How will I know when my company is ready to receive an investment?
How will I know when my company is ready to receive an investment?
I am starting a company and have bootstrapped it so far. I have produced four versions of the demo. The first fully-working version is underway. Getting this to a beta phase product will require capital, which requires an investment, which requires an investor, which requires I stop working on the product and go out and talk to people about it.
The last time I raised money from investors, it took a while but I was successful. I don't want it to take a while. I want it to be brain dead simple for an investor to understand the value so that I can optimize the time I spend with the product.
What is the best way to approach raising money, while limiting both my time and risk?
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@gahooa What is the litmus test for a brain dead simple product, other than "would my own mom understand it?" – Gunshor 12 years ago
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@gunshor: The best test I know is that you begin to explain the *benefit* to the end user, and they so quickly recognize that it solves one of *their* problems that they stop you and say, "How much and when?" The more you have to "explain" it, the farther away you are from "brain dead simple". Seriously. Take advantage of this, because it's $5 million of *not* [OPM](http://en.wikipedia.org/wiki/Other_People%27s_Money) speaking. – Peter Rowell 12 years ago
1 Answer
The best way that I have found through experience in funding others is to simply state the value of your idea. Explain whether your concept is a "nice to have" or "need to have." Most individuals when pursuing funds like to talk about their idea and the technology around it rather than the business itself.
Remember that the tech and product are probably really cool, but can easily be delved into later down the road. What investors need to know is whether there is a strong enough team to accomplish the mission, if there is a large competitor base and if there is a potential for follow-on capital.
That being said, you mentioned that you need capital to go through a Beta phase. Investors like to see traction before investment, try and release at least some of your product in a Beta and that way you have feedback to show the money people.
