Questions

Could a PPT deck and interest-based signups be enough for 20k pre-seed fuding?

I am an experienced (yet not necessarily that successful ;)) entrepreneur, and I have an idea for a new startup. I've collected about 100 signups from potential end users and potential vendors (to show the potential product/market fit). Since I've been down that road before I know it might be easier to raise now, with a much lower valuation of course, than later, when the product's ready and then I'll be expected to show traction before raising. I need a bit of cash to help me pay developers and get things going. How far off am I? does that sound doable at this stage?

3answers

Probably not but not because it's impossible to raise on a deck. Raising based purely on a deck almost only happens by seed funds backing an established team. In this case, the raise is much larger (usually between 1 to 2 million).

Without a technical founder, and without you both having a track-record that inspires a lot of confidence, seed funds are unlikely to invest and they're certainly not likely to write such a small check.

That leaves your options as accelerators, friends and family or angels. Most good accelerators (those writing 20k and greater checks) need product in the market to accept so id say that accelerators are likely not an option but you could try.

Angels almost always want live product, at least a somewhat functional prototype, so unless you have a close relationship with someone who is also an angel investor, this is unlikely to be attractive at this stage to angels.

So your best option for outside money is friends and family at this stage. Happy to talk through this in a call with you.


Answered 5 years ago

I second Tom's response above and recommend that you find a technical co-founder (this is something you can do with a deck and interest based sign ups) and build a MVP (minimum viable product) by bootstrapping and then raise the capital. This would test your idea at no external risk. I've been where you're at and successfully navigated my way around. I've personally raised Family & Friends money several times and will tell you that it's your relationship and reputation that's riding on that investment so be very careful with that raise and setting expectations.

I did sense that you're not confident about your idea's success or at least you didm;t sound like when you said - "Since I've been down that road before I know it might be easier to raise now, with a much lower valuation of course, than later, when the product's ready and then I'll be expected to show traction before raising." Well yes, so are you not sure that when the product is ready there wouldn't be enough users/ traction? And if not, what's the point of developing something you're not confident about? Also, 20K will only go so far so you will have to raise several rounds even after the product is developed with original 20K and the same question of traction will be raised anyhow.

Happy to help with ideas on bootstrapping, finding co-founders, outsourcing the development, or any follow up questions you may have, etc over a call.


Answered 5 years ago

An additional option I've just used: Similar to a tech founder. I sought out and used a student from the local college's Programmer Analyst course. Work placements were part of their course and they actually needed these work terms to graduate. Of course, paid is preferable, but not required. This provided us not only a working prototype, but got us very close to our Beta release. From there, at the end of the work term we offered the student equity to continue on with us.

It worked very well, and I suppose isn't very different from taking on a technical founder. But in this case the student had additional benefits to performing the work (he gets to graduate) and was willing to do the work for less equity.

In our case all of this was possible because the technical requirements were simple enough to be within a new graduates skill set, of course.


Answered 5 years ago

Unlock Startups Unlimited

Access 20,000+ Startup Experts, 650+ masterclass videos, 1,000+ in-depth guides, and all the software tools you need to launch and grow quickly.

Already a member? Sign in

Copyright © 2019 Startups.com LLC. All rights reserved.