46
39 Comments

We rejected 250,000€ in seed round

We (we are a team of two - Im a software engineer, and my fiancee is product designer) won an invitation to acceleration program in Poland. We got offer on the table, but we rejected it. Why?

  • They wanted us to give them all rights to our intellectual property (platform was almost ready)
  • We were obliged to work in specific working hours
  • We supposed to discuss every change in platform with them
  • We had to found a private limited company in Poland (we really wanted to do this in Estonia. [we did it BTW!])
  • They didn't give us much value as mentors (we needed strong, business, and financial oriented tutors)
  • We were obliged to spend invested money, and hire people even if we didn't need them at that moment

And that was pretty enough to decide that we just want to bootstrap our product as long as possible. Was it good decision? We will see! Now, we're focusing on getting first customers on our own, and targeting to achieve 5k € MRR until the end of current year.

More about what we do: https://nerdbord.io

  1. 1

    "to give them all rights to our intellectual property". Is it really an investment round? This conditions seems very stringent

  2. 1

    I can imagine it wasn't easy but you did the right thing. Do it your way and don't let anybody dictate you what to do... well except the paying customers with top subscription that allows them to prioritise their bugs/features ;)

  3. 13

    Yep, you dodged a bullet!

  4. 1

    Based on the arguments you shared with us, that seems pretty clever. Like @prattcmp said, "you dodged a bullet" ;)

    One question, why do you prefer to create your company in Estonia instead of Poland? Easier processes?

    1. 1

      @romaindewolff We founded company in Estonia because it was much easier to create, and manage (and you can do it all totally online). Tax policy is also much more reasonable. Founding limited company in Poland is a "pain in the ass" process - with a lot of paperwork, months of waiting, and very unstable law.

  5. 8

    that's great.. pretty bold.
    I'm pretty sure starting a business was to make sure you don't get stuck in the 9-5 job or behave and work on someone's will..

  6. 7

    That intellectual property clause is absolutely crazy - not so much a seed round as it is an IP acquisition offer.

  7. 6

    Wow this wasn’t much a decision. It sounds like the absolute worst proposal ever. And for a pretty tiny amount of money. What the hell kinda accelerator program was that?!

    If this post title said “we were offered 250k to get royally fucked over and we rejected it” - it would be valid.

  8. 4

    What product were you offering? Can you please elucidate more on this

    1. 3

      @saasnoob We are offering Nerdbord (https://www.nerdbord.io/) - platform for conducting, and creating workshops on interactive kanban board. That money we were able to get, was from an ed-tech accelerator. We had an opportunity to be matched with some bigger clients, but back in the days it was meant to be a B2C product. We had to pivot quickly, and that was another issue with that investment - if we took it, we were supposed to consult that with them. And with our fast changing product scope it would be a massive blocker. We wanted to focus on product in 100% - especially that it was not ready yet to sell it to customers.

      1. 2

        Thank you so much! I had not read that part

      2. 1

        @Sumick do you mind if we get in touch? i'd be interested in understanding your company roadmap. Reason behind this is that i'm currently building a startup platform that Helps VC's discover startups that are aligned with their investment approach. We prioritize startups that already have mrr

  9. 4

    Alone the first 3 Points are heavy red flags. Would say it was the best decision for you.

  10. 3

    I think there had been too many red flags to take the money.

    Some years ago me and my fiancee as well had the possibility to get investment. It was way too early, our prototype was in its really first steps and nothing to be used at this point. We did not even look investors, but they stumbled over us and wanted to invest some hundret thousands, but wanted to have 50% of the company!

    Our main mistake was to even continue with the negotiations for about half a year. Development on the prototype stalled completely, we built business plans and financial prognosis as air castles. Waisted so many times to realise it will never work. Finally we said just NO. They could not believe it, but I know it was the right desision.

    We really learned a lot, but we had no runway left to continue with the product. It was game over for it. Sometimes I still regret not to have continued with it, but never regret it to have said NO.

    It sounds like you are in a good situation now. And if one investor sees potential, another one will see it as well.

    Wish you two all the best!

    1. 2

      Thank you for sharing this! It's very similar case - we also wasted time for negotiations (3 months), and they expected us to do all the presentations, pitch deck, business plans by ourselves. They just corrected us if it makes sense.

      We are totally happy with decision we made :)

  11. 3

    I was in a similar position like you two. A big company got interested in the product, but sooner or later their smoke screen drops and you get to see their real intention.

    As a fellow indiehacker we don't do this work to do a get rich quick scheme. Bootstrapping is hard but when it (if) takes off you'll be happy your independent of external factors.

  12. 3

    You've shortlisted the key reasons why founders avoid joining typical accelerators. No freedom, much obligation. Difficult decision to make, but I think by rejecting these 250k you've just bought yourself freedom.

    1. 1

      Yea, that's exactly what we thought - especially that I just quit my full time job back then, and I totally didn't want to be back on the same schema

  13. 2

    It's not really an acceleration program with these terms. That's basically a take over. They own all the IP? Non-starter already. Good for recognizing that before it was too late.

  14. 2

    You should run a mile from any investor who 'obliges' you to take any actions on your business - they invest because they trust you to make the right decisions, not dictate.

  15. 2

    Gratuluję dobrego wyboru!

  16. 2

    Money is not everything! I would also rather work on my own terms than earn more.

    Random feedback for your landing page: note that for me the scrollbar on your landing page is hidden/not visible, which is horrible for UX (I often instantly leave a website that hides basic controls).

    1. 1

      Totally! + Thanks for feedback! Im fixing it right away :)

  17. 2

    Good call. I think what they were ultimately wanting to do was to buy the company but not directly because it might have cost them more. From the points you have listed, they basically will own the company and you will become their employees.

  18. 2

    Yeah, that doesn't sound like a seed round.
    Good for you, bootstrap it and own it all!
    Even under normal circumstances, as soon as you have institutional investors, it feels like you're an employee again.

  19. 2

    Crazy that they just dare to propose such a strict offer!

  20. 2

    That is pretty bold! But honestly a very good call.

  21. 2

    Always set terms in agreement to buyout investor if you want in future.

  22. 2

    Good call!!

    Honestly, many good negotiations begin with an initial rejection. You are simply setting boundaries. This is very similar to dating or any new relationship.

    i.e. you cant economically black mail yourself into a win-win situation

  23. 1

    You made the right decision. This deal is full of red flags.

  24. 1

    I think you did the right thing. Freedom is important, it liberates us to do what we truly want.

  25. 1

    Seems like the right decision to me. The only thing I'd say is that you always need people, even if you don't think you need to hire yet.

  26. 1

    Cool product congrats, best of luck with your first customers and great decision, cannot go against the gut feeling when it's your own company.

  27. 1

    I would say, you have made a cool decision. btw I am impressed with your idea and the website itself as well.

  28. 1

    250K for how much equity?

  29. 1

    Weird they want to give people 250k and then force them to decimate their business.

  30. 0

    i was able to recover my bitcoin from meta mask about 5.3btc with the help of "highjacktech" great services they got send them a mail to gmail at highjackteck and they will help you recover from any investment website
    Whatsapp: +1 321 988 1375

  31. -3

    This comment has been voted down. Click to show.

  32. 1

    This comment was deleted 4 months ago.

Trending on Indie Hackers
50 investors said no to us !😥So, now we are building our startup in public💪 20 comments The data proves you don't need a co-founder 16 comments Google add-on for SEO 14 comments My product is not first-need, should I keep working on it? 7 comments Why modern software is so slow 6 comments Indie Hackers' Hall of Fame 6 comments