I'm the founder of a social network startup. My family and friends gave me seed money enough to build the product, and though its far from complete, I think the app is like 60% done. The problem is that I live in Ghana, where VC is virtually non-existent. My programmers are in Serbia. It's however obvious that we need external financing to pull our app through.
My original plan was to finish the app, bootstrap and get some users, and then reach out for funding. I've formed some good connections on LInkedIn, but I'm wondering if it's even possible to convince someone over the internet to invest in your startup and I don't even know how to do that.
Luckily one of my programers is traveling to San Francisco in a month and he wants to help find an investor. The app would be like 90% at that time. Is it possible to get an investor when your app is not completely done? How do we even go about this process of finding investors? I've already read some investment blogs, and followed Paul Graham.
I need some real guidance here, possibly someone who will advice me through this process, from now till closing the deal.
There are some angel investors that may invest in your business, depending on how much traction you have but most investors want to see a proof of concept and some traction. The best advice I can give you is try to get the app done and continue to have conversations with investors outside of your family and friends. All you need is to find someone who believes in your vision. Even if you don't find an investor who is willing to take the risk, the worst case scenario us you build some good relationships that can be leverage later and you will get some valuable feedback on your product.
Unfortunately, this is quite far from a likely investment. Several big issues:
(1) It requires a great deal more work (read: "time+money") to SELL an app than to MAKE one. The primary risk investors need to overcome is not the question of whether the app can be built... it's whether the app can be SOLD. So if you haven't been able to demonstrate sales traction yet, then this is an unlikely investment.
(2) When an investor is in the same country, it's much easier to enforce the law. If someone in the US were, for instance, to transfer funds to a Ghanaian bank, and then you were to simply walk off with the money, they would have very little recourse. The idea of interacting with an overseas court system is a nearly unthinkable headache. I don't mean to offend or accuse you of bad intent — just pointing out that investors have enough fear within their own countries; it's compounded when looking at a foreign opportunity.
My advice is that you'll need to find a way to finish the Minimum Viable Product on your own steam, show some sales, and THEN pursue investors.
If the opportunity is so strong, for instance, perhaps you can convince your Serbian colleague to invest his own time in completing the project — in exchange for shares in the enterprise? If you hope to convince an investor to give you cash, then a good "baby step" would be to first convince a developer to give you their time...
Happy to discuss further on a call, if you like.
Generally speaking, yes, it's possible to get money from USA investors even though your company is not local.
On the personal note, I am glad to see that all your programmers are from Serbia, as that's my home country and I live in the US now.
The app does not have to be done at all. 60% is good enough to test the market, so I would shift my focus on product--market fit validation, customer acquisition process and a business model with an emphasis on revenue potential, addressable market size, total market size.
Seed investors will put their money into pre-revenue companies, but venture capitalist, Round A are less likely to do so which makes bootstrapping incredibly important.
Here's my paper that can help you understand where does your company fall on investment readiness spectrum.
How do you know that #startup is ready for venture capital? Industry fit, $1B+ market size, big competitive advantage http://wp.me/pj2e9-by
Finally, I would be more than happy to work with you on your investor's pitch and be ready before your colleague starts making connections in SF: