Questions

I am currently working to raise seed financing to support the development and launch of a SaaS venture that also encompasses a B2C model for attracting individual users. If my future plans include launching a subsidiary of this business for the purposes of leveraging the clients, user base and brand name: how might I go about seeking investors for these businesses? If these ventures operate using similar resources however each appeal to a different niche market; then how do I correctly position myself with investors to avoid either A. Giving away ownership of something unrelated or B. Failing to represent the business correctly and raising no funding. Is there a way I can exclude brand ownership from an investment: at what point do I need to start looking into the dynamics behind licensing and franchising?

In my experience, every step you take to complicate your company's structure and ownership rights reduces the likelihood of investors providing your venture with seed funding.

To attract seed funding, investors expect a single-minded laser focus on the entrepreneurs' assessment of his or her best path to validating their business and growing it into a very large business as quickly as possible. So the very idea that you are reliant or considering taking multiple paths to success is likely to act as a red flag for most experienced early-stage tech investors.

Also, until there is significant traction achieved, an investor is expecting to own everything generated by the business. There are rare occasions where a particular asset, brand, domain or other component of the business can be spun-out (usually in the case where it's a distraction from the core business but there's inbound demand from a buyer), but when I say rare, I mean this happens so infrequently that it's not anything that should be reasonably expected in the course of planning.

Speaking candidly, this entire strategy creates a perception (accurate or unfair) that you are undecided on a number of the key questions you need to be sure of before you have a good chance of raising seed funding.

I'd be happy to talk to you about what you're doing and help provide some clarity based on what I hear. I encourage you to review my references as I have been helpful to many other Clarity members on these types of issues.


Answered 6 years ago

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