We have a cart-before-the-horse AND an organic-vs-scale conundrum and could use advice.
We have developed a better, faster, cheaper, more transparent
event sourcing and pricing system:
I think we need two things:
1. To assemble a team capable of structuring and closing a deal with partners who can support the execution of our plan.
2. Develop a more convincing case for why scale is required. That point seems to be getting lost on a few folks.
One challenge we face is having built a race car engine and being told to drive it like a minivan. We need SCALE to perform and so far we’re sort of being told to grow organically, this accomplishes very little in an industry bigger than the NBA and NFL combined and for which there are no publicly traded companies.
We were recently advised by a potential investor to “get the
first customer yourself” and we did with a Fortune 100 company to the tune of
$300K with a bonus 3-year agreement. The investor now agrees that the model
does in fact require scale, but he's not a dealmaker. We’re making progress, but could use ideas.
In fact, we don’t even require investment “in advance” - WE CAN SECURE UP TO $20 MILLION IN SALES OVER 4 YEARS BY JANUARY 2016 IF WE HAVE THE RESOURCES TO SUPPORT FULFILLMENT OF THE BUSINESS SOLD.
We’re close, but any advice on how to get across the goal line would be appreciated.
All good comments that provoked a lot of thought on my part. I appreciate each of you weighing in and offering your feedback.
Alex - "Being big to be big is a good idea." I think it begs the question; are there businesses that require scale or volume at launch in order to be successful. I know I could be wrong, but for me the answer is yes, particularly when the launch is designed to be a game-changer.
If we were to grow organically and reach $17 million annually we will have
reached the median income for one of the more than 1200 companies in this
industry - and yet won't be a blip on the radar.
We definitely require seed money and in fact will require a high-profile underwriter of sorts to fund and logistically support the ongoing sales and growth, post launch. We certainly expect the benefit provided to them to be equal to or greater than the benefit we receive. One idea that we've been asked to consider is an "acqui-hire," where a partner has first right of refusal to acquire the company based on preset criteria - so in effect they hire us to build a company that they will ultimately own. I think the idea has potential with the right partner(s).
Chris Duncan - As part of the need to assemble a team I would expect to fill the role of co-founder/CEO and to build an advisor/investor pool, so your comment is absolutely correct. We were asked to start small last year, so we did and after proving the concept we just feel that it is time to take the next steps of assembling a team to get to launch. I would expect that team to include management, advisors and investors.
I do realize the path I've taken of not giving away equity in the company to this point is unconventional, however I see great benefit for investors in our having gotten his far without having to "settle" for someone just based on the need to check a box for potential investors. Our current position allows advisors/investors to have input and influence on who is on the founding team and I view that as a strength or an asset. Conventional wisdom or traditional VC's generally see this as a sign of weakness and while we understand that we just view it differently.
John Katovich - Bullseye! Not only have we considered a "Reg A" but we developed a path forward on just such a funding scenario. Admittedly, I didn't know about the Reg A or Reg A+ - as they seem rather new, but I was aware of crowdfunding and have mapped out a plan to implement a campaign that I think you would find very exciting.
Chris Carruth - I think before we would make a decision to finance at rates as high as 20% we would opt to grow our current business to a few million and just continue enjoying the good life. We're fortunate in that this is a fallback position, however it comes with its' own set of challenges one of which is; someone is going to change this industry sooner rather than later (it is decades overdue) and I feel that given our technology and vision, we are in a better position than anyone to do so. - It is why I am an entrepreneur; to improve an industry, to improve millions of lives, to be big, sure, but big with a purpose. Having the capacity to process a thousand orders a day in an industry where the 800-pound gorilla is only capable of processing 25 orders a day - requires scale - in my opinion. In fact, even having the capacity of optimal transaction processing is only part of the equation. You still have to convince event planners who plan the 1.4 million annual events to assimilate to the new process. Convincing 30,000 of them to do so (100 a day) puts you at half-a-billion in revenues. Getting there organically - seems to be a stretch. Speed of execution just seems to be a relevant and logical aspect of the launch strategy.