Summary:

Eight-figure VC investments don’t show up every day, but website tools firm Jimdo turned it down on principle – even though it knew the decision would make it harder to get to number one.

Jimdo co-founders (L-R) Matthias Henze, Fridtjof Detzner and Christian Springub

Talk about counter-intuitive. While Germany’s startup community is eagerly awaiting a big exit or IPO to validate its growing status, one local success story — website tools firm Jimdo — says it’s rebuffed an eight-figure investment from a big venture firm on principle.

It doesn’t even sound like the “top-tier VC” was explicitly pushing Jimdo to ‘sell out’, but the company saw that goal as implicit in the very idea of taking venture funding.

Here’s what founders Matthias Henze, Fridtjof Detzner and Christian Springub had to say in a blog post:

By taking a venture round, you basically commit to an exit.

There are usually only two ways this can happen: a sale (to a big corporation like Google, Facebook, or Microsoft) or an IPO. Selling (out) to a big corporation is not an option for us. We’re building this company for the long run. We want to see Jimdo and everything it stands for as a proud and independent entity, not subsumed into some corporate behemoth.

And an IPO? Well, unless you’re an extraordinarily successful company like Apple or Google, publicly-traded and sustainable just don’t fit together. Shareholders’ interests are short-term, looking at the next quarter’s profits. But we believe that decisions made with the long view in mind are better for the business and the company’s bottom line.

We think long-term and walking away from venture capital means we keep the freedom to make decisions that way.”

That’s a really strong position to take. But does it make sense?

It’s not like Hamburg-based Jimdo has never taken in outside funding. Indeed, it has had €500,000 pumped into it over the years by angels and the notorious Samwer Brothers, via their European Founders Fund vehicle (they’re still investors, too). The company has even given up a big 30 percent stake to investors United Internet before, but bought it back because it didn’t want to “have to justify decisions to a board.”

And guess what, Jimdo is now pretty successful. It employs more than 100 people in Germany, France, Italy, Russia, China, Japan, the Netherlands, Spain and Poland and the U.S. (where co-founder Springub is based). And it’s “rapidly growing”, the founders say, off the back of good old revenues.

However, it’s number three in its sector, behind Wix and Weebly — both of which have tens of millions in VC funding. While Jimdo’s founders say their anti-VC reasoning is partly derived from the fact that they’re “not driven by material success”, they also acknowledge that it means having to fight harder — and longer.

The price of saying ‘no’

“The round would have given us the chance to become No. 1 in our market in the very near future,” they wrote. “We won’t be able to outspend our competitors on the marketing side… at least not right now. However, we believe that in the long run, the company with the best product and strongest core values will come out on top.”

The post was an idealistic one that in some ways stands as an interesting companion/counterpoint to that written by Silicon Valley vet Bill Davidow this week. Davidow’s excellent post was a critique not only of the tech industry’s eagerness to exploit its increasingly consumer-centric clientele, but also of a general trend of short-termism.

Both Davidow and Jimdo are essentially standing up for the concept of a long-term, solid business, but of course, Davidow’s a venture capitalist. He blames the newfound consumer focus for giving tech firms more leeway in shafting their customers, whereas Jimdo blames VCs themselves for encouraging such short-term, value-lite thinking.

There’s probably a grain of truth in both perspectives. Where this gets really tricky, though, is for companies like Gidsy that take the VC rounds but still maintain they’re never going to sell out. Is that just wishful thinking?

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