Sand Hill Road may be the birth host to Silicon Valley, and arguably the most effective road on earth. Despite the fact that the world of capital raising has slowly began to decentralize, it really is still home for some of the biggest venture funds on earth. And there I was, pitching to a team of visible investors, with out a product, just as before.
I’m always on Quora and the question, “Can you really raise funding before building the product/app?” was asked. My short answer is “yes, it is possible.” I know it is possible because I’ve first hand connection with successful raises with out a product.
4 Steps to Beating the chances and Winning Startup Capital
A few of my firsthand experience is really as follows: I once was involved with a $2.2 million raise that didn’t have something upon funding (actually, it was a genuine consumer product, not really a digital product, which is what I am actually discussing now). I’ve personally done it a small number of times, with my largest raise being truly a six-figure investment without product. Plus, I am confident we will raise $650,000 because of this business, with out a product, based solely on our demo.
From my successful experiences, listed below are the three must haves:
You ever hear the word, “we don’t bet on the horse, we bet on the jockey”? It’s a mantra for some sophisticated investors all over the world. When doing work for an angel investment team in my own younger years, we lived because of it. Actually, besides our industry focus and size of deal, that was our main investment criteria.
For a few investors, team may be the single the very first thing they consider when placing their capital. Usually do not confuse that with previous success as there are many inexperienced entrepreneurs that get funded. However, you have to be in a position to articulate why you will be the right team because of this possibility to accomplish your vision.
Assembling the proper team for your mission is a testament of your capability to lead, influence and enroll people into your vision. Don’t underestimate the energy of the proper team.
Unless you yet have something, as inside our case (we remain in development), you best involve some sort of demo. Over will be the days enabling you to roll-up to an investor ending up in a pitch deck and a dream (well, anything can be done, but as an entrepreneur is hard enough).
8 Questions THAT WILL ASSIST Set the proper Expectations With Investors
Find out what which means for your business. For all of us, we mocked up some key pages of our platform that helps portray the vision, and inputted them in to the Invision app, which takes Photoshop files and makes them clickable via hot buttons that means it is almost feel just like you’re clicking through the pages of a website.
With out a product, some kind of demo is mandatory since it helps portray your vision, and shows anyone considering investing you are serious enough to begin with.
You have to be able to validate the marketplace opportunity. If you’re creating a mobile app, create a squeeze page and run Facebook ads to build an interested set of people who would join your app. This shows a demand available on the market.
Referring back again to the need for team, sometimes a highly effective validation technique is to get someone of industry importance to become listed on your team in a few role. This may create the subtle notion that, “if this industry expert will likely be involved (plus they obviously know a lot more concerning this space than I really do), then that is probably worth pursuing." Plus, generally, that industry expert can navigate a number of the nuisances and pitfalls of the area.
Inside our case, we have several validation techniques, with one point being twofold. We’ve struck a big cope with a significant media company that will be our first customer. There’s double validation because it’s a well-known company and they are going to be considered a customer. Validation at this stage, for those with out a product, is another critical factor which will donate to your funding success.
Boom. This will be easy enough, right? Avoid being discouraged if it requires longer than you anticipate. Capital raises are tough and always additional time consuming than anyone ever hopes.
In conclusion, yes, it is possible to raise funds with out a product, but you can also swim the Atlantic, paint a precise replica of the Mona Lisa and win the Crossfit Games four years in a row. All the best, and happy funding.
20 Questions You Can Ask to Validate Your Startup Idea