What Virtualmin really gained from early funding
Summary
Virtualmin co-founder Joe Cooper explains why contacts, advice and exchange were more valuable than the seed capital for the young open source company. Virtualmin took part in Y Combinator's Winter Founders Program. Cooper cites five to six percent equity as typical for funding of that time.
Ideas
- Very early investors assess people before a solid business model exists.
- Regular meetings create fast exchange between teams with similar problems.
- Experienced contacts shorten decisions on product, funding and sales.
- Good connections open conversations that unknown founders can hardly reach directly.
- Legal set-up work can consume a considerable share of small funding rounds.
- Capital alone replaces neither expert advice nor trustworthy networks.
Insights
- A backer's value often lies more in access than in money.
- Dense professional communities speed up learning through recurring informal feedback.
- Open source expertise does not guarantee experience in building and financing a company.
- Equity should be weighed against the total value of the support.
Facts
- The founders met weekly for three months.
- For the following batch there were more than four hundred applications and nineteen acceptances.
Recommendations
- Judge investors by advice, contacts and collaboration rather than capital alone.
- Seek regular exchange with founders of similar technical products.
- Assess equity offers by concrete services and long-term interests.
References
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