF compare to other methods?
- VC: Looking for +10x returns (more like +100x)
- CF: Looking for +3x
- Revenue based financing (RBF): Looking for +1.5x
How does CF compare to other methods?
- VC: Looking for +10x returns (more like +100x)
- CF: Looking for +3x
- Revenue based financing (RBF): Looking for +1.5x
4/
What financing mechanisms do CFs use?
A mix of equity and profit-sharing. For example, @earnestcapital uses something called the "SEAL."
I run through some scenarios...readthegeneralist.com/briefing/calmf…
What financing mechanisms do CFs use?
A mix of equity and profit-sharing. For example, @earnestcapital uses something called the "SEAL."
I run through some scenarios...readthegeneralist.com/briefing/calmf…
5/
Do calm funds make $$?
Hard to know definitively. But both @earnestcapital and @indievc put up some *serious* numbers.
- Earnest: Top 5% on TVPI
- Indie: Top 5% on IRR
Do calm funds make $$?
Hard to know definitively. But both @earnestcapital and @indievc put up some *serious* numbers.
- Earnest: Top 5% on TVPI
- Indie: Top 5% on IRR
6/
What's stopping CFs from breaking out?
@bryce talked about this eloquently wrt Indie...
Among other things, CF needs to find a way to package it's narrative such that LPs consider it an asset class worthy of dedicated allocation.
What's stopping CFs from breaking out?
@bryce talked about this eloquently wrt Indie...
Among other things, CF needs to find a way to package it's narrative such that LPs consider it an asset class worthy of dedicated allocation.
https://twitter.com/bryce/status/1366819200354820098
7/
What could CF become?
By definition, VC serves a very small portion of the business world, focused only on those with crazy potential.
CF has the potential to serve 10-100x as many companies. In that respect, it might look more like SMB lending over a long enough horizon.
What could CF become?
By definition, VC serves a very small portion of the business world, focused only on those with crazy potential.
CF has the potential to serve 10-100x as many companies. In that respect, it might look more like SMB lending over a long enough horizon.
Net/net:
I really hope CFs like @earnestcapital and @collab_capital succeed.
These funds can serve a different kind of early-stage business that often struggle to appeal to VC. Better yet, they seem to be able to drive strong returns while doing it.
I really hope CFs like @earnestcapital and @collab_capital succeed.
These funds can serve a different kind of early-stage business that often struggle to appeal to VC. Better yet, they seem to be able to drive strong returns while doing it.
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readthegeneralist.com/briefing/calmf…
(You might dig become a full Member...you'll get briefings like this every week, plus access to an amazing community!)
readthegeneralist.com/briefing/calmf…
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