Lessons Learned: How I Blew Through $120k in Pre-Seed Funding and What I’d Do Differently
Lessons from my Startup Journey: The Highs, Lows, and Reimagining Success
Context
The hustle culture is going all wild these days; there’s an entrepreneur every other door running a t-shirt printing business with two sales, watching motivational videos day and night with no empirical output.
We weren’t obsessed with the culture; we were just looking to build something tangible. Although it was a bit forced, we’ll talk about it later in the article.
With "we", I am talking about Kaustubh and me. I took care of the management side of things, and Kaustubh was the tech handler.
It was all crypto, metaverse, and Elon Musk (he’s still hot though), and to cut it short, we tried to build a crypto product (named “Crypdeck”) that helped users invest without needing to read white papers or go piggybacking over "tips." Now, it was being done by Smallcase in India, but for stocks, there was little to no competition in the crypto space. We were sure that we were hitting the right nail at the right spot.
The golden phase
I've written extensively about why distribution and validation are the gold standards for getting a startup up and running. I’ve been hellbent on following it since the Crypdeck days. We started by validating to see if we weren’t blindly in love with an idea that wasn't needed in the market. We ran human surveys and talked to crypto developers (a lot, to be honest), and our final validation was backed by one of the legal specialists at WazirX.
Validation was enough; it was time to build the product, but, um, we had no money.
Without thinking for a second, we started looking for the money left and right. We applied for incubators and talked to angel investors and VCs. Well, it was one hell of an experience when Xartup accepted us for incubation. We got enough tech credits (AWS, Mixpanel, etc.) to start managing and building Crypdeck, but here’s where we made our mistake.
The awful part
We kept banging on doors for money, we thought the only way we could build our product was with VC money. Some didn’t understand the crypto thing, like the panel at IIT Madras; we thought they were thinking backward, but we chose to ignore the fact that it is hard to explain what the USP or innovation is without the product but with just PPTs and words.
It’s not that we weren’t good at reaching out to people, an angel investor was ready to give $120k in pre-seed, but, as mentioned, he wanted a clear idea of what our product does, he literally asked us to shoot a video of ourselves explaining the product, and then he ghosted us. Again, nothing tangible was brought to the table.
We ran behind VC money. But this wasn’t the root problem. It was reverse engineering. We didn’t find the problem with iterations or by analyzing the real world. We set out with a strong desire to create something, so strong that we found a product and reverse-engineered the problem. I.e., it was not a burning problem for us, which is the first validation step.
What would I do today?
Today’s Harsh would instantly start working on building the MVP, get some traction, and then go to the investors for money to assemble the team and market our product. If and only if bootstrapping was not an option. Bootstrapping until $1 million in ARR can show you hardships that VC money would never be able to. Unless you are a seasoned founder with massive exits, it is nearly impossible to raise funds with just an idea or validation during funding winters.
Read it through? Consider following me; it’ll be a fun cup of coffee every week (twice).
