A few years ago, I was sitting in a room with my then business partners discussing ways in which we could streamline communications with a new platform. Within hours, we laid out potential features, began writing content for the landing page and identified a few key conferences we wanted to attend to get things moving.
The biggest question surrounding this whole thing: Where’s the money coming from?
The three of us were at a point in our lives where we couldn’t just take that traditional startup leap of faith and walk away from our jobs. People had bills to pay and mouths to feed, and we no longer could just worry about ourselves. We knew we needed cash, but didn’t exactly know where it would come from or what a good valuation at that point even looked like.
After countless meetings while still managing to push forward with this (what we thought) million dollar question looming over us, we connected with an outside source that was actually an acquaintance with one of my partners. He was working on something to benefit the same industry we were looking to enter, and after meeting, agreed he’d be a good fit. One conversation lead to another, and with no formal paperwork in place, we took the risk of verbally agreeing to bring this individual on to be the fundraiser.
Little did we know, just a mere few weeks later, this same person would send us paperwork to sign under his newly-started S-Corp with an ultimatum: either sign for a significantly reduced stake to work on our idea, or go off and try to make it on our own. With inadequate (or any) real funding resources or support, we signed.
Am I bitter? Not anymore. Am I better? Absolutely. While I’m no longer involved with the company, hindsight is 20/20. The writing may have been on the wall, but it would be the last time I let my emotions get involved with any business decision-making.
• Never bring someone on with similar equity as the original founder or partners to simply be a fundraiser. The right Advisor can certainly help with that and at a traditional 1% equity fee. Sites like FounderDating and CoFoundersLab can help identify and break the ice with those potential Advisors.
• The real top priority: User Acquisition. It’s going to be real simple for a VC to make a decision with little-to-no user base. With strength in numbers and continuously improving from early-adopter feedback, you’ll attract the right attention. Throw in a some steady networking within your area’s startup community, and you’ll be in the driver’s seat while turning your project into a product.
• Even if you have (or you think you have) the best idea in the world, it’s nothing without proper execution. How you execute your vision will decide your make or break. Make sure you’ve done your research, know your competition, and again, know what your users want.
• Pitch to an Accelerator: This is a great way to find out where you stand. These programs are typically 90 days, offer anywhere from $10,000-$75,000, and in return take somewhere between 5-10% in return for your early stage startup. The best part is that typically on that last day, the program concludes with each team pitching to a room full of inventors to showcase how they’ve grown for potential additional seed funding.
Here’s a list of Inc. Magazine’s Top 15 Accelerators in the US
• Bootstrap: Pinch pennies. Continue to cover your bills but instead of eating out during lunch, bring lunch with you. Instead of having that Orange Mocha Frappaccino three days a week, make coffee at home and enjoy it on your drive to work. Whatever you can do to help save a few extra dollars without jeopardizing the livelihood of your family, make it happen.
• Learn from Others: Some may say I walked on to an already sinking ship, but I grew from it and can hopefully help other startups avoid a few less headaches.
• Starting on a Bank Loan: If you’re pre-profit, skip to 1:00 and a familiar face will tackle this one