I sure wish we wouldn’t call non-VC fundable opportunities lifestyle businesses. It sounds like the person working on that business spends his days on a beach somewhere in the sun and collects the checks that come in. Just because it makes less money than a VC invested business doesn’t mean it isn’t still a business that takes lots of work.
We don’t have a good term for these types of businesses yet. Independent or indie is the best I’ve heard so far. Maybe, Fred, a post here and this community can come up with a great name we can all use?
I had never thought that the using the word “lifestyle” to describe a business that was too small to be interesting to an investor was derogatory. But I can see Elia’s point.
There is, however, a difference between what we’ve been calling “lifestyle” businesses, and “indie” businesses. My friend Bryce has launched an effort to fund “indie” businesses. As I’ve understood it, an “indie” business is one that might be large enough to support a significant investment but the founder wants to remain independent and therefore has no desire to exit and thus taking VC investment doesn’t work.
I touched on all of this is my ten ways to be an entrepreneur presentation (video, deck). Most of the entrepreneurial ventures I describe in that presentation are not backable by VCs. Only the last three (the startup, the breakout, and the company) are.
So I would define things this way:
Lifestyle – too small for VC, but will generate enough annual cashflow to be a great business to own and operate
Indie – might be large enough to justify and provide a return on a VC investment, but the desire to retain control and remain independent makes VC untenable for the entrepreneur
VC Fundable – large enough to justify and provide a return on a VC investment and the founder is willing to exit at some point and provide a capital gain to the investors
So with all of that in mind, I would like to ask a final question and then take this discussion into the comments. Is the term “lifestyle business” derogatory or dismissive in any way and do we need to find a better term for that kind of business? And if so, what should we call them instead?