3 little secrets to help make it happen
We recently met Rita & Rajesh. They have a brilliant idea for a new startup. They do not have a product or MVP but just a clickable demo. Besides, they have never done any business earlier and are not sure how to go about it.
They want to build the product for their idea. So, they are looking for investors to helping them with the money to build the product.
They have been sending cold messages and emails to people on LinkedIn and Facebook and are getting frustrated because of a lack of positive response.
They begin to ask themselves, what chances do they have to secure any investment without a product or MVP, with just a clickable demo?
Does it sound like your problem?
DueDash team flips a question to them.
What if they have 40.89% chance of getting investment?
It does not mean anything, right?
It is as vague as Rita & Rajesh having the “greatest chance” of getting the investment.
What Rita & Rajesh are subtly communicating is that they do not have the money, time, competence or energy to build the MVP or the product.
They think that getting a lot of money will solve all or most of their issues and will get him to building an MVP, build a company and eventually hit revenue and then hopefully profit.
Unfortunately, there are no easy answers. Let us examine what can Rita & Rajesh do to turn the odds in their favor.
Here is what exactly we told them. If it applies to you, use it.
Having someone to write a check is a very personal decision. Your dad or rich uncle might not have a problem writing a check to you.
A professional investor living 500 kilometers away may not even bother to look at your proposal. It is almost futile to waste your time chasing the investors without the right kind of preparation.
What Rita & Rajesh should be doing, is to put their company in the best position to ask for investment funding.
If there is something to demonstrate, it does improve their chances of finding an investor.
But the truth is, it depends on a lot of several other factors.
Let us list down the factors which can help bring Rita & Rajesh closer to finding that investment.
There is a clear order of an investors’ priorities:
1. Capital markets appetite for risk as a whole.
2. Current interest in your particular industry leading to a timing issue.
3. Current interest in the type of company you are creating within your industry
4. Attractiveness of your business proposal leading to traction and product or technology issue
5. The team and their qualifications and experience leading to the likelihood of success.
6. The investment terms.
7. Having something more demonstrable helps to address No. 5 and No. 4, but if you are pitching in an investment climate where No. 1, 2, and 3 are difficult, you’ll still going to have a harder time.
Let us you in on few little secrets to help you plan.
Secret No. 1
In the current state your clickable prototype, MVP, or plan will not have a product-market fit. This is absolutely fine, you will listen, iterate, and pivot to what your customers want and what the market needs. Focus on product-market fit. Bring in the data to substantiate.
Secret No. 2
Most investors invest in the team of founders and not the idea or product that’s built. Invest your money and time to work on solving a real problem that offers people value.
Secret No. 3
When an investor sees two similar ideas or companies and one company or team shows the ability to realize the idea with a lot of grit then, there is no second guess who will get funded and who will not.
Ok, let us finish the story. Rita & Rajesh took the advice and started focusing on the product-market fit and several other aspects that DueDash recommended.
You too can.
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