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
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Startup Lingos To The Point
How to turn an interest into a money maker. How to attract people, how to stimulate people to pay, how to make profit, how to make relations, how to keep relations.
How much do I have to give my audience so they can pay me something in return? What do they value? what problem do they search for answers on your own? I want to solve that problem.
Brand means name recognition. A lot of people knows what your company does and what you stand for. Brand is result of long campaign of consistent value provision and media cultivation. Brand helps a company reduce marketing cost.
Whether there are buyer willing to pay or not. For that to happen you must provide extreme value. The entire startup process would be based on guess before the validation. Validation happens in a market, not on the street.
Value is what you give customers beyond the price you charge. Value is effective solution to a problem. The price your customer pays reflects whether the problem is big for them and whether your solution is uniquely effective. Value stems from quality and detailed work.
Marketing means bring your product to the market and bring your message to your customer. Marketing is not salesmanship. Marketing is to penetrate the world of commerce through many barriers and existing networks.
Minimally viable business, or MVC, minimally viable company. A company that scrapes by, full of guess and hope and no traction and sales. When you give your customers things for free they all take it. But they never pay and you can never rent a table at the market.
Minimal viable product. A full artifact of a real product. Something that works ALL THE TIME. You can demonstrate the real effect on real people - not to sell hope. The MVP may not have certain non-essential bells and whistles, but it needs to have appeal value.
Customer is king
A business lives at the mercy of its customers. You provide your customers 10 dollars worth of value and they pay you 1 dollar, not knowing that your company only costs 99 cents to provide the item. The value is not the item - the value is what is attached to the item.
Company culture is based on a company making money. Once your workers are paid, they need to have a mission and aspiration so they are not bored everyday and make trouble in the work place.
A company valuation is cash investment divided by the percentage. As long as your story is good, the valuation will keep coming, and the investors will keeping falling into the line.
Return on investment
Investors are either behind family fortune (never work with them) or for rich clients as investment vehicle. Both need returns 2-3 times better than stock market darlings.
Having found what people want, not just what people may need. Your offering and their acceptance is sure, no longer a guess. You can provide it for profit, and you can indeed making living on it. Traction is sometimes called validation. You are no longer a theater. You have touched nature, and found cash vein.