Just a short note to say thank you to BFI. Several years ago I came here with a silly little MTG-related site (mtgprice.com) and got some good advice.

I've since quit my ($200K/year) silicon valley senior developer job to work on the idea full-time. The advice here got me to the point that I've raised money from VCs ($150K in the bank right now and the plan is to raise 750K in total seed).

Ultimately, the plan is to compete with eBay in the collectibles space but for right now I just wanted to say thank you. Sometimes real companies are generated from all the bull**** we spout here

Which VC was willing to give an amount as small as $150k? Under the impression ~$500k was generally the smallest amount they'd be interested in. If it's not VC and is angel, be wary of taking too many onboard. Too many cooks and all that.

Anyway, GL, sounds like it's going well for you!

$200k/year doesn't go far in silicon valley. If OP has kids then I doubt he was able to save a lot unless his wife worked full time making $100k+ or so.

Also, who wants to invest his or her own money when 90% startups fail?

who leaves 200k/yr to start a new venture where they have no experience? sounds insane

With proper guidance from investors and advisers and the right CEO, COO, etc., OP is looking at beyond that. Besides, it's not the money he is after I'm sure.

magiccardmarket.eu

/end thread

$250K is typically the smallest.
Technically this is an Angel raise (from people whose day jobs are VC's).

The $750K is mostly committed, I was just happy to see the first 150K hit the bank The rest will come in soon.

This is why I love 2+2 - judgement before basic understanding.

Of course I saved money before starting. Also, we're already cashflow positive (in that even the alpha version is making more than the salaries for all developers etc.).

GL, it would be great to keep updating the thread with how things are going.

Ah, so it is angels then I think you have to be a bit careful what you say here, if you're telling other angels you've raised VC it could be interpreted as dishonest.

I'm also pretty sure you'd struggle to find VC's willing to give as little as $250k, but this is based on fairly limited personal experience so maybe they are out there. Just be careful not to take on too many angels as you can end up spending more of your time managing them than your business.

How long have you budgeted this money to last for? And do you have two separate plans if you can't raise the $600k you don't currently have?

sharpie,

Have you made on decisions on the next step of this company, as far as diversifying markets? I remember we talked about a similar company out of Atlanta that was doing figurines and trains. They've continued to grow as a lifestyle business, but I don't think were willing/able to find the growth needed for a venture-backed startup.

Thank you for reminding me why I actually ask myself "do I know anything about this?" before I make real posts on 2p2.

Good luck OP. I think it's a great idea. Is the alpha version online ?

Do you really think people are throwing tens of thousands of dollars at random ideas that have little to no chance of working? Anyone who invests in a business that offers no collateral will want a major equity position to mitigate their risk.....it sounds like your idea of Silicon Valley is investors throwing money around like its nothing when I'm sure the reality is much different.....people with money are generally very smart, and smart people don't light money on fire with a high risk of failure and nothing to secure their investment.

Good luck and congrats OP. I enjoyed our lunch together in Seattle a few years back.

Ktaylor - you've already been ripped on pretty hard so far, but I feel the need to point out the obvious. Selling out to investors to eventually own a small % of a large company while only risking a small % of your own net worth to pursue growing such a company can both maximize upside and minimize downside.

100% bootstrapping and funding growth only with profits would limit the rate at which the company could grow thus limiting potential upside. If OP fails, he ends up broke maximizing his downside. This is the worst of both potential outcomes.

I'm glad that when I read this and thought "man this is an awful post", it was quickly confirmed with just a bit of scrolling.

Nice job OP, I think the main point of your thread was lost on some. I think what you're doing is great.

I think everyone is wrong. If you have a solid business idea, skills, and some money behind you (and a $200K/year senior developer should have plenty of money saved if he's thinking of starting a business, or the business probably isn't going to do well), then you're a nut if you give equity to angels in return for peanuts. Unless your business is high risk, questionable return. In which case ktaylor's point is kind of made. Lots of businesses these days are started to pump up valuation which wouldn't survive with the constant influx of investor capable and aren't viable businesses, ever. And you'd be naive to think angels don't factor in the value of a final sale to fools (private or public) when investing in such questionable businesses.

Anyway. Thanks a bunch for coming back OP. Keep us updated if you can. It's great to see a business in its infancy and growing.

Yes. And six figures, not five. Hundreds of millions collectively.

Smart people and/or people with money do this all the time. Where do you think the hundreds of billions to buy at the top of the 2000 tech bubble came from? Your "special" brother's piggy bank?

Even if this is true, joining in on the gravy train startup bubble going on right now still is beneficial for the people who can raise the money and cash out big without ever even having a profitable business. When the music stops it will be other people left without a chair.

What's unique about "collectibles" that ebay or other online market places don't accommodate for?

Between ebay and paypal getting their cuts, I think there is a lot of room for undercutting price especially if you provide a decent marketplace with an interface designed for the specific market, in this case mtg.

What do you charge and what payment processors do you plan on using?

The value is beyond just a buy/sell/trade platform, I think. People who put together these massive collections don't do want to hide it all for themselves, they want to show off to people.

IMO, a buy/sell/trade platform is a single part of a broader user-generated and standard content strategy. In 2p2 terms, at the base of the business they're a publisher of poker books. But their site has evolved from a community that discussed some poker hands to include related topics (additional games, BBV, coaching, bonuses), tangential topics (sports betting, fantasy sports, boardgames, Las Vegas) and completely unrelated topics (OOT, SE, BFI).

That's the true value of an enthusiasts site. Not that I can get you to come back to the site 2-3 times a year when you want to buy/sell, but I can get you to come to the site 2-3 times per week which means this is the main place you will buy/sell and now maybe I can get you to do it more often since you're more involved or I can find other revenue streams (meetups, conferences, related product sales, etc).

And yes, to maxtower's point, there is also significant value in customizing the buying process to what is most important to buyers and sellers. People who are going to look to spend hundreds of dollars on a single action figure or MTG card or model train or PEZ dispenser or whatever aren't just going to want a single photo from the front and freeform text describing the item. I mean, they will if that's their only option, but only until there are other better options.

>What's unique about "collectibles" that ebay or other online market places don't accommodate for?

Ultimately the plan is to directly compete with ebay but focus entirely on the collectibles niche rather than branching out into iPhones and cars etc.

Ebay has a bunch of issues:

1. Finding the "correct price" of a thinly traded good is tough. If you click around on ebay you CAN find completed listings, but they only include ebay data. Showing completed sales for hundreds of different vendors leads to much more accurate pricing.

2. UI is focused on the collectible. Ebay is a marketplace for everything and as a result, does nothing especially well. Type "babe ruth" into ebay and you'll get everything from baseball cards to programs to shirts to candy bars and all kinds of other stuff. Type "babe ruth" into a basecall card-only site and you'll only get information and pricing data for Babe Ruth cards.

3. We have specialist content, written by experts, that use the data we have collected. New articles about, say, your baseball card hobby are published daily, using analysis that is only possible with a huge dataset. Ebay is never doing this.

4. If the cheapest price to buy your baseball card, or whatever, is on Amazon, we will tell you. If it's on ebay or a specialist store, we'll tell you that too. Ebay again will never do this. We're marketplace agnostic - they are not.

5. We have tools for users to manage their collections and their wishlists of things they would like to pick up in the future. Ebay could do this I guess but it's hardly their core business. The cool thing about this is that it provides a certain about of stickiness - who wants to use a different site once they have entered their collection once? The collection and wishlist tools then provide customized information like "your Barbie doll just doubled in value this month!" or "The rare wine you were looking for has a sale on at this one vendor in Pittsburg!"

6. We provide daily market updates to those who are interested. Ultimately, I guess we are promoting the idea that you may not know a lot about investing in the stock market, but you DO know a lot about your favorite hobby and perhaps it's a good way to make some extra money.

7. Every collectible niche has thousands of vendors. All of them need a way to keep their prices up to date without manually checking everything. Pawn shops need the same thing. We can provide raw data feeds suitable for Point of Sale system integration.

8. All kinds of cool stuff follows. For example: ebay has no ability to set a standing buy order with a price. This leads to an inefficient market. I want to be able to say "I will pay $4,500 for a mint 1st edition copy of Breakfast at Tiffany's" and be automatically charged the moment someone has one for sale rather than polling auction sites every day for a year hoping I get there in time before someone else does.

9. For higher-value sales, we do escrow with experts to confirm condition and authenticity. Fraud is thus much more difficult. We may switch to bitcoin to prevent chargebacks post-escrow as well.

That should be enough to start with

Right now the marketplace isn't fully functional - we send users directly to the specific vendors site. We generally make affiliate fees of between 3% and 7.5% of a sale. We also charge $5/month for a premium service with around 1000 subscribers, growing at 30% to 50% a month.

We use Stripe but I think we need to use Paypal as a backup for some European users, many of whom don't use credit cards for anything.

We also charge for premium placement on the site and for advertising (2.5 million pageviews last month from 200,000 unique users). We get around $1.50 CPM from ads but that's without any kind of optimization.

This man gets it. We have private forums that a lot of users submit high-quality content to, for example, this User Generated Content increases the value of a $5 subscription, meaning more people join, meaning more people post, etc.

And yes, the whole point is have a vastly improved UI that is tailored to collectibles. People don't really care about tracking the value of all the iphones they have ever purchased over time but they DO care about doing that for a collectible.

This leads to all kinds of extra niche offerings - for example, we can message everyone with over $10,000 in a collectible and send them to an insurance agent specializing in collectibles insurance, making a comission on each click or sale.