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Do you think Indie.vc can work?

I've been watching Indie.vc for a while now, because I think the people behind it are great, and more importantly, I appreciate their motivation for this little experiment of theirs.

Short story is: the folks from O'Reilly AlphaTech Ventures have created a new vehicle for funding founders who are trying to build a company that doesn't fit traditional VC paths.

WHAT DOES THIS MEAN?

Good question. I think the partners would be the first to say, "I don't know." But, they are pulling together a "Declaration of Independents" to figure out what an Indy Company is or isn't:

  • Independent businesses are majority owned by their Founders.
  • Founders should maintain full voting control of their board of directors.
  • Independent businesses should provide equity or equity-like profit sharing to all employees that should be reported in percentage of company/profits vs. number of shares.
  • Independent businesses provide a real time view into companies financials and make that available to all employees.
  • Independent businesses should provide the same level of benefits for all employees as they do for their Founders.
  • Independent businesses respect their users by not selling their data to 3rd parties or opting them into spammy offers.
  • Independent businesses, who've raised outside capital, put in place a distribution plan for their investors to share profits and relieve pressure to go public or sell out.
Personally, I hope this experiment goes well. Do you think it can work?

11 Replies

Alison Lewis
1
0
Alison Lewis Entrepreneur • Advisor
CEO/Creative Director
This looks really interesting. I am a big fan of O'Reilly Ventures because they understand people are hacking every system, even the funding one. I wish I had more to add, but my general response is wow, what a great idea!
Jessica Alter
0
0
Jessica Alter Entrepreneur • Advisor
Entrepreneur & Advisor
I'll be honest, I don't really get the goal OATV aside from some press. Do a lot of companies bootstrap, yes of course. Is that a great model - 100% if you can do it. I don't get a) how OATV will ever really make a ton of money from this unless these are venture style returns and b) what $100K will really help with for companies that are a going concern if that is all they raise. Most of these companies seem like they could eventually be VC backed businesses and so if that's the case this seems like a way to say - you could be, but you don't have to be?
Alison Lewis
0
0
Alison Lewis Entrepreneur • Advisor
CEO/Creative Director
Great points. As a hardware start-up, bootstrapping doesn't cut it for long. We require funding for engineering and physical product making. Things like tooling, manf. set-up, and more. These are still 10x higher than a software start-up. So, my feeling is they are aimed at the makers and inventors out there. Alternatively, most VC's are not in the hardware world or only in energy or medical. OATV has a history of understanding convergence of multiple sectors that include design, art, and social applications in hardware.

What I don't understand is the salary to 2X ratio they are talking about on their page.
Thomas Knoll
0
0
Thomas Knoll Entrepreneur • Advisor
Executive Advisor & Business Coach. I help entrepreneurs survive and thrive at building their teams and businesses.
Unfortunately, I have watched (and experienced) companies who get forced into certain expectations and trajectories because of the optics of the venture backed model. It doesn't mean that there isn't room for capital investment to be part of the way they grow.
Daniel Austin
0
0
Daniel Austin Advisor
Founder and CEO at GRIN Technologies, Inc.
Hi Thomas, It looks like an interesting approach to solving the 'ramen profitability' problem for small offbeat companies, closed now however. Did you apply? R, D-
Jessica Alter
0
0
Jessica Alter Entrepreneur • Advisor
Entrepreneur & Advisor
@thomas but does $100K really help?
Sandeep Jumani Bansi
0
0
Sandeep Jumani Bansi Entrepreneur
Product Owner, Entrepreneur, Auto Domain Consultant, IT Expert
A lot can be done with 100k if in the SaaS space or mobile apps space. Depends on the business and the operational expensed.
John Seiffer
0
0
John Seiffer Advisor
Business Advisor to growing companies
I sure hope this experiment can work. There's a huge need for a vehicle to fund companies that A) aren't bankable, B) Need cash beyond the founders' 2nd mortgage and C) aren't likely to have an exit. By the way, most companies that go for angel or VC money aren't likely to have an exit - but they convince themselves (and investors) they will because they don't see any other way to start.

I love the indie.vc experiment as a new funding mechanism. I'm a little put off by the "manifesto" aspect of the definition of "independents." Open book management can be a wonderful thing for many (but not all) companies. And equality of benefits as well. However, I'm of the opinion that those things should be separate from the funding mechanism - not a requirement of it. But then, I'm not running the experiment.

I really appreciate the offering the docs to people and being so open with their process.
Daniel Austin
0
0
Daniel Austin Advisor
Founder and CEO at GRIN Technologies, Inc.
Maybe I'm a little biased as an O'Reilly book author, but the point about hardware development made earlier by Alison L. strikes home. $100K is a huge amount to a small company financed on your credit cards, and may mean the difference between life and death for the company, or between having to do all the work yourself instead of being able to hire or attract others to join.
Angela Courtney
0
1
Angela Courtney Entrepreneur
Visionary Social Entrepreneur
Thanks but no thanks Thomas I have wasted my very precious time for no reason except that I have not enough friends to come to their party!!! Nor can I have the satisfaction of backtracking or officially declaring my disinterest and dissatisfaction. /you may want to know about my contribution to this 'experiment' Follows: Involvement with the women's movement and the wider NGO (voluntary sector) spans thirty- years of development; mainly services for women and children experiencing violence in the home. This includes organizational and project management, training, representation to government; policy development; interagency work; fundraising etc. Handing on my legacy of 30+ years via mentoring, organizational transformation and team building, through a learning agenda that I devised is my ultimate objective at this stage. http://www.alphastudio.co.uk/port/ I established Alpha Studio in 2003 as sole proprietor business. After my retirement as Director of Northern Ireland Women's Aid Federation took effect. In this I was assisted by 'Invest NI' and two Millennium Awards. Memoir as marketing is my current project and expanding Alpha Studio in order to develop capacity to achieve the objectives. My personal history of my ancestral family history in the Irish diaspora in the British Empire in India before the rise of Republicanism is set in the context of my leaving the North East of England to live in Northern Ireland in 1967 and rearing my children here and taking a lead part in Refuges for Women and children against the background 'the troubles' The thirteen chapters of Benediction and Cosmic Dancing are at the final editing stage and pre-publication stage. I am also working on a manual of self- care and organizational resilience entitled: Human Energy, Resilience Organisations and Spirituality (HEROS) All the best with your stuff Angela
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