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MenuI am developing a web app and wondering how early I can start pitching to investors?
Developing Web app and finished MVP feature -
1. Is it still too early to start pitching investors or no?
2. How can I attract investors?
Answers
It will depend upon your relationship with the investor. If the investor have trust upon you, then you may pitch anytime, however, if you don't know the investor for long, then you have to follow a process.
You may setup a call to discuss more.
Start a Kickstarter project.
This will give you early funding + you'll be able to negotiate far better terms for investor money.
You may even find, running multiple Kickstart projects provides better funding + you keep 100% ownership.
If the investor is a rich uncle who would do anything for you, pitch it today! :) Most people aren't that lucky so they prepare an elevator pitch (Think "Shark Tank") and business plan. Your pitch should describe your vision, the service, the potential value of your business, the amount of money you need and what you're offering early stage investors. Form an advisory committee to help you with your plan and find investors. While you work on your pitch and plan, start thinking about investors who might be interested. For example, investors/managers who understand the space and had success with a similar / related offering would give you a quick dose of reality about your service and your proposition to customers and investors. Angels with related experience and potential customers are good prospects too. One way to appeal to potential investors is with reviews / quotes from potential customers and former managers / owners of related / similar offerings. Test results with testimonials from the user/customer is the best proof. Let me know if you need help with your pitch, plan or start-up.
This is a great question and is often asked around the startup community. At a recent event, the three main ingredients the panelists concluded for fundraising are: 1) have a good story, 2) be prepared and 3) build relationships
You can start talking to investors now to build those relationships. Don't start by pitching to them, start by asking for advice. Be genuine.
A big milestone you want to get to BEFORE actually pitching is having a very tangible dollar amount that you need to get to the next milestone for your business. I call it the "rock-solid plan" when your financials line up with your marketing plans, product roadmap, and hiring plan.
Investors that do believe in you will want to know that the money they give you will get you to milestones like: Early Revenue, Product Market Fit, Cash Flow positive, etc.
Related Questions
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How do you get exposure on AngelList to attract angel investors?
What of the following things does your startup have? > Founders who have graduated from prestigious universities / previously exited companies to known acquirers / worked for a known companies (with known being a brand-name company such as Google, Amazon, Facebook etc) > Three or more months of statistically meaningful growth (e.g. for easy sake, double digit growth of a number in the thousands) > At least one investor who is active on AngelList (defined in the ideal state by at least one investment in a company who raised their round through AngelList and ideally whose social graph is connected to "high signal" members of the AngelList network) If you have none of these things, then at least, have advisors and referrers who have a strong AngelList profile. And another option is to seek out the AngelList scouts and pitch them directly. They are more open to this than anyone else and I've seen companies with very little traction and very little social proof get featured because a scout believes in the founder and/or the story. Without any or most of the above, it will be difficult to stand out or build relationships via AngelList, in my opinion. I assume now AngelList operates on a concept similar to the LinkedIn "degrees of connection" model, whereby an entrepreneur can now send unsolicited messages to investors so long as there is a degree of connection between the investor and the company. I get a few unsolicited emails a week from companies whose advisers or investors aren't people I follow but that because of the way they determine "connection strength", these unsolicited emails still gain my attention. I assume this is the case for all investors. So the more that you can build your list of advisers and referrers, the more connections you can solicit. That said, AngelList's inbound email system is almost entirely ineffective for "cold" emails to really high-profile investors. Happy to share with you what I think to be your best options for raising profile for your company.TW
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Among platforms for startup funding, AngelList is the 800 pound gorilla. Does it make sense to use simultaneously other platforms like Gust, etc?
Short answer: Of course! Many angel groups require you to submit through Gust because it offers a consistency and makes reviewing applications easier. But not all use Gust same as not all use AngelList... I haven't met an angel who frowns upon using multiple platforms. I would encourage you to leverage your twitter and Facebook or Instagram to meet angels and get in their radar (don't hassle or stalk) just try to get exposed a bit to them by being part of the same meetup group, follow the same blog, membership... Subscribe to their own blog.. And when you submit funding request considerations do please send a follow up email or a call or basket of fruits if you have contact them before.HV
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What is a fair rate of return on a $70K investment?
An agency is an instant cashflow model business. Ugly to scale due to logistics of a team and the mess of being in a client-service business model. But easy to rapidly monetize. Make a phone call. Close a client. Collect the cash. (Yes, that's a bit over simplified). Your girlfriend shouldn't grab a dime from anyone before locking in her first client. An agency can be entirely self-funded and there's little reason to pursue funding. After she had generated her first $50,000 in clients (for example), she can supplement growth with debt financing. And, in no way, is the idea of your generous, retiring parents investing $70,000 into a first time business owner, when statistically most businesses fail ... a good idea. Fair rate is a flexible concept. If I was lending out $70k, I'd want to see 3x $210k back as a minimum. Irregardless of whether that is "fair"... it would be the minimum (for illustrative purposes) where the process of the due diligence and contracts and parting with $70k liquid in trade for a "maybe" $140k gain would be of interest.RT
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What exit strategies do angel investors want/prefer for a service business?
Keep in mind that investors invest for returns. Telling a prospective investor that you want his or her money to grow your business but don't plan on ever generating a liquidation event that pays him or her a dividend is not likely going to work; angel or not. You may be better served with debt financing where returns are generated in the form of interest payments not equity value growth. BUT, if equity financing is the plan, you're going to want to develop a strategic exit plan right from the start. That means identifying prospective buyers, strategic channels etc and characterizing the value drivers for each right up front. You'll find prospective buyers come in a number of forms; competitors, bigger versions of you, strategic partners, private equity, etc. Each will value your business in different amounts for for different reasons. Understanding this is vitally important for you to navigate to securing the right money, from the right sources, with the most favorable terms. Once you've qualified and quantified each of them, then determine what (specifically) you're going to need to do to align your business with those prospective buyers generating the highest returns. This will drive your business model and go to market strategy and define your 'use of funds' decisions. This in turn result in a better, more valuable business whether you exit or not. Do it this way and you'll have no trouble raising money from multiple sources. You can learn more about the advantage of starting with a Strategic Exit plan here: http://www.zerolimitsventures.com/cadredc Good luck. SteveSL
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What metrics are investors looking for in a fashion/clothing/apparel startup?
Team is more important than the startup itself. Investors prefer invest in the Jockey over the Horse. There may be n number of reasons for not getting through the funding rounds. If your startup is able to provide 10x return I can invest straight away. However, I will look at the team first and foremost and then I will look at the management skills and then I will come to other metrics like traction and scalability.DS
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