Permanent Equity for profit-focused founders
On Base Capital is an investment firm founded by former venture founders who believe that good profits compounded over long hold periods are how you build great companies. We build and invest in startups (mostly, but not always software) that want to dominate their niche and build profitably over time.
Why Freight Trains > Rocket Ships?
Rocket ships are cool. Startups with 10X ARR valuations growing 300% per year are really cool. The problem is they both have binary outcomes: you get to space or you blow up when you come back to Earth. If you make rockets or fund startups for a living, that’s fine: you only need one of the rockets to work.
When you’re the pilot, you probably want to know there’s a safe landing if you’re not one of the 0.01% of new companies that successfully IPOs…
The tried and true way of building a massive business is compound growth over long periods. Most great businesses are freight trains, not rocket ships.
We started On Base because we’re former venture backed founders who believe there’s a better way to build, fund, and grow companies. Together, we’ve started companies that have raised more than $200M of venture capital and grown companies from $0 to $45M in revenue. We’ve also seen some of our companies crash from 9 figure valuations to zero in <12 months. We don’t recommend that particular learning experience.
We believe that startups should start lean, target profitability early, and find their fully burdened unit economics before raising venture funding.
We don’t think you should sacrifice a great shot at a $50M company for the slight chance of building a billion dollar company and the 0.01% chance of an IPO.
We think the goal should be: profit market fit > product market fit.
Create a high margin product or service that customers want to pay for. Build a team that love their jobs. Stay focused and let them do great work. That’s how you create Good Profit.
And in the long run, Good Profits mean happy customers, happy employees, happy investors, and very, very happy founders.
We don’t think the goal should be to build a company fast and sell it so you can live the life you’ve always dreamed of.
Running the company of your dreams should be the life you want to lead.
What we do
build
Startups we work on target niche markets that can reach early stage profitability quickly. Our goal is to reach profit-market fit fast to determine if there’s a business worth building. We mostly do these ourselves, but if you’re a solo founder looking for partners, we can round out your team of one by offering product development, growth marketing, marketing and design, legal, finance and regulatory support.
Who do we want to work with? If you’re a B2B founder you need to run sales. If you’re B2C with a price point high enough to do paid acquisition (min ACV > $100), you need to own growth marketing. If you’re a low ACV B2C play, you need to own product and engineering, so you probably need to be an engineer. If you’re working on a deep tech problem you can’t solve alone, we’re not your guys.
invest
We’ve developed a unique structure for a SAFE investment called the BASE note. The acronym just exists to sound cool, so we’ll save the details for later:
If you’re looking to raise funding or sell secondary and you are already or almost profitable, we are an alternative to venture capital for founders looking to grow moderately fast and run profitably over the long term.
We don’t take a board seat, we don’t have series level blocks on future financings, and we don’t care if you sell in 5 years or 20 years. We do need you to be fully committed to dividends and future share buybacks, so we require approval rights on founder compensation. If you think it’s fair that founders, employees and investors should all share profits at the same time, then call us.
recapitalize
Most venture investments ultimately fail because the market they are chasing turned out to be too small. If you built a pretty good business (min $3M annualized revenue) and are starting to realize your market is too small to raise a Series B, we’re happy to chat if your VCs have already come to the conclusion that they either need to recoup some capital or take a $0. They usually prefer $0, but if they don’t then give us a call. We’re looking to partner with you to take back your dream. We aren’t here to buy your company, so you need to be long-term committed.
For re-caps, we work with family offices to put together SPVs (special purpose vehicles) that take a majority interest in the company and we can help organize additional debt financing if you’re EBITDA positive or close to it.
Contact Us
Interested in working together? Fill out some info and we will be in touch shortly. We can’t wait to hear from you!