I am a serial entrepreneur and have built 4 profitable businesses in the past. I currently run two businesses. I am a doctor and make a good living working part-time, but I also have a start-up on the side (I am funding the startup with the doctor job). The startup has taken off and grown. We have calls from Fortune 500 hundred companies to partner and recently started a strategic partnership with Google. We have hundreds of thousands of users, sold out events, viral blog articles.....it's super exciting. I am still making a lot more revenue as a doctor, but I realize that I don't make enough to potentially support the momentum of this venture. I have been given some opportunities to pitch angels and VC's (pitch events), but I am hesitant to go down that road as I know it is time consuming and could potentially take me away from building the company. I would love your advice on whether to continue to bootstrap and run lean or to get out there and start raising outside capital. If raising outside capital is the preferred route, where is the best place to find investors by their preferred niche/expertise?
How are you still bootstrapping if you have hundreds of thousands of users and "sold out events" would be my first question-Is your service, product free and you using the word "sold" not to mean monetary? Second question is what does your business plan say? If you have one this question should be answered in the interwoven strategy of your plan. Third question is what do you think VC's or Angel investors are going to say when you tell them you have hundreds of thousands of users and are selling out events but not yet figured out how to create needed revenue? Fourth question is why are the Fortune 500 companies calling-to say hi...what kind of partnership? Because if they are calling to partner with you it should mean you are generating revenue, or they believe partnering with you will generate revenue which brings me back to the original question of how is it that you have not figured out how to utilize all of this momentum into revenue so that you do not need to give up equity in exchange for an investment.
These are pretty much the questions any competent investor is going to ask. Granted I have not seen a business plan. So it could mean that you have hundreds of thousands of users, but are hemorrhaging or breaking even..could mean any number of things... It could mean that fortune 500 companies are calling to tell you they can believe they can utilize your company and you have not yet struck a deal with them. In that case, again, I would consider that route to an investor any day and keep equity. Pitch Events with as much potential as you are describing seems to be a waste. Focus your time and strategy and pinpoint investors rather than going to a cattle call with a bunch of weekend entrepreneurs who read "rich dad poor dad" and are hoping to get rich. Whatever pitch you would use with them, you can use with investment firms. Every angel and VC out there is looking for a great investment.
If you dont need the money, build the company. If you need the money, then approach the investors and give up equity.
I think it is a great idea to raise outside money to validate your idea. Try to get "smart" money -- meaning money from an investor who understands the space of your startup. While it takes a bit of time to raise money you'll save lot of time and money later on if you figure out your product-market fit soon. Talking to outside investors will help hone your offering.
I disagree with the individual who stated its great to raise money to “validate” your idea. While that can be one of the by products of a raise, the only thing that truly validates an idea, is generated business, and furthermore a path to profitable business. Not only that, if you don’t know your “product-market fit” or target market, how do you plan to find a competent investor? No competent investor is going to invest one in an “idea” or two in a product that is still floundering about trying to figure out the target market. But again if you are selling out events and have hundreds of thousands of investors, it sounds like you have a good start at that anyway. Financial plan could be a different story.