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Comment by eruci | Hacker News Reader

I've bootstrapped everything I've ever built. Yet, I constantly get investor pitches from bootcamp/accelerators/etc. One of them I got just the other day put forward this interesting offer: "$25K for 6% equity" on my current bootstrapped project which is earning about $20k per month in profit. Thanks, but no thanks!

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$25K does seem somewhat pointless when you can wait a month and get that, with no dilution.

Their offer was a bit low. However, it's not quite as insulting as you may think.

Many bootstrapped SaaS businesses are valued at 3-6x profit (aka "discretionary earnings") [1].

At 3x, your business would be worth $720K, which makes 6% $43,200

At 6x, your business would be worth $1,440,000 which makes 6% equal to $86,400

[1] https://baremetrics.com/academy/how-to-value-a-saas-business

That's a value for selling it to someone else in its entirety, but no one who runs a stable business is going to sell 6% of their company at those rates because it literally means that every share sale will turn a profit guaranteed in 6 months merely from dividends.

Imagine what the stock price of a company who boasted such dividends would be.

Lots of SaaS companies sell based on a multiple of their ARR, and it can get a lot bigger than 3-6x. https://www.quora.com/What-are-typical-exit-revenue-multiple...

Definitely depends on how much you're making, how fast you're growing, who the buyer is, and why they're buying.

Sure, if some random person/business is buying you to just consume your existing profits, that's about the worst-case scenario you can find.

> my current bootstrapped project

Is that geocode.xyz?

Yes.

Congrats! Your submission got almost no attention on HN. Just curious, how did you find your first customers?

My first customer found me before my showHN post ( publicsonar.com - they needed a geoparsing tool). I'm not entirely sure how they found me, perhaps from a talk I gave on my book scanning project. I also don't know how the other early customers found out, I'm not doing any marketing (other than conference presentations).

Can you link that book scanning project? It may be a blog post I read on HN and really liked but subsequently lost the ability to find.

https://books.geocode.xyz/

Cheers mate!

Incubators/Accelerators are the way forward. I have always been rabidly advocating for more public funded real accelerators (Not YC model but built like the college/university/ YC startup school model) which can take a risk on ideas.

Entrepreneurship is a mentality. Even if you fail the first one with the accelerator, you grow your horizons and will eventually succeed with the next startup.

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