I have been working really hard on putting together a team and developing a prototype for my startup idea of an on-demand male grooming service. After weeks of hard work, prototype is ready and I have brought together a team of excited young talents but the next problem now is raising seed funding.
This is my first first startup venture, and just like my team is hungry, adventurous and excited, we are still learning the ropes and so I will greatly appreciate any leads or advice on how to go about raising seed investment.
We have done the traditional FF round of investment and that has brought us thus far with a prototype and concrete market validation.
As a general rule, CEO’s want to secure a 18+ month runway so that they will have time to build a business, fundraise and hopefully respond to M&A interest in the company. Clearly, there are many start-ups that raise this amount of money simply based on an idea, a team or the past success of an entrepreneur.
First time founders are not so lucky even if they have been key employees of other successful start-ups. First time founders should expect that their company will be measured by core metrics like revenue, users and growth. Given that, if you are a bootstrapped, first time founder, it is essential that you focus on revenue and take every action to build a great product and extend your runway. A long runway gives you more time and it gives potential investors the comfort of knowing that the company will have the time it needs to build a business and explore all options.
Momentum is another key component of fundraising and there are several ways to influence it beyond hitting business milestones. The two most effective ways to build funding momentum are: (1) begin by raising small checks from influential Angels and (2) price a round realistically at the start. YC companies leverage both of these principles well and are disciplined at building momentum and fundraising. The bigger checks (>$500k) are more like a lottery ticket and you should focus your energy on building relationships with key influencers and Angels who can help build momentum both with customers and future investors.
Additionally, your earliest investors will want to be a part of creating your vision and you should welcome their help. They can play a critical role in providing references for future investors.
Thanks for asking the question and Thanks John Robb for replying it so well. I learnt from your reply
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