15
4 Comments

Why Hackers are Taking Money From Founderpath (#1 on PH today)

Hi IndieHackers! :)

@mubashariqbal and I built the Founderpath free capital calculator to help SaaS founders raise money without giving up equity.

We also built in a bunch of free analytics for founders who don't want capital, but want to better understand their numbers.

Launched today! We're blown away by all of you who comments on the PH post: https://www.producthunt.com/posts/founderpath

The backstory:

...9 years ago, I rushed the newspaper stand so fast people thought I was running to pick up a million bucks.

… $2m actually.

The headline I cared about so much was finally here “Latka raises $2m from Forbes Billionaire” was blazed across the top of the paper in 36px Times New Roman font.

alt text

(I was so silly, I framed it :/)

I was 21, building my first SaaS startup in my Virginia Tech dorm room, and was about to get a tough lesson in how VC works.

I had bootstrapped the company to $50k in MRR and though this funding would solve all my problems.

You can guess what happened next.

I had to turn down an acquisition offer that would've made me “well off” at the ripe age of 22.

VC’s wanted me to “go for a billion!”

Our board meetings sounded like: “Spend more money faster to grow!”

But I could see our cash declining, we’d need more money if I spent faster. I liked profits and not “go go go”.

Revenue flatlined at $90k/mo (shot from our April 2012 board deck):

alt text

Ultimately I sold the company at a loss in 2015 (Heyo.com if you want to check it out, new owners took great care of it!).

That same year, I was determined to learn from as many CEO’s as I could to make sure I knew as much as possible before launching my next venture.

So I launched a podcast and got 20 minutes with Eric Yuan at Zoom, Henry at Zoominfo, Jay president at Atlasssian, Sid founder at Gitlab and so many more.

Yesterday I recorded our 2,783 interview. All SaaS CEO’s.

Between 2015 and today, those founders have asked me to help them raise $120m+ capital for their business…..

But most of it wasn’t VC. It was debt.

Starting when Salesforce went public in 2004, the world has started to understand “SaaS metrics”.

PH's know 45% annual churn is bad and a payback period of 24 months doesn’t usually work.

These standard metrics have enabled companies like Lighter Capital, SaaS-Capital, and others to lend money to software founders.

After helping dozens of founders raise, analyzing term sheets with them, it became clear that these things were complex and many times required a small legal and accounting army to undrstand.

alt text

The cost of capital for many of my founder friends could be extremely high (20%+ in many cases).

...especially when pre-payment penalties, warrants, advance fee's or strange covenants kicked in.

Today, Mubs and I are launching Founderpath to help founders (mostly bootstrapped) get capital without giving up equity.

We hope that founders building healthy companies, will use Founderpath to get capital without having to manage a board, no personal guarantees, and without having to “grow at all costs”.

Now we’ve productized the calculator so you can quickly see terms without having to pay loads to your lawyer/accountant.

To see how much you could get, and at what cost, try the calculator out at Founderpath.com

alt text

We've tried to make it super transparent :D

Anyways, Mubs is up in upstate NYC and I’m finishing my late afternoon "super coffee" here in Austin texas.

Plan to stay inside most of the evening as its about 101 degrees out. (Aug is brutal)

We'd love any comments/reviews. 🎉

  1. 3

    Congratulations on building such an incredible tool @RealNathanLatka & @mubashariqbal! I found it on PH and immediately upvoted it. The business model behind it is even more clever than the idea ;)

    Quick question - when getting money from VCs, you generally also get access to their networks and knowledge, which can be crucial when growing a startup. Do you plan to help the SaaS that gets funding by providing them with useful resources and connections?

    Love what you're doing with Deal or Bust as well, you're an excellent host.

  2. 3

    Hey Nathan
    I would love to get the full story featured in my newsletter first1000.substack.com if you are open it

    1. 3

      i'd love that! want to email me? [email protected] the google thing :)

  3. 3

    Love being able to raise cash without diluting equity. Technically this is way cheaper money than a VC. If I were to raise VC I'd give up 20%+ equity, plus power via a board seat. With this I'd only really have to trade the 15% interest to get the cash. That's a huge game-changer.

    Have also looked into bank loans and MCAs, but those seem pretty predatory and sketchy, and sometimes require personal guarantees, which tbh isn't worth the risk for an early saas product.

    Thanks for building this! Also, love the demo over on your PH page (https://www.producthunt.com/posts/founderpath)

Trending on Indie Hackers
💯 users 💯 days 31 comments Can you give me some feedback? 20 comments HootSuite founder Ryan Holmes discusses product validation platform Kernal 8 comments How to fight back against Google FLoC 6 comments 💪 A story about perseverance, success and the proper mentality for it. 3 comments 4 content strategy rules I've learned the hard way 2 comments