We have potential customers but we are running out of money fast ...
I'm the head founder of a deeptech B2B hardware startup. I come from a mixed business/technical background, and currently lead a team of three non-technical and technical co-founders on a full-time basis. Our market feedback so far has been overwhelmingly positive and we already have a pilot program set in stone for next year with around a dozen paid users and several dozen more customers sending in letters of intent. We're also securing partnerships with massive corporations who've been interested in a product like ours for some time. (more follows)
However, we've run into some big problems.
We're running out of runway faster than expected, and we've been advised that taking further customer cash outside of our paid pilot would create a recipe for legal troubles in the future if we spent it but were unable to deliver.
We're still months away from finished MVP. The industry we're targeting is capital intensive, and there's a definite understanding that without a small raise (150K or so) or accelerator funding, we will go kaput before the MVP is complete.
Right now, we've been actively meeting with angels for the past 2-3 weeks. Many angels in our area (Midwest) simply aren't interested in hardware or are dumb money, but thanks to luck and cold emails I've built my own network with angels & VCs in Silicon Valley/NYC who've been far more receptive to us We're also applying to accelerators like Alchemist and Techstars as well, but I'm curious to see if there's other options for us - most of the advice I've seen so far is based either on having a MVP and no customers, or for a B2C model that's easier to bootstrap.
We ran into similar problems - needed cash to build monitizable MVP (fintech) but had very willing customers and super good feedback. Just about to close a 450k angel round based in Utah.
RAISE THE MONEY - DO NOT PIVOT.
The kind of capital youre looking at is really easy to raise if you have early revenue. I would reccomend chatting with a few hardware pre-seed VCs, but planning on raising most of the capital from Angels.
If you have more willing customers, but dont want to take money, see if you can get them to sign a Letter Of Intent (LOI).
Check out angel groups in your local area and try to get a pitch - most dont mind cold contact. You could ask the business owners of the companies who are potential customers if they know folks who might want to invest. All about networking.
Again, if you have proof of validation and potential PMF, dont pivot. Figure out how to build what people want.
Raising money is a full time job.
Question asked by
June 25, 2020, 4:15:07 PM