Serial Entrepreneur, , Early Stage Funding Hustler, Founder and CEO of DealzTap.com, BidzDirect.com and IOBIZ Solutions, Ex-Corporate IBM, All round good guy. haha.
Started DealzTap with 2 other founders. Registered the business name in October, Developed the MVP in 2 months. Raised over $400,000 with only the MVP and no revenue the following month, with no signed businesses on board.
In the early stages, usually the founders have a split in equity stake in the company depending on the arrangement and agreement between the founding members. What you can do to make things attractive is make him a CO-Founder and CTO, with say 20% equity, dilution in the normal ratio tween you and him (ie Ration 1:5). I don't like bringing on investors or shareholders with no dilution as it may hurt your chance of bringing on new investors. Even worse by the time you reach Round B, your own equity shares will be diluted several times and you may find yourself no longer the majority shareholder. Find other ways to make the deal attractive to the CTO. Make him feel he is a part of the founding team.
If they invest money in the early stage of your business, this is a great opportunity to put a "market" value on your business. One of the hardest thing for any startup who only have a protype with no revenue is put a value on your business. For eg. One of the company I raised early funding for, we secured 2 lots of $150k for 10% each. So that equates a market valuation of $1.2m. Your accountant can help you set this up and create a CAP table to keep track of equity dilution.
Wordpress has thousands of templates you can purchase which all you need to do is upload your logo, fill out the blanks and insert your videos or blogs. Here is one our sales guy put together, and trust me they have NO development or html skills at all. THis cost us $55 >>> www.dealztap.com. Check it out.
You need to look at your startup in stages. If you are getting revenue in your business and have 1400 subscribers, what execution plan do you have in place to GROW, and how much money do you need to do so? Even at this level, I believe you are still considered as early stage seed and still would be looking for small/med Angel to help you boost your existing traction. You are in a good position to look for smart money investor that will have the contacts and network to take you to Series A. Since your company is enjoying good cash flow, take your time to find the right investors that will maximise your evaluation for the next round.
I am a strong believe of focused marketing. Amazon sold books in the early days as you know, and they were amongst the first of not the first to sell books online. They identify themselves as the platform to sell BOOKS. Once they have a massive double market place and became successful at selling books, they then reach out to other sellers. I remember in the early days I was not interexted in buying books on Amazon, but I did know about them. Once they added DVDs to their platform, I was hooked. Start centric with a focus demographic or an area of the market you can dominate, and then expand out to the next set of products by perhaps surveying your existing database of customers. "Hi Mr Customers, we noticed you have been buying books from us for awhile now, if we start selling DVDs on our platform, would you buy it?". Don't be afraid to ask your customers for quick survey. Perhaps offer them a $20 coupon towards their first purchase of the new line of product you plan to sell after plants.
