Seed funding · Bootstrapping

What has worked best for your: Freelance while Bootstrapping vs Seedfunding

Jason Woodlee Sr. Director Cloud Products at Datapipe

July 26th, 2013

Everyone has a story. i have an idea i have been working on/off nights and weekends but its so scattered the progress is limited. So I contemplating a change to give it the focus it needs. 

I see 2 major options
1.)  Seek seed funding to give it a proper 6-8month of landing strip and commit 110%
2.)  Stop the 8-7pm job in favor of the freelancing to self bootstrap and commit at least 50%

I have very adult constraints so living on ramen or mom/dads garage aren't an option.
I'm curious what paths others who have faced this very dilemma have taken and how they weighed the equation with a bit of hindsight.

Thanks

More than 65% of new companies fail because they lack funding. In this course, you’ll learn common fundraising mistakes, how to nail an elevator pitch, how to craft a killer pitch deck, where to source investments from, and all about term sheets and convertible notes.

Thomas Knoll Executive Advisor & Business Coach. I help entrepreneurs survive and thrive at building their teams and businesses.

July 26th, 2013

Ah, I'm sorry that I was unclear. Not testing on the problem or the solution, but tests on the business model itself. Like, testing people's willingness to pay for the solution. 

e.g. tell people a high price, and see if they say something like "$140 dollars?! No, we probably wouldn't pay more than $60" Or, adding an "upgrade to pro for $49" button on the app, and just measuring how many people click the button (there is no pro version), etc.

When making the jump from part-time to full-time, it can really help to have a good sense of whether you actually have a business, or an idea.

Thomas Knoll Executive Advisor & Business Coach. I help entrepreneurs survive and thrive at building their teams and businesses.

July 26th, 2013

How many tests have you run on the business model?

reed hearon

July 26th, 2013

Greetings - I've done both. I'd ask yourself which route is likely to get you there more quickly. It's better to have less equity in a bigger business when there's a greater likelihood of success.

Chris Mathias CTO at Viderian

July 26th, 2013

I have been in the same boat since leaving my 9am - 12am job. Wanted to freelance and really kick my startup ideas in the pants and push them out there.  Also needed to reset my work/life balance. I'm pretty close on two of my pet projects at least having beta level/customer testing readiness.  But finding time to put the finish touches on, and get with somebody to help market?  Can't find it.  Why?

Because when you are freelancing, it is so hard to say no to money. You just are never sure where your next check is coming from, and those who really want you, want all of you. So I find my time vastly overmortgaged and still commoditized, and the only time I find for my startup projects is either costing me sleep or family time...or occasionally one of my contracts goes on pause for a few days.  Then I'm half sweating making up the income elsewhere vs. working on the projects.

Solutions?  I'm not sure.  I think if one can freelance and legitimately, responsibly, and completely limit their commit to 50-60%, it could work.  I find that my "adult concerns" always end up overriding my entrepreneurial goals.  I have considered trying to find a 9am -5pm job...not sure they still exist...something I'm not terribly committed to and leaves a couple hours in the day and on weekends to commit to startup...but sounds like that isn't your experience.

Funding?  Probably not as easy as it sounds from my experience, and from what I read it is getting tighter.

I suppose one option is an incubator, if you can find one, that might give you anywhere from 5-20K. But if you have the same adult concerns as me the bigger number will still only carry 2-3 months...Curious how it ends up for you!

Good luck,
Chris

Jason Woodlee Sr. Director Cloud Products at Datapipe

July 26th, 2013

Thomas- 

  Interviews using screens/wireframes with about 15 consumers   
  Multiple one-on-ones with "friendlies" in the ideal customer segments

Mostly positive

Chetan Nadgouda

July 26th, 2013

Hi Jason, I was exactly in this spot about year ago. I decided to take the plunge and took the Step #2. This was possible only because my wife works and we have insurance through her. If you can get that, then this infact will give you a lot more money than salaries position and you can definitely boot strap your company. I am onto a 8 hr/day job now with about 2-3 hours per day being spent on startup. Note that I am intentionally taking on full time position so that when required, I can just take a 2-3 month break and survive on the extra income that we have saved. If you want more specifics or more details explanation send me email at chetan@pradhee.com and I can share my cell phone number there. I prefer conversation on phone than on email (takes less time to communicate more J) Good luck. Chetan

Tyson Verstraete Vice President, Head of Telco & Mobility North America at SAP

July 26th, 2013

Jason, Either route is significant so a question first.. How much customer validation have you done on your idea already? Can you take 1-2 weeks of vacation and focus on idea validation? Ash Maurya's Running Lean provides a great validation playbook. May assist in the decision making. All the best! Tyson

Anonymous

July 26th, 2013

The key is 100% commitment.  There are many methods that will give you the run way you need.  Don't be tempted to half ass anything. It's fine to seek funding first or work 100% contract first to save up. Either way, just make sure you commit to your startup 100%. Don't invite distractions. 

Jason

Ian Bailey Data and Architecture Stuff

August 1st, 2013

My experience from a few startups (only one of them my own) is that if you divert your attention from the product, the product never gets built. Even if you hire staff, you can't go off consulting if you want to grow a product business. 

This gets very difficult when you have a family - the need for constant income means you need to have a big chunk of investment up-front, or another income stream. If that other income stream eats up a lot of your time, it takes you eye off the product.

Stephanie Cruz Product Marketing & Product Management

August 2nd, 2013

I had two major challenges in pursuing option #1, and in hindsight I did it too early. I'm now doing option #2 out of necessity. Based on my experience, here's what you really need before you choose option #1:

1) If you're in consumer, getting seed is likely not going to happen without a product in the market and some proven traction... unless you are a proven successful entrepreneur or really well connected. Just as you tested with target users, soft pitch with friendly VCs to get a sense of their interest in you/your idea. I did that after I quit my job thinking that a functional prototype with UX design polish, customer validation, and an experienced co-founding team would be enough. It's not.

2) You need consistent development. I'm on the business/product side, and without a technical co-founder I've had to pull favors from friends, which is too slow when you're FT and they're coding in their spare time. Or hire contractors, which eats into your money faster than you anticipate. So make sure you have the same level of development commitment because you can't build traction without iterating on your MVP (and investors want to see organic growth in early stage, not marketing spend to acquire customers).

Even at the expense of splitting my time, option #2 is paying for product development. So far, it's been better than when I had a full-time job. Good luck.