Loading...
Answers
MenuCould a PPT deck and interest-based signups be enough for 20k pre-seed fuding?
I am an experienced (yet not necessarily that successful ;)) entrepreneur, and I have an idea for a new startup. I've collected about 100 signups from potential end users and potential vendors (to show the potential product/market fit). Since I've been down that road before I know it might be easier to raise now, with a much lower valuation of course, than later, when the product's ready and then I'll be expected to show traction before raising. I need a bit of cash to help me pay developers and get things going. How far off am I? does that sound doable at this stage?
Answers
Probably not but not because it's impossible to raise on a deck. Raising based purely on a deck almost only happens by seed funds backing an established team. In this case, the raise is much larger (usually between 1 to 2 million).
Without a technical founder, and without you both having a track-record that inspires a lot of confidence, seed funds are unlikely to invest and they're certainly not likely to write such a small check.
That leaves your options as accelerators, friends and family or angels. Most good accelerators (those writing 20k and greater checks) need product in the market to accept so id say that accelerators are likely not an option but you could try.
Angels almost always want live product, at least a somewhat functional prototype, so unless you have a close relationship with someone who is also an angel investor, this is unlikely to be attractive at this stage to angels.
So your best option for outside money is friends and family at this stage. Happy to talk through this in a call with you.
I second Tom's response above and recommend that you find a technical co-founder (this is something you can do with a deck and interest based sign ups) and build a MVP (minimum viable product) by bootstrapping and then raise the capital. This would test your idea at no external risk. I've been where you're at and successfully navigated my way around. I've personally raised Family & Friends money several times and will tell you that it's your relationship and reputation that's riding on that investment so be very careful with that raise and setting expectations.
I did sense that you're not confident about your idea's success or at least you didm;t sound like when you said - "Since I've been down that road before I know it might be easier to raise now, with a much lower valuation of course, than later, when the product's ready and then I'll be expected to show traction before raising." Well yes, so are you not sure that when the product is ready there wouldn't be enough users/ traction? And if not, what's the point of developing something you're not confident about? Also, 20K will only go so far so you will have to raise several rounds even after the product is developed with original 20K and the same question of traction will be raised anyhow.
Happy to help with ideas on bootstrapping, finding co-founders, outsourcing the development, or any follow up questions you may have, etc over a call.
An additional option I've just used: Similar to a tech founder. I sought out and used a student from the local college's Programmer Analyst course. Work placements were part of their course and they actually needed these work terms to graduate. Of course, paid is preferable, but not required. This provided us not only a working prototype, but got us very close to our Beta release. From there, at the end of the work term we offered the student equity to continue on with us.
It worked very well, and I suppose isn't very different from taking on a technical founder. But in this case the student had additional benefits to performing the work (he gets to graduate) and was willing to do the work for less equity.
In our case all of this was possible because the technical requirements were simple enough to be within a new graduates skill set, of course.
Related Questions
-
How has Uber grown so fast?
Obviously, they do the fundamentals well. Good brand. Good experience. Good word of mouth. Good PR. Etc. Etc. But after my interview with Ryan Graves, the head of Global Operations at Uber (https://www.growthhacker.tv/ryan-graves), it became clear that they are operationally advanced and this is a huge part of their success. I'll explain. Uber isn't just a single startup, it's essentially dozens of startups rolled into one because every time they enter a new city they have to establish themselves from essentially nothing (except whatever brand equity has reached the city ahead of them). This means finding/training drivers, marketing to consumers, and building out local staff to manage operations for that city. This is where Ryan Graves comes in. He has a protocol of everything that must be done, and in what order, and by who, to ensure the best chance of success in a new city. So how has Uber grown so fast? Essentially, they figured out how to grow in one locale and were relentless about refining their launch process to recreate that initial success over and over in new cities. No plan works for every city, and they've had to adapt in many situations, but it is still a driving factor for their success.BT
-
How much equity should I ask as a CMO in a startup?
Greater risk = greater equity. How likely is this to fail or just break even? If you aren't receiving salary yet are among 4-6 non-founders with equivalent sweat investment, all of whom are lower on the totem pole than the two founders, figure out: 1) Taking into account all likely outcomes, what is the most likely outcome in terms of exit? (ex: $10MM.) Keep in mind that 90%+ of all tech startups fail (Allmand Law study), and of those that succeed 88% of M&A deals are under $100MM. Startups that exit at $1B+ are so rare they are called "unicorns"... so don't count on that, no matter how exciting it feels right now. 2) Figure out what 1% equity would give you in terms of payout for the most likely exit. For example, a $10MM exit would give you $100k for every 1% you own. 3) Decide what the chance is that the startup will fail / go bankrupt / get stuck at a $1MM business with no exit in sight. (According to Allman Law's study, 10% stay in business - and far fewer than that actually exit). 4) Multiply the % chance of success by the likely outcome if successful. Now each 1% of equity is worth $10k. You could get lucky and have it be worth millions, or it could be worth nothing. (With the hypothetical numbers I'm giving here, including the odds, you are working for $10k per 1% equity received if the most likely exit is $10MM and the % chance of failure is 90%.) 5) Come up with a vesting path. Commit to one year, get X equity at the end. If you were salaried, the path would be more like 4 years, but since it's free you deserve instant equity as long as you follow through for a reasonable period of time. 6) Assuming you get agreement in writing from the founders, what amount of $ would you take in exchange for 12 months of free work? Now multiply that by 2 to factor in the fact that the payout would be far down the road, and that there is risk. 7) What percentage share of equity would you need in order to equal that payout on exit? 8) Multiply that number by 2-3x to account for likely dilution over time. 9) If the founders aren't willing to give you that much equity in writing, then it's time to move on! If they are, then decide whether you're willing to take the risk in exchange for potentially big rewards (and of course, potentially empty pockets). It's a fascinating topic with a lot of speculation involved, so if you want to discuss in depth, set up a call with me on Clarity. Hope that helps!RD
-
What advice do you give to a 16 year old entrepreneur with a start up idea?
First, hat tip to you for being a young entrepreneur. Keep it up! If you have the funds to build out your MVP, hire a developer and possibly a mentor. If your idea is marketable, you don't need to give up equity by bringing in a co-founder. If this is your entrepreneurial venture, I would recommend you do retain a coach to help you see all the things you may not know. Have you already done your SWOT analysis? Have you identified your target market? What is your marketing plan? What will be your operating expenses? There are lots of questions to ask. If you would a free call, I'd be happy to help you in more detail. Just use this link to schedule your free call... https://clarity.fm/kevinmccarthy/FreeConsult Best regards, Kevin McCarthy Www.kevinmccarthy.comKM
-
Whats the best way to find commission sales reps?
This is not my specialty, however, I have been in your position many many times -- maybe this will help. If the product is in-tangible, then look for JV partners on the Internet. Try to find an expert that deals with these JV opportunities (like me). If the product is physical, then look for sales organizations that have networks of sales people across the country. You do the deal with the organization and the independent network of sales people sells your product. It's a sweet setup if you can negotiate a margin that works for everyone. Hope that helps - Cheers - NickNP
-
Business partner I want to bring on will invest more money than me, but will be less involved in operations, how do I split the company?
Cash money should be treated separately than sweat equity. There are practical reasons for this namely that sweat equity should always be granted in conjunction with a vesting agreement (standard in tech is 4 year but in other sectors, 3 is often the standard) but that cash money should not be subjected to vesting. Typically, if you're at the idea stage, the valuation of the actual cash going in (again for software) is anywhere between $300,000 and $1m (pre-money). If you're operating in any other type of industry, valuations would be much lower at the earliest stage. The best way to calculate sweat equity (in my experience) is to use this calculator as a guide: http://foundrs.com/. If you message me privately (via Clarity) with some more info on what the business is, I can tell you whether I would be helpful to you in a call.TW
the startups.com platform
Copyright © 2025 Startups.com. All rights reserved.