Comments on: Software Startups No Longer Need As Much Venture Capital, Says Founder of RescueTime http://www.xconomy.com/seattle/2008/08/07/software-startups-no-longer-need-venture-capital-says-founder-of-rescuetime/ Business + Technology in the Exponential Economy Sun, 22 Nov 2009 18:08:03 -0600 http://wordpress.org/?v=2.8.6 hourly 1 By: Cam G http://www.xconomy.com/seattle/2008/08/07/software-startups-no-longer-need-venture-capital-says-founder-of-rescuetime/comment-page-1/#comment-60440 Cam G Wed, 27 May 2009 08:20:15 +0000 http://www.xconomy.com/?p=3743#comment-60440 Interesting post and the comments. I have observed a gap though between the incubator and the traditional area of VC's. We went through the incubator model, put ourselves on starvation wages in order to prove that we had a market. In order to expand further, we didnt need $5m that VC's, for the very reasons Tony Wright outlined. Costs in particular staff costs have come down significantly. Interesting post and the comments.

I have observed a gap though between the incubator and the traditional area of VC’s.

We went through the incubator model, put ourselves on starvation wages in order to prove that we had a market.

In order to expand further, we didnt need $5m that VC’s, for the very reasons Tony Wright outlined. Costs in particular staff costs have come down significantly.

]]> By: Manoj prasad http://www.xconomy.com/seattle/2008/08/07/software-startups-no-longer-need-venture-capital-says-founder-of-rescuetime/comment-page-1/#comment-52643 Manoj prasad Thu, 02 Apr 2009 13:11:50 +0000 http://www.xconomy.com/?p=3743#comment-52643 The concept of a "one-man" software company is becoming more and more realistic. A visionary with a great idea can get that idea out into the market with as low an investment and risk as possible. Working with an OPD company i have seen several instances of people who come to us with an idea for a software product. We then step in to completely take onus of the conceptualization, the development, the testing and the implementation of the product. A huge VC funding and an elaborate office infrastructure is not necessarily needed when the work can be done with a key skeleton team. In fact, the energy (and whatever available funds) can be better utilized to the more needed (and profitable) marketing and sales activities. The concept of a “one-man” software company is becoming more and more realistic. A visionary with a great idea can get that idea out into the market with as low an investment and risk as possible.

Working with an OPD company i have seen several instances of people who come to us with an idea for a software product. We then step in to completely take onus of the conceptualization, the development, the testing and the implementation of the product.

A huge VC funding and an elaborate office infrastructure is not necessarily needed when the work can be done with a key skeleton team. In fact, the energy (and whatever available funds) can be better utilized to the more needed (and profitable) marketing and sales activities.

]]> By: Tony Wright http://www.xconomy.com/seattle/2008/08/07/software-startups-no-longer-need-venture-capital-says-founder-of-rescuetime/comment-page-1/#comment-25515 Tony Wright Thu, 07 Aug 2008 15:56:17 +0000 http://www.xconomy.com/?p=3743#comment-25515 Great article-- thanks! I would like to clarify a bit-- mostly about the headline. It should be noted that we on the tail end of fund-raising ourselves. We've talked to several VCs (mostly ones who are shifting to be open to a lower dollar amount than the $3m+ that is historically so common) I do believe that MOST ideas for software startups can be "tested" in the market with very little money (which is what we did). Bootstrapping and increasingly important small-dollar investment can allow tech-centric teams to get a core offering into play to see if anyone responds. The danger here is to assume that the new model is "overnight success". Just take 3 months, whip up a prototype, and it's either pass/fail. You either sit back and watch it rocket to the top or you shut it down as a failure. While the instant scenario does happen, the reality of success stories is that you take a glimmer of user/customer satisfaction with your initial offering and build on it. For years. Depending on your model and goals, this trajectory might require (or at least benefit from) investment after the concept is proven in the market. For some ideas, big money VC investments is really valuable (notably, enterprise B2B plays). Great post by Matt Mullenweg (founder of WordPress) on overnight successes here: http://ma.tt/2007/05/meaningful-overnight-relationship/ I wrote a bit about the transition from early market validation to profitability in a post called "Bootstrappers Beware" at tonywright.com/2008/bootstrappers-beware/ Great article– thanks! I would like to clarify a bit– mostly about the headline. It should be noted that we on the tail end of fund-raising ourselves. We’ve talked to several VCs (mostly ones who are shifting to be open to a lower dollar amount than the $3m+ that is historically so common)

I do believe that MOST ideas for software startups can be “tested” in the market with very little money (which is what we did). Bootstrapping and increasingly important small-dollar investment can allow tech-centric teams to get a core offering into play to see if anyone responds.

The danger here is to assume that the new model is “overnight success”. Just take 3 months, whip up a prototype, and it’s either pass/fail. You either sit back and watch it rocket to the top or you shut it down as a failure. While the instant scenario does happen, the reality of success stories is that you take a glimmer of user/customer satisfaction with your initial offering and build on it. For years.

Depending on your model and goals, this trajectory might require (or at least benefit from) investment after the concept is proven in the market. For some ideas, big money VC investments is really valuable (notably, enterprise B2B plays).

Great post by Matt Mullenweg (founder of WordPress) on overnight successes here: http://ma.tt/2007/05/meaningful-overnight-relationship/

I wrote a bit about the transition from early market validation to profitability in a post called “Bootstrappers Beware” at
tonywright.com/2008/bootstrappers-beware/

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