Europe: Is it time to seek VC funds?
European VC rounds were just as impressive as their US counterparts in 2021, according to the State of European Tech report.
- €100bn+ raised in Europe in 2021 (3x times as much than 2020)
- Early-stage raises (up to $5mil) made for 33% of all global rounds (au-pair with the US)
- Big tech is getting even bigger, but that's not a surprise.
The report uncovers much more, but here's the question.
Is it time for Indie Hackers in Europe to seek some extra dry powder?
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If founders raise funds depends on business model, industry, product and preference of the founder. Most people on IH (I assume) are here for the "indie" part, thus not raising funds.
I currently see (and hear, and read) about tons of money in the market looking for investments. Cheap money that needs to be invested until interest rates go up again. Even ludicrous ideas and simple clones raising 7-figure sums.
But what then? Funding and VC money does not guarantee success. You still have to build the product, the company, the customers still need to come from somewhere, but now you have investors expecting you to simply perform. Been there, done that. Not anymore.
The whole point of IH for me is to stay independent of all that.
Fair points.
Independence is a major factor in my personal happiness. I wouldn't raise money for a company that doesn't have a proof of concept out there or a working SaaS -- maybe even a product/market fit on a smaller scale.
Theoretically, would it be wise to raise money when you already have a viable indie business running? Then, exit the company a couple of years down the road?
The later you raise the money, the higher the valuation and smaller the stake in the company you have to give away.
If the product and business is not proven yet investors want a bigger stake for the higher risk they are taking.
If a business is proven, established and ideally profitable, then VC money is one of several routes you can take. VC money usually enables faster growth than other means. If that is your plan and goal, go for it.
Not sure if it is wise, but it is an option. If your company is already profitable though, I'd try to see if I can find another way to get money, without giving away any part of the company (e.g. through debt financing).
I agree with Jan here. If you already have done the trouble of bootstrapping your product to profitability, you probably don't need VC money just yet, or even at all.
I'd recommend just continuing to build the business and get it off the ground. Funny enough, you only need VC funding if your product cant compete without a large marketing budget in a competitive industry.
In that case, pursue a VC route and use the cash wisely to differentiate your product from others in the space. Otherwise, stay the course and don't worry about the VC funding route. It is a bunch of hype anyways. Even if they give you the money, it comes with strings.
Thank you both! It's hard to watch an exorbitant amount of cash flooding the market and just stay aside. But I guess you're right.