Question
We have developed a software product (application platform) on which we have built five solutions for a particular vertical, in partnership with a paying customer. The intention is to deploy these into the cloud as SaaS applications with our platform underneath. Eventually, we will be moving into other verticals but have chosen to start with one in which all customers are "me too" - they have the same processes, same organisational structure, same drivers and challenges, etc.
I have recently started reaching out to potential customers in this industry (we have worked within this industry in a consulting practice for many years and therefore have a lot of contacts) and the feedback has been very positive to the point that a number of these customers have indicated they would like to buy, and are at various stages of the buying cycle. This is an enterprise product where one solution runs around $10-20K per year (most of these customers want multiple solutions), so we are not talking a $19.95/month online application.
In order for us to support new customers, we are going to need to be able to focus on this company full time, as opposed to the bootstrapping, off the side of our desk model we have been working under so far.
In speaking with various investors, the feedback has been that we should get as much traction as possible before looking for a seed round.
How much traction is enough? With two paying customers in three-year contracts, and a full working solution, positive competitive research and positioning, good response from a handful of customers, what more should we be gathering in terms of evidence before we look for funding? We may run out of options soon if these next two customers sign up.
Answer
Based on what you have written here, you have proven "The dogs will eat the dog food." Do you have the cost to deliver the product in an analysis that will show a potential investor it will be profitable? Do you have a business plan? You need this information in order to get through the filtering process a potential investor will put you through. Make sure as you are beginning to deliver the product, you maintain an accurate list of costs you can compare to your projections and make sure they are realistic.
I have reviewed a number of business plans presented to investors. The best ones have a one page executive summary with a very high level describing the "Why" the product exists, macro projections and a high level summary of the leadership team. The detail follows in the actual business plan. You only have a few minutes to get the investors attention enough to turn the page and keep reading.
Feel free to reach out for a call if you would like to discuss further.
