Ask HN: Sell my startup for $14M because I can't raise $2M? - <AUTHOR> I founded an vertical-focused enterprise startup. We signed a few huge customers in the space on a build-and-beta basis, and that led to industry awards and a full pipeline of leads and signed contracts for installation (SaaS pricing with small implementation fee).
We've done it with a ridiculously small team, however. And it's become impossible to handle the dev and deployment, support and training, security reviews, feature requests, etc. So we are looking at options.
We've been approached by a few large companies in the industry regarding acquisition. It looks like we could sell for $12-14M. Kind of exciting, but also well under the value that's possible (which would probably be something north of $400M in our industry alone, with the possibility to move laterally).
The alternative is to raise money. We've put together a solid deck and model (I think), but the local venture capital scene is not great (think $1M+ ARR).
We think this is a product ripe for SV firms, but those critical "warm introductions" are elusive. We just don't have the network. Only 4% of my cold emails have even been opened (yes, we track it).
It's crazy to me that our industry is jumping up and down for our product, we've got offers to buy the company, but we can't raise a seed. I've failed hard here. I'm open for advice. <comment><USER2> Learn from my mistake. Unless you're already financially secure (meaning you could stop working and live your current lifestyle for several years) then my advice is to take the money while you can OR to leverage that valuation to pocket a few million $ (by selling equity).

I'm doing great with my current startups now but several years ago I founded a very promising startup which almost immediately got many acquisition offers in the high six figures and low seven figures. I, of course, took all of this to mean that we were onto something and were sure to get very wealthy in short order.

That didn't happen. What our app did got simply duplicated as a feature by an industry leader in software for our target vertical and that startup rapidly went from extremely profitable to bust.

TL;DR: Unless you're financially secure take the money.

<comment><USER3> There is a lot of advice on the thread saying: take the money. Given your personal situation etc. this may very well be the right choice.

But you need to realize that just because you've been approached for acquisition and even if somebody tells you straight up "we want to acquire you", it sounds like you are far away from actually getting acquired. The road from casual interest to money in the bank is long and bumpy.

Unless you actually have a term-sheet in your inbox, you aren't in the position to make this decision right now.

The right tactical approach is for you to push hard on both fronts - push as hard as possible on fundraising as if you have no other option. And if you do want to consider an acquisition, start approach these companies and ask for term sheet.

If both go well, then you have a decision to make.. (and more leverage..)

<comment><USER4> > Unless you actually have a term-sheet in your inbox, you aren't in the > position to make this decision right now.

even then, its not over till the cash is in your account.

<comment><USER5> Even then, it's not over completely if part of the cash is attached to milestones or subject to a new vesting schedule.

I've seen friends' companies acquired without them ever seeing the full "acquisition price".

<comment><USER6> If the cash is attached to milestones or vesting, it won't be in your account...

</comment></comment></comment></comment></comment><comment><USER7> Welcome to Silicon Valley, it's all about networking here. I'd suggest you to sell and to update your Resume - "I created company XYZ acquired by ABC in 2017". That alone will help you fund your next venture. Also, you'll gain a lot of credibility in the Valley and you will be seen as a successful entrepreneur.

Lock your money first, then go out there have fun with your new ideas. You'll be way more focused on your baby and wouldn't even care about all this 'mafia' thing...

<comment><USER8> > Welcome to Silicon Valley, it's all about networking here.

I haven't found any aspect of life that this isn't true yet.

<comment><USER9> Wow. I always thought my technical skills would help me.

<comment><USER10> For about 10 years. Less so for another 5. Then not at all.

<comment><USER9> I'm about 3 years into my career. Should I focus on developing my technical or interpersonal skills?

<comment><USER10> What you think are technical skills is just currency. Your in depth knowledge of this stack or that toolchain will doom you to maintenance when that currency is discarded for the new new.

Your interpersonal skills are tied to your cohort.

<comment><USER5> The in-depth knowledge is also only as worthwhile ad you can communicate how it affects the company in dollars to the business side.

At the end of the day, a competent developer will great communication is a better position to be in than a great developer with so-so communication in most companies. Maybe different in the biggest ones or where you can have very specialized roles.

</comment></comment></comment></comment></comment></comment></comment><comment><USER11> IMO You need to look into both options until you get at least (a) a letter of intent for acquisition or (b) a term sheet from a VC. If you can, get both, then consider taking the VC money if you can get a significantly higher valuation and good terms.

I recall a VC interview recently where he said (paraphrasing) _not accepting cold emails and requiring an introduction is a filter that proves you know how to hustle and make some connections. That 's a skill you're going to need anyway._

If you're willing to do that, start working your network of former classmates, co-workers, bosses, friends, etc. Don't be afraid to make phone calls, ask for favors, etc. If you are in the US, attended a university, and worked in tech there's really no excuse for not being able to get some warm intros to investors.

On the acquisition side, definitely pursue that but don't be mistaken thinking "interest" == "sure thing acquisition". 8-figure acquisitions don't happen without a shit-ton of due-diligence. If you feel someone is truly interested, retain an M&A lawyer and get their advice before giving access to anything beyond basic numbers.

Good luck and expect to be challenged/busy whichever way you go.

<comment><USER12> Re the "know how to hustle" thing - building a successful business takes a lot of "hustle". If someone succeeds at that, they've proven that they can do it.

The notion that someone needs to meet some invisible bar of proof beyond building a successful company is - to me - yet another symptom of the damage SV has inflicted on the minds of a generation of technically inclined enterpreneurs.

<comment><USER13> Which successful business are you talking about? OP's business is clearly promising, but if it needs $2M to keep going, success is clearly still ahead.

For LPs trusting a VC with their cash, successful means the company growing 10x in the next seven years. That VC's conviction that the ability to hustle is between where OP is and 10x is something you could disagree about, but I'd say it's somewhat less arbitrary than forking over $2M at just the data given.

Maybe different financing tools would allow for different definitions of success, and different guesses about what the OP needs to get there. I'd like to see someone weigh in on debt financing options, which I don't know enough about. But nobody is abusing young minds here.

<comment><USER14> 10x? At seed stage? Try 1000x.

</comment></comment></comment></comment><comment><USER15> I haven't seen this advice in this thread yet, but there is a path other than selling or raising VC. It's focusing and growing your revenue until you get through this crunch.

We've been in a similar situation before, that we managed to grow our way out of. It is possible to get through this, keep growing your business, and do it all on your own terms.

To resolve the short-term feeling of being overwhelmed, here are a few ideas:

* Try to get more $$ upfront by converting customers to annual plans, or raising implementation fees.

* Defer some customers until your team is larger (or they pay more).

* List out what you're working on, and ruthlessly trim anything non-essential.

* Contract out what you can.

* Raise some angel or friends and family $$.

I don't know what your revenue is, but I'd guess a few hundred k ARR. In the medium term, if you can grow 5-10% a month, you'll double or triple your revenue in a year. This will give you a lot more optionality in the long term:

* You can just keep bootstrapping forever if you want.

* If you raise, you'll get much better terms with more revenue.

* If you sell, you'll get a higher price.

Of course, this depends on having solid growth channels, and a reasonably sized market.

Taking the time out now to chase VC funding when it's not there will hurt your ability to grow in the short and medium term. If you focus on growing revenue instead, you'll increase your chances at VC funding or a sale in the long term.

I'm happy to chat more if you want -- email is in my profile.

<comment><USER16> > I don't know what your revenue is, but I'd guess a few hundred k ARR.

Is it normal for a SaaS with a few hundred k in ARR to be worth $14 million?

<comment><USER15> Not typical, but possible with the right team/tech/connections. OP said that the local VC scene asks for 1M+ ARR to invest, which led me to think that revenue was lower.

</comment></comment></comment><comment><USER17> A seed investor/advisor once said to me the biggest mistake he made with his first company was waiting too long to sell. He put in three more years of hard founder-type work on its growth, and with investment dilution, wound up hardly making more than he would have made if he'd sold early to a buyer who was ready to put their own money into scaling.

Especially in the enterprise market, where requirements are complex and sales cycles are difficult, selling out to a big company that has all the pieces in place already can make a huge difference - not just in your bottom line, but the chances of long-term success for your baby.

</comment><comment><USER18> Owning 100% of $14M is better than owning 10% of a $100M exit after 5 more years of hard work.

<comment><USER19> You'll have gone through some pretty insane fundraising rounds and extreme growth then near-collapse to pull those numbers off.

Raising 2M at 14M puts the OP's stake at 87.5%. Long long way to 10%.

<comment><USER20> Not really. $14M vs $100M is an order of magnitude difference. By the time you hit $100M, there's a lot more than just dilution. There's early employees, an option pool (~30%), down rounds, advisors, etc. And, there's liquidation preferences – someone with only 10% could have a 2x liquidation preference. I'm not saying it's likely, but it's also not insane to think they'd only end up with $10M out of $100M.

</comment></comment></comment><comment><USER21> Yes. You will now have a blank Check for the rest of your life:

1- you won't need to work again. This lets you work on what you want next.

2- you're very likely to get funded 2m for the next thing. This sale gives you a big stamp.

In short, this game is never about just one company. Get the 14m, stay hungry, and go for the 400m sale on the next.

Play the fucking long game and play it on your terms.

<comment><USER22> PS if you do a "next thing", don't spend very much of your own money on "it". Even though you don't "have" to get outside funding, do the angel/seed/VC thing based on your previous success and the strength of your idea & team... and if any stage fails, bail on "it" and go to the next thing. The investment you can make is not paying yourself a salary for a year while you figure out if the product succeeds during the angel round stage. Just my $0.02, your mileage may vary.

</comment></comment><comment><USER23> I'm a seed stage VC. If you want feedback on your pitch or cold email, please email me at firstname.lastname@example.com. I'd be happy to help.

My fund might be a fit as an investor. If not, then I might be able to suggest a few firms that could be a fit.

Also, 4% is a low open rate, but that might be misleading. For example, I set gmail to not open images by default, which could affect emails that use tracking pixels.

Finally, selling something for $10m+ is a really amazing "last resort." :)

<comment><USER24> I can vouch for Susa as a seed-stage investor. Definitely take this offer - this is a big decision, and it's worth talking to experts on various sides.

I also sold my last company for a bit more than what you're describing, but in the same arena. Feel free to get in touch if I can help. (Find me via my profile and/or on social media if you're interested.)

</comment></comment><comment><USER25> It's tough to really evaluate this without knowing roughly your headcount, revenue, and growth numbers. 14MM could be a great deal if you barely scratching by with current employees, and a terrible deal if you socking away large amounts cash every month.

I was a "no" vote on the acquisition of my company and I regret selling; we would have been substantially more valuable the year after selling (we had just figured a bunch of business model stuff out). But _almost everyone_ regrets selling, because that's when your company gets sold: when things are going well.

Be careful about threads like this. Obviously, you want to take people who are talking about how "14MM will leave you set for life" with a huge grain of salt, since that's not what you're going to take home from this deal.

Shooting for the moon is probably not a good bet the first time you pony up to the table, to be sure. But getting a company to the point where you're getting random 8-digit acquisition offers is _not easy_. The idea that you'll take the money this time and roll right back to the same position with a thick bankroll to make it easier is fanciful.

</comment><comment><USER26> Off-topic: I thought that tracking email opening was no longer possible in gmail? My memory of it was that you'd insert an image and track whether that was retrieved, but that GMail started caching all images ahead of time for their users so you couldn't tell if/when it was opened. See, eg, [1]. Is that not correct?

[1] [https://arstechnica.com/information- technology/2013/12/gmail...](https://arstechnica.com/information- technology/2013/12/gmail-blows-up-e-mail-marketing-by-caching-all-images-on- google-servers/)

<comment><USER27> No, it only caches when they are requested by the user - google acts more like a proxy. Essentially they're preventing the remote server from grabbing HTTP headers/cookies from gmail users but not preventing them from tracking when it is loaded, chronologically.

<comment><USER28> The google servers download every image, regardless of whether or not the user later opens it or not. So since every image is downloaded, and subsequent downloads come from google cache, the pixel becomes an ineffective way of tracking open rate.

<comment><USER29> You can only get the image from cache if it's the same URL. You can still vary those between recipients.

<comment><USER28> But if it's a different URL for each recipient then google will fetch each individual URL, for each email. So every URL will be opened exactly once, by the google fetch that happens when the google server receives the email. The user will fetch the pixel from google cache. So how can you track open rates by pixel download when 100% of pixels are downloaded just one time?

It probably depends on email clients. If a desktop client fetches email direct from smtp then it will probably also fetch the pixel directly. So tracking all downloads after the first (by google) may yield some signal, albeit not for gmail web users.

<comment><USER27> Try it. The various MSPs I use report to within a minute whether I open an email or not, and they do this effectively on Gmail and other clients as well.

I see no way they could do this besides the tracking pixels they embed in email, which means that google does not prefetch, but I'd be happy to be proven wrong.

</comment></comment></comment></comment></comment></comment><comment><USER30> If you're not profitable enough to hire without borrowing money, then that's something to really look at. You don't have to hire 15 people. And taking on money is giving away your control; you'll have to bow to the VC's wishes because they bankrolled you. If you can go without, I'd go without and keep on chugging.

And depending on how you're structured now, $14M is a LOT or it's quite a bit and you can take your time looking for the next thing....

</comment><comment><USER31> If you get your $400m exit you might own 5-20% ($10m - $80m) of the company at that time. At this point I assume you're a large shareholder and so you need to price out what your time cost is. That's a lot of money to take off the table and from then you'll never have trouble raising another seed round. Do be careful though. Business development people are paid to scour a market and this could be a huge time suck with no exit in the end. If they eat into your runway then you could get to a point where you MUST sell. Be careful. Maybe if they're serious you can ask for a $100k convertible note to enter the negotiations.

<comment><USER19> How do you get to those dilution numbers? The OP is already at 14M, apparently with no significant outside funding. If you assume they'll be at 5-20% ownership at 400M, practically all the "growth" will have been cash from equity sales. Presumably the OP believes that he can actually grow his business to that size, like he grew it to 14M.

<comment><USER31> He's at a $14m acquisition number. How much of the company does he own? Does he have one or two other founders? Marching to a $400m valuation is going to dilute you around 20-30% each round to both investors and ESOP. I'm giving an approximation but what I'm pointing out is that you not going to own 100% of the company and you may see a <1x - 20x multiple on your current ownership.

<comment><USER19> But he's not "marching to a $400m valuation", that's what he believes he can grow the company to. If you get a 20x multiple on 14M for 400M, you have grown less than 50%, and raised a ton of money.

You're not magically getting diluted into the ground because you raise a bit of money.

<comment><USER31> And to grow a company to that he'll need multiple rounds of VC funding plus ESOP and so you need to estimate how much of the company he might own at the end of it all. It's not going to be $400m. So if he has a 100% option to take $5-$14m off the table today vs a 20% possibility of taking $100m off the table, I'd be included to take the former Given the resistance he/she is getting raising a seed round.

</comment></comment></comment></comment></comment><comment><USER32> >Only 4% of my cold emails have even been opened (yes, we track it).

You only know that at least 4% have been opened. If an email client blocks the image used to track opens then you'll never know if it was opened. I'm guessing many SV folks and HNers block their email client from displaying images by default.

</comment><comment><USER33> If you actually have written offer for $14M then absolutely take it. Absent that, engaging with potential buyers will take a lot of your time and probably won't result in a sale. The road from interest to sale is long.

If you guys have $1M+ ARR, I'm happy to make some warm intros for you to Chicago-area VCs. Not SV but investors here love solid, profitable businesses and not always in "sexy" verticals, and there are real funds based here.

I'm an enterprise SaaS founder as well. Would be happy to talk further, just DM me on Twitter: @JosephFlesh

</comment><comment><USER34> Happy to talk through your options on a phone call if you'd like. You can email me: email@example.com

Relevant experience: sold a couple companies, raised a lot of money

<comment><AUTHOR> Wow, thanks Justin. Done.

</comment></comment><comment><USER35> Shoot me an email (see in my profile); I'm an angel and see a lot of deals of that stage. At the very least, I could give you some feedback from an investor's mindset.

</comment><comment><USER36> What are you after in life?

A lifetime of financial security and building great businesses?

Or working for someone else / struggling to make ends meet because you thought you could turn 12M into 50M or 200M. But in fact it flopped.

If you have more than enough to be financially secure already (and perhaps your children if you choose that path).... then go for the home run.

But if this thing comes crashing down (99% of businesses fail within 5 years and 99% of the remaining 1% fail in the next 5)... then what would you think?

Sure would be nice to put a million or two in the pocket today.

I'm going to get flak for this.... but there's probably a better chance that BTC/ETH will return 10x returns over the next 10 years than turning a business valued at 12M into 120M.

Yes, that is speculation. But so is your ability to scale 10x (but at least somewhat within your control).

</comment><comment><USER37> AngelList was built to solve this problem. If your revenue and traction are true, you'll be oversubscribed. Create a profile, and message investors.

Also -- even if you intend to sell, consider raising a round first. Having an bonafide valuation will let you jack up the sale price 5x, or more.

<comment><USER38> This isn't even remotely true. Years ago I signed up for AL, and the situation was _exactly_ as the OP described in "real life": you _had_ to be connected to get connected. Revenue does not matter.

Or rather, did. I don't know if it's any better now, but I doubt it.

<comment><USER2> Same here. If you don't already have a well-connected lead investor or a well- connected board member/advisor then AL will be a ghost town for you.

<comment><USER39> This +10. AL has not been worth any of the time I'd put into it, attempting to locate potential investors.

Wasn't in a "hot" space. High performance unified (file, block, object) scale out storage and compute hardware. Most of the VCs and angels we spoke with were saying "hardware? Why? Everyone just runs everything on Amazon". Which isn't correct, or even nearly correct. One VC who saw us compare ourselves to Nutanix (way back in 2013), decided to then speak to Nutanix and help them. Nice of them to do so.

Early in my processes I learned that things like "growth capital" meetings, where you get to pay to present to VCs/investors are a complete waste of time and capital. AL is sort of like that, though you don't have to pay money, just time.

Raising capital is all about who you know, and who knows you. There's a mixture of pedigree and other intangibles, and relatively uncorrelated with actual results things in there. Which dominate the "hey, we pulled in $3.3M in revenue at 50%+ gross margin with no external investment, how about some love" discussions. Even funnier to hear them say "but we want to see more traction". Yes, really.

Sorry about letting the bitter leak into this.

Learn from my many failures. Try not to make them yourself.

</comment></comment></comment></comment><comment><USER40> Have you considered traditional business loans through a commercial bank, if your revenue and growth projections would support that? Downside: debt is a drag, upside: you don't have to give up ownership stake. Good luck, whatever your path ends up being!

</comment><comment><USER41> Well, now that you're on the HN frontpage, you're in front of dozens of VCs. Create an anonymous email account and post it here so investors could contact you for more info.

<comment><AUTHOR> Done. Hopefully not too late. I was working :)

firstname.lastname@example.com

<comment><USER42> more info => email@example.com

</comment></comment></comment><comment><USER43> I'm speaking out of complete ignorance, but if you have assured revenue and just need funding to cover operations until all the checks clear, you might try just getting a small business loan. It comes with none of the cachet of venture capital, but also none of the baggage. Just make your payments and they'll stay out of your hair.

</comment><comment><USER44> If you're young, sell now. Then take some time and pursue something more recreational for a while. When you're ready to get back into the grind you'll still have a nice stake to start with.

<comment><USER45> I might even argue even if you're old, sell now still. I assume "a ridiculously small team" means 3-4 people. Even assuming an equal split (it sounds like OP is CEO/main founder, so should be even more), that's $3mil a person at least. After tax that's still $1.5mil. It allows OP to live a much improved life, while at the same time optionally pursuing more business ventures if they wanted, or simply spend more time with family and kids.

<comment><USER46> Why would the tax be 50% ?

<comment><USER47> OP did not specify their country; some countries tax that high.

</comment></comment></comment></comment><comment><USER48> I suggest you simultaneously pursue the buyout and continue trying to raise your funding.

Neither event is 100% likely to succeed, hence do both. If it turns out you get to choose which one happens, that's a nice choice to have.

And please strongly credit other posters' observations about 'bird in hand vs. two in bush'. If the buyout were 100% probable, my advice would be to do that. There isn't a shortage of opportunities and personal financial security will increase the range of those that are feasible for you.

</comment><comment><USER49> You haven't failed, you've founded a successful startup. Now you're looking at options and obstacles to taking the next step up. Big money, and the potential for even more of it, does weird things to people. Look at where you are at in life and where you want to be personally. The problem with "possibly" is how it can change one's perspective of reality. Others have given you the "take the money advice." I agree with the push both fronts advice. The reality is you have the skills to start a company but finding investors is not your gig.

Options:

Small Business Association - Specifically the 7a Loan which tops out at $5 million. The "Lender Match" program may also be of interest.

Find a lawyer or banker with experience - What sgs1370 said.

Consulting firm or person - If you don't have contacts flush with cash hire someone who does.

Legal council - The cost of a hiring a lawyer is a pittance compared to later realizing you should have done so. Same thing applies to a banker if you sell the company. (Obviously)

Things to consider -

[https://hbr.org/2008/02/the-founders-dilemma](https://hbr.org/2008/02/the- founders-dilemma)

Managing a small team of professionals is a different world from finding and managing competent workers. Your daily duties will change dramatically especially if outside investors have a controlling stake in the company.

</comment><comment><USER50> serious life lesson here. Unless you have a lot of money now, take the 14m and run! I am 40+ now, but at 23 I was offered £5m for a business. I tuned if down because I would have to wear a suit and goto a stuffy office in a 2-year lock- in. I turned it down and lost the lot. I was a total idiot looking back on it now. You are better to have something than nothing at all. With £14m you can come up with the next great idea, and you still have a few million left over!

</comment><comment><USER51> If you think you could actually sell for $12m-$14m do it and don't look back, even if you get to the $400m sale you may not even make that much personally.

But be wary - companies are bought not sold. If you're below $1m in ARR, those approaches you think you're getting at tenuous and possibly totally fake. It may not feel that way to you or even to them, but acquisition are HARD without a revenue number to calculate price on or a really motivated CEO.

</comment><comment><USER52> You could also pivot into something else. Here's why: you're not even at $1M ARR despite seeming to have a compelling business and early traction. It's not "hard" to get there, which means investors see many companies there and beyond for seed. If this sale locks you up for a few years that's a huge opportunity cost. I can tell you that I've personally witnessed major value changes in less time. I don't regret saying no to local maximum acquisitions (~20M) in the early days because 1) I didn't do this just to sell 2) I was confident we could be much more valuable, I just didn't know what was possible. I was righh!

Though if you're a sole shareholder or own a significant chunk of the company, $14M really is a lot. There's a post out there showing how, for example, Arrington made more than Huffington on their respective sales despite Huffington Post selling for way more. Something to think about...

Finally, you're in the drivers seat when it comes to customers. Something not scaling? Refuse to do it. You'd be surprised what wiggle room you can get when the buyer is motivated.

</comment><comment><USER53> If $14M is a life changing amount of money for you, if you aren't already monetarily set for life, then take the deal. Having that kind of financial freedom will afford you the opportunity to start other, risker, ventures in the future. On the other hand, if you're already very wealthy, it might not be worth exiting right now.

</comment><comment><USER54> Drop me more info firstname.lastname@example.com

Sounds like $14M is a stretch if you have scaling problems. That will come out in due diligence.

But there will be more options that are immediately apparent, been there before.

</comment><comment><USER55> If you're looking to sell - feel free to get in touch. I work in tech M&A and can help guide you through the process if you're interested (value of the company, prepping biz for sale, negotiating, educating decision not to sell, etc). Contact details are in my profile if you're interested.

</comment><comment><USER56> Hmm, the consensus here seems to be that you should take the money. But "it looks like we could sell for $12-14M" is not the same as "we have a firm offer".

It looks like a few investors have invited you to respond, and one or more of those connections might work out. If none do, however, it sounds to me like your best remaining option would be to continue to bootstrap. A couple of people have suggested bank loans, and that might be worth looking into, but I'd guess your better bet is to explain the situation to some of your customers and ask them to help out by prepaying some amount of their SaaS fees in exchange for a discount on same. Nobody knows better than they do how useful your product is, and they want you to stay in business.

Whatever you choose -- good luck!

</comment><comment><USER57> \- Outsource non-critical tasks using upwork or odesk for under $1k

\- Raise some from [http://www.indie.vc/](http://www.indie.vc/) and then, upto 30% of your ARR as debt. Repayment done as x% of your rev.

If you think, these two steps will charge you up to build & grow this business to 10m or 100m revenue biz, then don't sell.

Else, $12m is pretty much FU money. Buy 250 bitcoins, buy bunch of rental properties, invest in your health & fitness. And, travel a bit to come up with the next idea.

I have sold two companies in last 5 years. But this time, I'm building bootstrapped business with an aim to remain bootstrapped till we touch $100m ARR i.e. building for long term

All the best. There is no right answer to this so, in future, never regret whatever route you pick at this juncture.

<comment><USER38> > Raise some from [http://www.indie.vc/](http://www.indie.vc/)

[https://raw.githubusercontent.com/indievc/indievc/master/Ter...](https://raw.githubusercontent.com/indievc/indievc/master/Term%20Sheet%20v.2)

300% capital payback, at the end of which they still retain half of the equity option.

Good Lord, you're better off financing with _credit cards_.

</comment></comment><comment><USER58> I know you're framing this as a failure to raise, but believe it or not you're in a very fortunate position that most founders (including VC-backed ones) would kill for. You have complete control of the decision and by the sounds of it relatively firm interest from buyers at a decent price. You can either take-the-money and move onto the next venture secure in life, or double-down and swing for the fences to see if you can achieve that $400m exit. Once you take external money, you lose that flexibility as your investors will usually dictate when and how you exit. If it were me, I'd cash out now but I appreciate it can be difficult to let go of your baby.

</comment><comment><USER59> For god's sake, negotiate to $20M and retire early.

</comment><comment><USER60> > I've failed hard here. I'm open for advice.

I would suggest that you have not failed if you have an offer to buy your startup for $14m.

Not everyone is Steve Jobs, Bill Gates, Mark Zuckerberg, or Jeff Bezos. That's OK.

</comment><comment><USER61> Have you considered applying to YC?

</comment><comment><USER62> > _I 've failed hard here._

Stop that. No you haven't.

You've built something that is useful, valuable, and that others see massive potential in. That sounds like a win all the way around.

Could you scale it bigger and become something more? Maybe. Could you crash and burn and wipe yourselves out? Maybe.

Sometimes taking the small win feels like losing but putting a win on your resume will open doors that you didn't know existed and might need next time around for your next venture.

</comment><comment><USER63> Making 14m on a startup is 1/100 shot. Like taking a hundred sided die and nailing it. THEN, you are asking if you should push in all your chips, roll the die again, in another _gamble_. That is completely insane. The amount of founders that lose big because of greed could fill AT&T Stadium. I know what you are thinking: _this isn 't luck_. Perfect, then you will have no problem doing it again.

</comment><comment><USER64> Heavily discount offers until you have real termsheets.

</comment><comment><USER65> Do you not have enough revenue from current clients to be able to expand your team and hire more people for dev/deployment/support ?

<comment><AUTHOR> The launch cycle is usually about 6 months from signature to first user onboarding. We expect it will take about 12 months to get full organization saturation. We've looked at upfront pricing, but it has been hard to get for a new budget-line product.

<comment><USER66> shoot me an email drayburn[at]nvp.com, happy to jump on the phone and discuss

</comment></comment></comment><comment><USER67> Sell and build it again.

Once you sell to one company, the other enterprise companies are going to be looking for alternative. Who wants their competitor to control their destiny? Top this off with enterprise tendency to simply kill anything they acquire, and you can probably cycle this 2 or 3 times.

Presumably you'll be able to build the company even faster this time around.

I see RF wireless startups do this over and over.

</comment><comment><USER68> Taking home $12-14MM now is a no brainer!

Say you raise $5M at a $14M valuation. The VC will want a 3x return ... so the next sale for you is around $60M. How quickly until you are at $60M.

Having been in a similar situation in 2006 I am so glad I sold. With the GFC around the corner the next hurdle would have been very difficult to achieve!

Another way to look at it -- until the $$ are in the bank, the $12-14MM is not real!

</comment><comment><USER69> There are sooo many alternatives, not just two.

For instance you could partner with another company, showing them the open contracts and make deals with them to share the price when a project is successful.

You could try to put your knowledge into low-thinking-step-by-step guides and raise a team of student workers to support you.

You could buy another small, struggling company, taking a bank credit for the buy. (a bank is much more willing in such a case than when you just want to grow)

And this is just what I come up with laying in my bed at 7 in the morning. There are dozens more options. As entrepreneur it is your job to find a solution without being limited by common ideas.

PS: A profitable, vertical, enterprise solution provider is not a company you raise money from investors with. You don't have the growth factor an investor needs. Grow with increasing profit. Grow with taking on more than you can handle and then keeping your customers continue with you despite you not being able to deliver on time. That's how this business works.

</comment><comment><USER70> If you have sufficient revenue (or pilots that could lead to it), you could look for alternative financing. Venture debt offerings are increasingly common from firms like Lighter Capital and Landscape Capital. There's also an emerging wave of invoice financing companies like VendorTerm that lend against individual contracts

</comment><comment><USER71> If you are profitable and you think the industry is ripe for the taking, consider taking a loan. The downside is unlike VC money you will have to pay off the loans slowly.

Also, and I might be reading this wrong, looks like you haven't got much feedback on your deck and model. Consider getting some feedback including an industry expert.

</comment><comment><USER72> Side question. It seems the conventional advice here is to take the money.

What if it was far less, say half that? How much is too little?

<comment><USER73> So by Mr Money Mustache method, you look at the 4% rule.

1mm = 40k per year forever

2mm = 80k per year forever

3mm = 120k per year forever

4mm = 160k per year forever

Pretty set with anything past 2mm in most of the US, maybe you would want 3 or 4 if you really like SF.

<comment><USER46> 160K in SF right that will take you far

<comment><USER73> It will give you a place to live and food to eat without ever having to do work for money again?

<comment><USER46> If you have no family sure

<comment><USER73> Not true at all. If you cannot survive on 160k even with a family even in SF, you may want to look at your spending habits.

<comment><USER74> Let's say I have a child with special needs, be it giftedness or disability. If I want to provide my child with decent care and quality of life in the SF Bay Area, a household income of $160k is going to make things very difficult. Not impossible, but certainly very hard, and likely harder than anywhere else in the country.

In this case my "spending habits," as you put them, might include expenses like routine hospital or clinical bills, specialist care, or some sort of domestic help. Double all of that if my child is physically as well as mentally disabled, or if my child exhibits some sort of prodigy that I want to nurture properly.

You have to remember that the _price_ of goods and services in this local economy is largely driven by those earning some significant multiple of our hypothetical $160,000.

<comment><USER73> I mean, I guess you can have:

* Stop working and live on your 160k per month for life

* Deal with kids special needs

* Live in SF

Pick two

Does this really need stated? Do we need a disclaimer at the bottom of EVERY financial story ( * you may need 10-15% more if your kid has special needs)

<comment><USER74> Sorry if you were somehow offended by my considering the needs of those we rarely consider. You're more than welcome to read through my posting history and see that this is possibly the first time I have ever mentioned the subject on HN. It may well be the last time. And in case it wasn't abundantly obvious through subtext, I'm mentioning it out of personal experience.

I read, and contribute to, quite a few financially oriented threads on HN. I don't see this subject brought up all that often, and certainly not as ubiquitously as you suggest.

I understand what you're trying to say within the narrow context of this thread ('hypothetical: earn $160k and never work again'). It's the whole "Must we hear this every time??? UGH!" aspect of your tone that really bugs me. But this subthread is veering far enough off topic as is, so I'll just leave it at that.

</comment></comment></comment></comment></comment></comment></comment></comment></comment><comment><USER75> If you've got pipeline full of leads and signed contracts, why don't you just grow organically with revenue?

</comment><comment><USER76> Have you checked whether any of your customers are connected to VCs? Enough of ours are that in our seed, A, and B diligence they found folks to talk about us that I didn't point them to.

Re: selling vs raising, I would say it really depends on your fire to change the vertical market you're talking about (or more).

The other thing I've seen (in both directions) is that if you get hooked up to a few CEOs, they can make introductions for you. Can you introduce customers to any CEOs that don't compete that have great investors that you'd like to talk to? Get most CEOs I know a solid $100k+ ARR customer into and they'll listen to your story and make intros if I think appropriate.

It is a disadvantage to not be in an investor-dense area, and travel costs money. I moved to SF to start Kentik, but I think the same principles would work if I had stayed in Philadelphia.

Good luck!

</comment><comment><USER77> I'd suggest 2 things:

1) Have you incorporated the buyout offers into your deck? Showing that other companies recognize your company's potential even in its early stages should make a positive difference in communicating value. Consider having another go at fundraising and use resources like AngelList and FB groups related to your space to help with identifying investors and getting intros.

2) Research and Apply to YC - By "research", I mean pre-screen by contacting a few partners to ensure the investor contacts relevant to your company type, stage and size are available; and that investment terms would be and whether they're amenable to you (since your company is more advanced than the typical entrants, the standard 120k-for-7% shouldn't apply).

</comment><comment><USER78> It looks like you've received a lot of good advice and established at least a couple of conversations from this post.

A nice way to give back to the HN community would be to write up what you decide and what happens next.

I, for one, think that would be really interesting to read.

</comment><comment><USER79> Take $12M. You never have to work again. What the fuck do you need more money than that for?

</comment><comment><USER80> If you sell your company: \+ You will be financially secure

\+ You won't be taking any risk so your life will be easier

\+ It will be dead easy to raise when you start a new company

\+ You will have more reputation thanks to the exit

\- The potential of the company may be much higher

\- Your life will no longer be fun if you love what you're doing right now.

If you don't sell your company:

\+ If thing go well, you can be the founder of a unicorn

\+ It will be more fun if you love what're doing.

\- One of the big enterprise companies that wants to buy you may build the same product and try to kill your company

\- The fundraising may take so much time and stressful for you

\- Even if you fundraise, things might not go well and lose $14M.

I would think about all of them at first and sort them by their priority and then it will be easier for you to decide.

</comment><comment><USER81> Shoot me an email (see profile). I'll introduce you to an NYC based VC who likes businesses like these and has a fantastic network. I promise he will look at it if asked. Include small blurb so I can include some substance in email intro.

</comment><comment><USER82> Take the money.

It will be 100x easier to raise capital next time.

</comment><comment><USER83> You only get to live once. The only limited thing that you have is your time. If you wake up every morning with the passion for the work you are doing, then you are lucky. A lot of people work at a job that they don't like; this includes engineers at top companies.

If you love your job as founder of a startup, I would suggest that keep doing what you love to do. To be successful, you need following:

1\. User/Customer Empathy 2\. Move Fast in the right direction 3\. Focus on hiring and retaining good/great engineers.

When you know that you are failing on any of the above, then you need to think about the exit strategy.

</comment><comment><USER84> I had a company that was profitable, growing, and paying the bills. I had plans to grow it to super huge. I also remember wondering why people wouldn't invest, or lend money to, my business, even though it was doing quite well. One day, someone offered to buy me out, and I honestly hadn't expected that. I sold my stake for way less than I had expected to get at some future date, but don't regret it for a second. I used that money to switch careers, and even though I'm an employee now, I don't have any regrets about selling out.

</comment><comment><USER85> Your hardest decision ever: the balance between $14M in the pocket now which is more than 0.001% of Earths' citizens will ever have _or_ potentially lose it all/win big depending on future uncertainty.

I'm really happy I'm not in your position but if I were I'd take the $14M. This is probably also why I'm not fabulously wealthy.

As far as the local venture scene is concerned: look abroad. US, UK, DE, FR all have _lots_ (more than 1,000) active VCs in total, if your story is as good as you say then at least one of them should be willing to fund you.

</comment><comment><USER38> We've been in the same boat: a solid, profitable business in an unsexy sector. Our solution was just to continue building slowly from cashflow.

I don't have any advice here, just a note of commiseration.

</comment><comment><USER86> Are you not profitable? Why do you need VC money if you are worth 400M?

I would start calling the VC firms everyday to set up an appointment. You have revenue and a proven product which is leaps and bounds ahead of most pitches they see. At the very least you can use these term sheets to increase the acquisition offer and give urgency for the acquiring company to act. You do not want to let them come in and learn everything and leave as I have seen this happen with a company I was a contractor for.

</comment><comment><USER87> You don't mention the types of firms that have talked to you about acquisition (e.g. are they they types of "large companies" likely to be your customers, competition, or other). Depending on their motives for wanting to buy you outright, you might be able to suggest they buy part of the firm in exchange for a cash infusion. You might be able to run the same playbook with > 1 of them and solve your capital crunch for a while.

</comment><comment><USER88> How small is your ridiculously small team?

Sounds like you could retire nicely and basically not have anything to worry about for the rest of your life. I would go for that personally.

</comment><comment><USER89> It's not just a choice about selling out or not. Do you like being at your current venture or can you see yourself doing something else? Do you want to take it to the next level or not?

If you want to walk away and focus your mind on something else then go take the money. If you want to grow this business then start networking and maybe visit your bank (commercial bank loans can often work out cheaper than giving away equity).

</comment><comment><USER90> Email tracking is not an exact science. A lot of people (myself included) don't auto download images for that reason.

But back to the issue at hand:

You could sell it while continuing to be actively part of it, in fact that might be a condition of selling. Plus, with the budget of a larger company and a potentially unlimited supply of talented engineers from said acquirer, sounds like you'll be rich and continuing to build your dream product.

</comment><comment><USER91> SELL AND GO AGAIN WITH CONTROL Sell and go again because you will have your OWN seed funds out of the $12-14M. CONTROL is key and many of the VC are just THAT short sighted.

SMART PEOPLE Please remember that as the old saying goes - "Smart people seem like Crazy people to dumb people." I know it is a radical simplification and a bit cruel, but since it makes you laugh a bit, you know it is a bit true.

RICH email@example.com

</comment><comment><USER92> Many of the top founders are serial entrepreneurs. If you're the only shareholder and you sell for $14,000,000 now you've got fourteen million dollars (minus whatever your government takes) to live from while starting your next company.

You can learn to love again. If you can sell but can't raise funds, consider the option of it being a way to self-fund your __next __startup.

</comment><comment><USER93> Keep in mind that you also can try to sell the company for more money if there's competition. Competition from other buyers, competition from investors. You probably want to try going down both roads to see how hard it is to sell or raise money. At that point you'll know more and you can feel more comfortable with the decision, whichever one you make.

Congratulations and best of luck!

<comment><USER10> You can sell the company for more money if there's more competition. That was one of the lessons of _The Hard Thing About Hard Things_. This is actually the best book to read about this particular situation.

</comment></comment><comment><USER94> Are you the sole owner? If so, take the $14m. Preferably (if you're not American) move to a country with no capital gains tax before selling. Make sure you make your windfall count. Invest the money well, enjoy life, and start something new in a few years.

Rome wasn't built in a day. Unless you're 75 years old, there's always another idea you can build into something huge.

</comment><comment><USER95> $2M you may be able to get via debt if you have decent cash flow. If you have a relationship with a bank (and you should), go talk to them.

</comment><comment><USER96> If you're not in California, you should post your region or state, and see if this post can lead to a solid, local connection.

</comment><comment><USER97> I'm not a business owner, so this advice might be naive, but is there a reason you couldn't get a business loan from a bank instead of VC money? If you've got a strong enough business (which it sounds like you do), I'm confident they'd be interested, and it's not like they don't have the cash to invest.

</comment><comment><USER98> Maybe this article would be helpful to decide if sell right now vs raise capital and then raise at a higher valuation - [https://medium.com/strong- words/meaningful-exits-for-founder...](https://medium.com/strong- words/meaningful-exits-for-founders-4c3b2baba6b4)

</comment><comment><USER99> I recently went through a similar scenario. Feel free to reach out (email in my profile) if you'd like to chat.

</comment><comment><USER100> I don't understand how you can consider your product to be worth north of $400M, but can't raise half a percent of that. Where is the disconnect here? Sure, that intro would be nice, but if you have that kind of product, you should be able to communicate it to any VC and sell it as such.

</comment><comment><USER101> What does the cap table look like? Presumably you won't take the full $14m off the table even if the deal does go through (which is uncertain).

That context matters a ton when recommending a course of action. If you own 100% of the company that changes what I'd tell you compared to if you only owned 20%.

</comment><comment><USER102> If raising funding would help you help your customers and grow exponentially AND you like what you do, don't even think of giving up. Stay strong. Fundraising is not easy and it takes a lot of dedicated effort to make it happen. I have been through it thrice. Each time is the same - hard.

</comment><comment><USER103> Sell at $14MM and offer to be an advisor for a small piece of equity in the sold company after you sell.

</comment><comment><USER104> I'm in a similar position, if anyone can help with intros and / or acquirers please reach out

<comment><USER66> shoot me an email drayburn[at]nvp.com

</comment></comment><comment><USER105> Take the money. The only way you are going to raise money is if you have a VC network _or_ if you are killing it. I mean killing it. You aren't.

Take the money. Relax. And do it again. The company that buys you will fuck it up and then you can fill in the gaps later as Newco.

</comment><comment><USER106> >> well under the value that's possible

The value of something is the amount someone tangibly offers/gives you, at the time. If you are out of time then that is the value.

You might destroy all value if you live in the fantasy of what it is "actually worth".

</comment><comment><USER107> If you come away with several millions, you could live comfortably just off the interest on a 30 year note. Take the money and start another company with the interest. Don't be greedy. You could easily end up with nothing.

</comment><comment><USER108> Did you optimize your bid? If your technology is already up from the ground and you have a solid team that can execute and hire then you very well might be worth 50-100m as well.

And send me your deck - firstname.lastname@example.com

</comment><comment><USER109> Whatever you do, don't try to sell without the help of a banker. Also negotiate the best possible deal with the banker you choose.

I can intro you to ours, he was great (we sold this year): email@example.com

</comment><comment><USER110> Maybe your just not charging enough?

\--installation (SaaS pricing with

\--sounds like on site implementation

\--support and training(outside of basic documentation on a website)

\--security reviews(part of on site implementation)

Shouldn't all that be billable hours?

or some kind of add-on fee

</comment><comment><USER111> Which will you regret more? Selling knowing you could have made more, or losing it all knowing you were a contender and gave it your best short?

Do the one you'll least regret if it turns out badly.

</comment><comment><USER112> It sounds like it's time for an ICO... all the cool kids are doing it.

But in all seriousness one in the hand is not worth two in the bush in these scenarios it's worth a thousand in the bush.

</comment><comment><USER113> If you don't mind sharing your company name or some anonymized form of contact info if you prefer, there are people here who can help, assuming your biz/opportunity is legit.

</comment><comment><USER114> Why not ask the companies that want to acquire you, if they would also be interested in investing, because you think yoi can grow it to $100 within the 3 years.

Surely something theyd be interested in.

</comment><comment><USER115> Generally I'm in the "sell" camp - but one question I haven't seen in the answers: do you love this business? Are you passionate about it? If you are, then you may not want to sell.

</comment><comment><USER116> send me an email giving me more info- firstname.lastname@example.com

</comment><comment><USER117> Have you tried [https://21.co/vcs/](https://21.co/vcs/) ? Might be worth a few thousand bucks?

</comment><comment><USER118> Is raising money from the companies willing to buy you an option? Instead if taking the $12M, you could take the $2M you need and dilute accordingly.

</comment><comment><USER119> Email me: email@example.com - I suspect that if the numbers your quoting is correct, there should be many more options on the table for you.

</comment><comment><USER120> We provide non-dilutive funding for companies with $1M ARR. Email me - email@example.com if interested. Happy to discuss.

</comment><comment><USER121> If you're actually confident in your positioning, take the offer and then start up another company in a similar enough field.

</comment><comment><USER122> $12-14M in cash or in equity of the buying company? Is that equity liquid? Can you sell it now? How many vesting years?

</comment><comment><USER123> You thought of crowdfunding? These guys just had an American company on www.crowdcube.com

</comment><comment><USER124> A bird in the hand is worth two in the bush. With a few million you can never work again.

</comment><comment><USER125> Sell it, and then use the money to start the journey again. It will be more fun.

</comment><comment><USER126> If you were unemployed and saw $14M on the sidewalk would you pick it up?

I suggest you do that.

</comment><comment><USER42> please send your deck to email@example.com, we might work something out

</comment><comment><USER127> Email me (me at myusername dot com) and I'll see if I can help.

</comment><comment><USER128> How would one reach out in private via email to you?

</comment><comment><USER129> i can give you a warm intro. email me :)

edit: you should def. explore all your options and choose the best one. don't discount any yet though

</comment><comment><USER130> Just take the money then start a new startup.

</comment><comment><USER131> we can help you get more investor responses from firms all over the world. contact us at email@example.com

</comment><comment><USER83> Would you mind sharing your contact info?

<comment><AUTHOR> You can reach me at email@example.com

</comment></comment><comment><USER132> [https://www.youtube.com/watch?v=-WCFUGCOLLU](https://www.youtube.com/watch?v=-WCFUGCOLLU)

</comment><comment><USER133> What is your revenue and profit margin?

</comment><comment><USER134> Apply to YC.

</comment><comment><USER135> I'm curious what ARR is?

<comment><USER22> Annual recurring revenue, I'm not sure if monthly subscriptions or even 1-year contracts count but I think multi-year contracts definitely do.

</comment></comment><comment><USER136> Did you watch Silicon Valley episode 1?

If you still don't know what to do after that, just watch some more episodes.

</comment><comment><USER137> A bird in the hand.

</comment><comment><USER138> Take the money.

</comment><comment><USER112> It sounds like it's time for an ICO...just saying.

</comment><comment><USER139> not a bubble, not a bubble, not a bubble.

</comment><comment><USER140> yes

</comment><comment><USER141> A few things, though it's hard without much info (re: revenue/growth).

Regardless:

1\. A $14m sale is a huuuge win. You'd be set for life. A 100% likelihood of $14m is something that is difficult to turn down in almost any scenario. Even if you'd eventually make $50m, your life wouldn't change much from a net worth of $14m to $50m. You could buy a nicer jet?

Let's say you take the $14m. Your life would (presumably) change drastically. That's "pay yourself $750k/yr without ever working again" level financial stability. (OK, some of it depends on taxes, but regardless...) If you raise VC, who knows what could happen in the next 5 years? IMO take it if you can.

2\. If you want to go bigger, SV isn't the only way to do it. If you have revenue you could potentially raise debt. Hard to do, but perhaps worth it in your scenario.

3\. If getting warm introductions is hard, just know that actually raising will be much harder.

<comment><USER74> _" Even if you'd eventually make $50m, your life wouldn't change much from a net worth of $14m to $50m. You could buy a nicer jet?"_

I know you're kidding around here, but all kidding aside, whether your net worth is $14M or $50M, you can't afford a jet. (I mean, nominally speaking, you can front the sticker price -- but you'll get eaten alive on fuel and maintenance over the jet's useful lifespan, and the jet as an asset is depreciating all the while.)

I say this almost as a reflex. I used to work in talent management many lifetimes ago, and I'd actually find myself having this talk with people in this specific situation. Explaining to someone who just made $10M on a single movie that s/he can't afford a jet is a surreal experience. Sorry for the tangent!

<comment><USER142> Would a small helicopter make more sense?

<comment><USER143> Privately owned aircraft are referred to as "that hole in the sky into which the money goes."

<comment><USER103> ... and may be your coffin.

</comment></comment></comment></comment></comment><comment><USER144> Consider selling the company.

There are a million other ideas to work on, and once you've sold a company, you're investable.

Ironically, you can't raise anything now - but you'll be able to raise on your next project.

You'll have a nice little bank account to get whatever going, and that'll make you considerably more confident as well.

There's not reason to be sentimental about your project. 99% chance 'it's just a project'.

Think of yourself as a 'Movie Producer' or 'Director' or whatever. You made Jaws. Next you can make Alien. And then whatever.

Unless your project is deeply close to your heart, or you are doing something you really and truly find personal and existential meaning in - and you have a high degree of certainty of competitive advantage for whatever reason (high barrier to entry, massive growth etc.) then consider selling.

FYI that you're having trouble raising is at least some kind of 'flag' that you might not have a strong competitive position, but don't read hugely into 'not being able to raise' \- most companies (and many good ones) can't.

</comment><comment><USER145> There's nothing to think about, take the money, consider yourself lucky and don't chase a fantasy 400M that may never happen. The old adage is true, a bird in the hand is worth two in the bush. Then you'll have the money to do the next thing if you're still hungry for it.

</comment><comment><USER146> I'm interested. You should create an anonymous Gmail account for people to reach out to you.

<comment><AUTHOR> Done, contact me at firstname.lastname@example.com

</comment></comment><comment><USER147> On the one hand, money today is better than the possibility of more money tomorrow. On the other hand, have you tried getting a business loan from a bank?

</comment><comment><USER148> take the money and run.

</comment><comment><USER149> i don't know what i'm talking about but i'd take the money and run, it sounds like enough to get by on

</comment><comment><USER150> It's all about talking

<comment><USER151> Would you please stop posting unsubstantive comments to HN?

[https://news.ycombinator.com/newsguidelines.html](https://news.ycombinator.com/newsguidelines.html)

[https://news.ycombinator.com/newswelcome.html](https://news.ycombinator.com/newswelcome.html)

</comment></comment><comment><USER152> Great humble brag. Sell and do the next thing.</comment>


Twitter's Ben Cherry's response to Hashbangs (or hash-bashing) - <AUTHOR> http://www.adequatelygood.com/2011/2/Thoughts-on-the-Hashbang

<comment><USER2> I've been faced with a similar design choice on my current project and it's not as simple as "adding a layer" or progressively developing.

If you plan to implement what is more traditionally a native app rather than a typical website then your javascript use gets heavy enough that #! fragments become necessary.

Especially on app engine as you have no ability to write to a non-db file.</comment>