Buffer bought out their investors

startup
buffer
funding
wistia

#1

https://open.buffer.com/buying-out-investors/

The TLDR is that Buffer bought back the shares of their main Series A VC investors. The VC investor business model wasn’t a fit for how Buffer wanted to grow sustainably.

This is an “alternative to VC” trend that I’ve been following for a while. IndieVC (who are structured as a VC but with a different business model) are big champions of this as well.

The Wistia team did something similar in July of this year:

https://wistia.com/learn/culture/taking-on-debt-to-grow-our-own-way

We turned down the offer to sell Wistia and instead took on $17.3M in debt. This allowed us to buy out our investors, gain full control of Wistia, and take the path less traveled in the tech industry.


#2

I was taken aback when I was asked whether I would step down as CEO in the event that Buffer could not afford the 9 percent annual return. Although it may be a reasonable question from a pure business perspective, and I was confident we’d be able to deliver, it shocked me to my core. The level of communication we once had started to break down after that and it triggered much reflection and some sleepless nights for me.

Sounds like they had no choice.


#3

Good for them.

I think it is incredibly hard to mix VC and open source / community focus.

How to sufficiently align incentives to square the fact that VCs are looking for a return on their investment and will always want their pound of flesh at some stage.


#4

If you can NOT need the investment in the first place, that is obviously best.

But people seem to want to be paid and stuff :slight_smile:


#5

They did have a choice. Most companies would not have the cash in the bank to attempt this. The part you quoted was an illustration of following the VC path — so they decided to do things differently.