Putting the emPHASis on the wrong sylLABle

Bryce Roberts
4 min readNov 1, 2023

Last week we closed our first investment out of Indie Fund I. It may come as a surprise to some who’ve followed the early indie journey that the investment was made on a standard SAFE into a pre-product, pre-revenue, pre-company formation, company.

I say surprise as many associate indie with a very specific type of investment structure that became known as “redeemable equity”. This structure allowed founders to repurchase shares out of revenue and capped indie’s return between 3x and 5x our initial investment. Many people inferred that this meant indie was targeting 3x returns and, as a result, would often frame indie as a firm looking to fund small cashflowing “lifestyle” businesses and even questioned whether indie would be better served as a non-profit. As I wrote at the time:

Nowhere in anything we’ve written publicly or discussed privately about indie.vc have we said we’re only interested in “modest, cashflow businesses”.

The message this article, and all others in modern startup media, sends to founders is that unless you’re raising significant stockpiles of cash and giving up ever increasing amounts of your business to be controlled by outside investors, you’re not going big.

This is a dubious narrative and we’re seeing it have an ever increasing negative impact on the startup community and the vast majority of founders in it.

Big rounds of funding make for great headlines and driving clicks. But most of this capital, and these headlines, are having a dangerous effect on founders and the companies they’re building. It would be no understatement to say that the vast majority of the capital being raised today is done so out of vanity or fear, not need.

It is no coincidence that much of the new money flooding into the startup world is coming from the same banks, hedge funds and financial institutions who flooded into the housing market last decade.

With their capital and this dangerous narrative, we’re not unicorn hunting; rather, we’re becoming the subprime lenders of the internet economy funding digital McMansions built on increasingly questionable foundations.

The intent of redeemable equity was never to limit our upside by capping our returns; rather, it was to make explicit the optionality founders maintained in working with us. It’s one thing for a firm to say it and an entirely different thing for a firm to hard code that optionality into the structure of the investment. Along the way, what seemed like a simple gesture began to overshadow the underlying objective of the indie experiement.

When we announced indie.vc back on Jan 1st, 2015 we laid out a fairly simple experiment we were hoping to run:

Can companies today who plan to stay independent and bootstrap their business be competitive in a world awash with Silicon Valley startups and Sand Hill Road cash? Can we build a new kind of startup community that values independence and a DIY work ethic?

This is the experiment we’d like to run with Indie.vc.

As part of the experiment, we tested a range of variables from new investment structures, to new community models to a new, scaled approach to a Scout program for sourcing and supporting portfolio companies. All of this iteration was in service of a north star for indie; namely, attract bad ass, ambitious founders who wanted to build big businesses on their terms.

Example companies we used at the time, who embodied that North Star, included:

From the launch post of Indie.vc

It would be a stretch to call any of these companies “lifestyle businesses” today. Many have since gone public with market caps in the billions and tens of billions. And many more have followed in their cash efficient footsteps since including Zapier, Calendly, Webflow, Mid Journey and many many more.

We believed then, and believe even more so now, that founders who develop a bootstrappers mentality will reap the benefits of raising less and building more. They’ll control their own destiny and be positioned to win, and win big!, in this radically different market than their predecessors built in.

Our North Star continues to be attracting and partnering with these founders in whatever structure makes the most sense for them. By removing the emphasis from the structure of the investment to the DNA of these founders, we hope to attract and back many more of them in a market that seems custom built for their cash efficient approach to building and scaling generational companies.