How We Raised $700,000 For Our Startup without a product

Index

Andrew Michael
Jun 1, 2016 · 20 min read
  1. The Options
  2. Our Process
  3. Pitch Deck
  4. 10 Things We Learnt About Investors
  5. Summary
  6. Resources

“Not every startup needs rocket fuel”

As exciting and challenging fundraising can be for a startup founder, it is also a long and tiring process that will keep you away from your business at a time where it needs you most.

THE OPTIONS

FFFs

The 3 Fs otherwise known as friends, fools & family is one of the most commonly used funding sources by startup founders for many reasons but probably the most common being that it is their only source of capital.

Bank Loan

Probably the root of all evil (I have a big bias against institutional funding). A bank loan is not common practice for startup funding but there is always the option.

“The only way to make money is with other peoples money.”

You will spend more time and take higher risks than any sane person is willing to do while building your company. There is no point in putting yourself at more risk in the end by adding a financial component to it as well.

Government Grants

Government grants should not be a source of funding you rely on as the arbitrary process takes way to long to come through than most startups lifespan.

Crowd Funding

Crowd funding can be an incredibly powerful source of funding if successful and seriously devastating if unsuccessful. I would advise crowd funding when you have a product that has proven product market fit and you need the additional capital to move into production.

Equity Crowd Funding

Equity crowd funding is a practice growing in popularity that gives people the option to purchase small stakes of equity in startups listed through the various platforms. The upside to this is you not only get to raise money but you will also have a large amount of ambassadors for your company.

Angels

Angels are called angels for good reason as more often than not they are the only ones to come to the table with money and normally at the time startups need it most.

  1. They were investing their own capital and would add a lot more value in the short term being directly vested in the company and having their combined hands on experience would help us grow and learn a lot faster.

VCs

VCs are a very important part of the startup ecosystem but it is really important to understand when the right time to partner up with a VC is and for what reasons.

Customers

I left this one for last as it is the ultimate source of funding without a doubt.

OUR PROCESS

Raising any sort of capital can be a time consuming process and the better prepared you are for the process the greater chance you have of being successful. Here are 10 steps we followed during our process.

1) Be Specific
  1. It avoids any miscommunication and stops any mixed messages being received by the investors.
  2. The pitch is constantly evolving and being perfected each time so the more you pitch the better it gets.
2) Be Educated
3) Be Organised
  1. Sales
  2. Product Developments
4) Be Social
5) Be Simple
6) Be Prepared
  1. Pitch Deck
  2. Investor Deck
  3. Business Plan
  4. Financial Projections
7) Be Eye Catching
8) Be Connected
9) Be Polished
10) Be Interesting

PITCH DECK SLIDES

*The pitch deck material used in this section is 3 years old and merely for demonstration purposes.


The problem


The problem validation


The solution


The team


Market size


Business model


Traction/market validation


Go to market strategy User aquisition


Project plan/Key milestones


Mentors/Advisors


Projections


Needs


10 THINGS WE LEARNT ABOUT INVESTORS

When you start out fundraising you are super focused on your business and involved in the process that you don’t really have much time to think about the process.

“Oh shit, this is real. The pressure is really on us now to perform.”

Whilst this is a logical thought process it is also something you should eliminate early on, as the reason your investors invested in you to start with, is because they believe in you. You need to take that belief and put it to good use.

1) The are human

2) They invest in teams not ideas

3) They don’t want instant returns

4) Watch out for the greedy ones

5) They understand the risks

6) They are busy

7) They have a fear of missing out

8) They know it’s not cheap

9) Look for more than money

10) They don’t want to dictate

SUMMARY

In this post I have covered the funding options, the process we took, the pitch deck & 10 things we learnt about investors which is a culmination of the knowledge accrued during the last 3 years fundraising.

RESOURCES

Investor Deck Examples

Duxter
Square
Mint

Term sheet negotiations

Term Sheet Negotiations
Term Sheet Battle Malmo — Venture Capital Negotiation

General

Venture Capital Crash Course With Jason Mendelson
The Best Startup Investor Pitch Deck & How to Present to Angels & Venture Capitalists
How to Pitch a VC Dave McClure
How to Pitch a VC (Sept 2010)
Raising Seed Capital
Raising Money For A Startup
Getting a seed round from a VC
What You Need To Know About Raising Venture Capital (By Mark Davis, DFJ Gotham)

Investors to follow

Dave McClure
Paul Graham
Gary Vaynerchuck
Tim Ferriss
Kevin Rose
Phin Barnes
Christian Hernandez
John Henderson
Chrysanthos Chrysanthou
Brad Feld
Chris Dixon
Hunter Walk
Ron Conway
Ben Horowitz
Ashton Kutcher
Reid Hoffman
Marc Andreesen
Rob Moffat
Shervin Pishevar

RECOMMENDED READING

The Lean Startup
Venture Deals

Frontiers

Stories from the startup journey around the world.

Andrew Michael

Written by

#Entrepreneur | #Startup Activist |

Frontiers

Frontiers

Stories from the startup journey around the world.