How likely is an investor to support a marketplace which plans to raise $500K & acquire 200K registered users to generate 5 digits revenue in a year?


I think Alessandro has read the question wrong. An angel investor rarely invests in a plan. They invest in the entrepreneur and any evidence that the entrepreneur is on the right path. This is ideally expressed in some form of early traction, or at least early external validation.

Early validation in your case would show that you've already run customer acquisition experiments and proven a stabilized CAC. And that you've run some basic experiments to show that acquired users are willing to transact in some way.

In other words, a plan is likely not enough to convince investors to invest.

Answered 9 years ago

Very unlikely... you're describing an acquisition cost of $2.50/member, to produce $0.50/member of revenue (if the 'five digits' is $99,999). A different take on it would be that $500k investment to support revenue <$100k a year later isn't a formula for success either.

Marketplaces are a difficult pitch, since you need to convince the investors that both the buyers AND the sellers will value your proposition (and can be acquired at a cost low enough to be profitable).

I know this isn't what you'll want to hear, but if you're in a "pre-revenue" or "only enough money for ramen noodles" kind of situation, most Angel Investors would want to see you have >1,000,000 registered users *before* they get involved.

I don't mean to "shoot ya down", just saying, it's a rough marketplace. I'd be happy to discuss ways to dress up your plan, in a private consult if you like.

Answered 9 years ago

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