When I first started working on my start up, it seemed that until it was generating revenue,it would be pointless to ask anyone to invest. So I pursued it myself. Now that I have spent about $300K in development, I have a working product with paying customers. But I think I need investment to make it grow and I'm not sure the next steps. A local business association agreed to promote the solution to 70 members if I provided a 15% revenue share. As an example, for the business that referred me into their local association, the annual cost for me to deliver them services was $300 a year. The amount they paid for the service was $3,000 a year. Client is reporting results of $40,000 a year in new client acquisition. We expect their results to increase and have agreement to raise the cost accordingly. Our cost of service will not rise. Need help in understanding funding options to help grow the business now that I see it has roots.
The decision to raise equity capital would be made based on these criteria:
(a) Size of your market: Is it a big market, meaning you have a chance to hit $100M in revenue in 5-8 years?
(b) What is your YoY growth rate?
(c) Will infusion of equity capital help you greatly accelerate your YoY growth rate?
Happy to discuss further if you'd like to.