What is Indie.vc?
Indie.vc is a 12 month program designed to fund and support founders on a path to profitability.
We believe deeply that there are hundreds, even thousands, of businesses that could be thriving, at scale, if they focused on revenue growth over raising another round of funding. On average, the companies we've backed have increased revenues over 100% in the first 12 months of the program and around 300% after 24 months post-investment.
We aim to be the last investment our founders NEED to take. We call this Permissionless Entrepreneurship.
Who is a fit for Indie.vc?
Founders who value preserving optionality and ownership.
Post-revenue tech, or tech-enabled, Real Businesses
Note: we don't have a target or minimum revenue for investment.
Interestingly 50% of the teams we've funded are led by female founders and nearly 20% are led by black founders. Demographics and geographies that most VC pattern matching overlooks, tend to thrive with Indie.vc.
What isn't a fit?
Products that require significant investment and extended periods of R&D prior to commercialization.
Winner take all, land grab, style markets.
Teams that believe good products will just sell themselves.
Founders who enjoy owning single digit percentages of their businesses.
What are your terms?
We know that fundraising can feel distracting, frustrating and complicated. We've taken great care to ensure that nothing in our investment documents would prevent you from being able to raise another round of funding without raising any unwanted red flags. That said, we also take great care to cultivate a community of founders who have a laser focus on raising their revenue and profits, not their next round of funding. This allows the founders we work with to use the most effective pitch deck anyone can share when talking to new investors.
We've worked with Fenwick & West, creators of the Series Seed docs, to develop a simple, standard investment instrument that functions similar to a convertible note. We've made our v3 investment documents available for free on Github.
The documents provide a high level summary of the terms to be negotiated.
Purchase Price: This is the total amount invested in the round. Indie.vc prefers to be the lead investor and can write checks ranging from $100k to $1M, though our average investment amount is around $285k.
Purchase Date: This is the anticipated date we will fund our investment.
Percentage: This is the ownership %ownership we convert into if a company chooses to raise a round or sell. We us a simple fixed % as it avoids much of the confusion and signaling associated with valuations or valuation caps. If a company raises, we convert the remaining % into preferred equity prior to the pending round and receive pro rata rights to maintain that % in that round. The same is true in the case of a sale.
Conversion Trigger: This is the amount of follow-on financing that must be raised to trigger our conversion to equity. These conversion triggers generally range from $500,000 raised up to $5M before the conversion to equity it triggered.
Redemption Start Date: This is the date founders will begin repurchasing our equity option with a % of their gross revenue. These start dates generally range from 12 months to 36 months, post investment.
Redemption Amount: This is the % of gross monthly revenue founders will allocate for redeeming our ownership %. This generally ranges from 3% to 7%.
In the event that a company raises or sells, our terms function identical to a standard convertible note, with the remaining % ownership converting to equity or cash/stock (in the event of an acquisition). This conversion happens on a pre-money basis and retains a pro-rata right in the pending round to maintain our ownership %.
In the event that a company chooses to forego further fundraising, and on the Redemption Start Date, they will begin to repurchase our ownership with a fixed % of their gross revenue. Each redemption reduces our ownership and increases the ownership of the founders. This allows founders to repurchase up to 90% of our ownership % via scheduled redemption payments, a lump sum payment, or some combination of both until they redeem 3x the Purchase Amount.
Below, we’ve used Capshare data to contrast the cap table impact of the traditional VC funding path (Seed, Series A and B) vs. the Indie.vc path (assumes Indie.vc is the seed funding, “Series A” is funded via profitable revenue growth, then a Series B- of course, the numbers look even better if no Series B is raised!).
We've also provided a downloadable version for founders to run their own scenarios against.
We think the contrast of the traditional VC route with v3 is simple, stark and compelling. It should be the obvious, if not always easy, choice for ambitious founders looking to preserve equity and optionality for their businesses.
Do you take a board seat?
Do you co-invest?
Yes. We're an active lead investor and are open to working with other investors as long as they are willing to sign on to the same investment terms as we use.
Will you fund someone who has already raised capital?
Yes. Often, their existing investors prefer our terms and request to convert into the Indie.vc investment document, though that is not required for us to invest.
How will you help?
Many founders who chose to build a Real Business feel alone. They read the headlines of startup after startup closing raise after raise and think they must be doing it wrong. The first way we can help is to let those founders know they aren't alone. There is a large, and growing, community of founders who are quietly building “equity efficient” businesses.
The first way we try and help is to organize and expose those founders to each other. Sometimes we do this through public events like our Founder Field Trips to Wistia and Tuft & Needle. And, sometimes we do that through private events and training for our portfolio companies.
These private events for portfolio companies are held quarterly and involve a combination of reporting on company and financial progress since the last retreat, group discussion and training facilitated by members of the Indie.vc team or portfolio company founders and in-depth Q&A with like minded leaders. Previous participating leaders have included Rony Kahan (founder of Indeed), Jason Fried (Founder of Basecamp), Liz Valentine (Founder of Swift), David Cummings (Founder of Pardot) and many many more. Each leader we introduce into our community shares a similar appreciation for building real, sustainable and profitable businesses. This may seem subtle, but it is a huge advantage for our companies to learn from the playbook of leaders who've scaled their businesses via revenue and profits in the most equity efficient way possible.
In addition to the public events and private retreats, we meet monthly with each company to review the previous months performance, check in on their overall wellbeing and offer any support or connections they may need.
We know that building a company doesn't fit nicely into a monthly or quarterly calendar so in addition to all of the above, we make ourselves available via a private portfolio slack channel, email, text or phone call. Our goal is to provide the highest level of support to our portfolio companies and we aim to be their first call when they need help with a problem or just need someone to share a win with.
Who have you invested in so far?
What do they say about Indie.vc?
“I can honestly say that I wish every founder would get the chance to take money from Indie.vc. My cofounders and I are determined to not only make Nice Healthcare a huge success but also to prove the Indie.vc thesis correct. For the majority of founders, if they viewed sales and distribution the same way as raising capital from traditional VCs they will find they do not need those traditional VCs. We want to grow big, grow fast, and be profitable all at the same time. Fifteen months into operations we achieved $1 million in ARR and are continuing to grow fast. Our gross margins are approaching 50% and January 2019, our 16th month of operations, will be our first cash flow positive month.” - Thompson Aderonkomi, Nice Healthcare
“Working with Indie.vc was extremely transformative for my business. I would describe myself as a person who had fairly low business acumen at the start of my journey with Indie.vc. As a result of the quarterly retreats and my relationship with Bryce, I am much more mature in business. The retreats provided me many opportunities to learn from industry giants in small group sessions. Indie.vc also created a space to network and learn from other entrepreneurs who faced many of the same setbacks and issues. I’ve become a pit bull in a skirt who focuses on the health, authenticity, and longevity of her company rather than artificial growth.” — Angelica Nwandu, The Shade Room
“We chose Indie.vc because we knew the discipline of being customer and revenue focused would put our company in a position of strength. The program has exceeded our expectations in terms of connections, learning and the peer pressure that comes from being a part of the Indie.vc community. Indie.vc gave us the capital and coaching we needed to build a product that customers love without having to give up control or prematurely scale.” — Jack Moxon, Blue Canvas
“Indie.vc should be your first call if you're building a business with big ambitions. Once invested, Indie.vc becomes the first call when things are going well and the first call when they're not. They persist with you and your ambitions. Having a truly professional investor has been a game-changer for us.” — Sarah van Dell, Plum Relish
Where’s the original burning unicorn?
If there's a question you have that we haven’t covered here, reach us anytime on Twitter or send us an email to firstname.lastname@example.org.
(Yes, we really do read and respond to those emails.)