TechCrunch and other big outlets do important work, but celebrate companies that raise a bunch of capital. We assume that the only metric of success is "have we raised capital?" There is space for equity & fundraising but 95% of SaaS founders who build freedom in their lives, have great relationships with others, printing money from cashflow and dividends are generally really happy.

Framing newspaper was really, really bad for Nathan. Dark green line is cash balance. Blue bar: total revenue $99K MRR should go way up. Revenue started slowly declining, painful 3-4% per month. Couldn't figure out where to put the capital.

Cap Table: 38% ownership raised $2.5M and would be down to 4% by the time of IPO. Why would you work your butt off for billions when it's hard to get to billions? Why not build a $5M - $10M company with cashflow and own 100% of the company, then get rich off dividends?

Investors got 19.08%, 9.44% to angels, 8.94% FORCED to an "Adult Supervision COO"

Would you be happy with $10M in revenues, cash flow positive, where you own 75% or more?

Equity, SAFE, SEAL, RBF, Term Loan, Bank Debt. People are least familiar with SAFE/SEAL/RBF. $40M in SEALs, very early asset class.

Top tier VC firms target fund returns above a 40% IRR.

40% INTEREST RATE FOR YOU, cost to capital is 40%

~25% equity dilution. SAFE at seed stage has the same return profile.

SEALs: Take $200K for 10% of company. Way less than $100M deployed in SEALs. Buy back equity for $600K if you want (3x return to investors, expensive for founders). Pay out dividends if turns into "lifestyle" business and you have way more optionality.

RBF: Idea is take money, pay it back as % of your monthly revenue (usually 4%) to 1.5-3x repayment cap. Watch out for prepayment penalties, warrants, covenant origination fees. RBFs are less expensive (2x), but less optionality because you must pay it back. They are debt instruments.

Cost to capital relative to optionality relative to cost.

Term loans: take 3-9x your MRR< pay back like a house mortgage (fixed interest rate). 10-25% rates common. Watch out for warrants, covenants, prepayment penalties. Founderpath does this and they don't take any equity. Loans against MRR. Banks don't understand this because MRR is a virtual asset.

How much money could you have today to get that big break? To run that big experiment? 15% Can you spend $250K today and make back more than the cost of the loan ($7K/mo)?

If you can spend $1 to get $1 ARR, if you had $3 you can get 3x the loan cost. Leveraging debt in a smart way if you know your unit economics can let you build a $1M-$5M topline company without giving up control.

Bank debt (must have VC raised; banks lend because they trust VC relationship/diligence) cheap capital at 4-9% interest. 0.1-0.5% warrant coverage (Silicon Valley Bank). If bank loaned you $1M then it would take 2-4% worth of options.

Merchant Cash Advances (you pay back on a 6-month term); hard to make that debt accumulate ARR because you have to pay it back really quick.

Will there be 0.50% convertible senior notes for early stage companies (raising something like a bond)? Is there a way to lend money to founders at $1M at cheaper rates? It depends on how lenders quantify risk.

Equity & SAFE: $250B+
SEAL: <$100M (early asset class)
RBF: $1B
Term Loans: $50B+
Bank debt: $750B+

Minimum Revenue (ARR) Requirements:
Equity: $0-6M+
SAFE: $0-4M+
SEAL: $0-2.9M
RBF: $500K-$3.5M
Term Loans: $1M-$5M (Founderpath does <$250K)
Bank Debt: $3M + raise from VCs

$1M ARR bootstrapped is possible.