breaking the catch-22 raising capital
TRANSCRIPT
Bryan [email protected]
Raising Bootstrap capitalBreaking the catch-22 of needing a bit of capital to get the product built, in order to raise the rest of the seed
round
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THE GOAL
Raise a TINY AMOUNT of the SEED ROUND, in order to build the product.
Break the catch-22 of needing to #1 build the product, in order to #2 raise the full seed round.
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Timeline1) Goal is to raise $100k early to start engineers building
Month A to D Month 1 to 5 Month 1 to 5 post-launch
2) This coves the METHOD to raise the money to break this catch-22
3) Engineers start
4) Raise the next $100k, after product built but not yet launched (1 or 2 months before launch)
5) We must grow revenue in the first 5 months after launch6) We can finish raising the rest of the seed round after the first 5 months post-launch are growing revenue
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Full Seed round
Eventually, a startup should raise a $800k to $1.5m seed round.
But initially, it needs a tiny bit (~$100k) to build the product. The product nearly launched is needed to raise more money
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Experienced Angel investors
Experienced angel investors want to invest here.
Month A to D Month 1 to 5 Month 1 to 5 post-launch
POST LAUNCH. ~5 months+ after launch. At $15k/mo in revenue.
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Strategy
It is CRITICAL…
to raise the initial ~$100k from a special group of possible investors.
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Strategy
Target investors:
1) Friends and family
2) People who are EXPERTS or PASSIONATE about this industry or solving this problem
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Great pitch decks
Creating a BRILLIANT pitch deck is required.
If you won’t reduce risk for investors by giving DETAILs and ARTICULATING
very very clearly, then it isn’t worth them investing.
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Great projected financials
Creating a BRILLIANT projected financials is ALSO critically required.
Without it, entrepreneurs are often overly optimistic and in dreamy mode.
With it, entrepreneurs have done their due diligence, removing hidden assumptions, made detailed plans,
and REMOVED RISK for investors.
Building a QUEUE of Leads to Investors
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Start the QUEUE
Start the QUEUE by CVS EXPORT
from your Linked-In contacts
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Expand the QUEUE
Then expand people who may
have other great related contacts
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Qualifying possible investors
To find people who could be qualified:
1) Need to have enough money to invest
2) Need to be experts in this area, or PASSIONATE about solving this problem
Letters of Intent from target buyers
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Getting Letters of intent
You must prove to investors that you
are taking risk out of hidden assumptions
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Getting Letters of intent
Show the investor Letters of Intent
from real target buyers
The Target Buyer
They signed: 1) They want to buy.
2) They approve the price. 3) They approve that their company would pay.
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Video
Ask them for a quote on video
Great ending of the pitch.
Visceral way for investors to see target buyer show that they will buy at those
prices
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Video
Capture on video:
“My company has this problem, and we will pay to get it fixed.
We will be happy to pay $39 per user per month, because it saves us from XYZ.
We would buy this for all 45 sales reps in our sales division because of ABC”
WARNING
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WARNING
Even with all of this guidance,
I’ve seen first timers spend most of their time talking to experienced angels who say “Come back post-revenue”.
We know ahead of time that they are a waste of time
THE [email protected]@BryanStarbuck