Pre-product funding
Gibin Michael
10 replies
Is there anyone here who has raised funds for a pre-product? What was your impression of the situation? I'm stuck, but I'm not giving up (and I'm not going to) - I've been working on an idea (I'm a UX guy) and creating a pitch deck, and now I'm looking for investors who are interested in individuals like me. If any of you can offer any suggestions, I would be grateful. I'm seeking a technical co-founder as well.
Replies
Maxwell Davis@maxwellcdavis
Unless others disagree friends and family is likely to be your best bet.
Have you tried Indie Hackers for finding a co-founder or cofounderslab?
Share
Pre-product funding needs trust in the founder and hence the network of the founder and his ability to connect and communicate with the team matters.
@barada_sahu yea true - i am trying to apply with incubators that support solo founder pre-product startups - i must say it is hard - but everything is hard first time know :D
Fundraising Kit
It's (almost) impossible to raise at a pre-product stage. All VCs and angels will tell you that it's too early for them.
2 exceptions:
1. You're a "star" founder with successful exits in the past.
2. You're well-connected with VCs.
But you still have 2 options:
1. FFF round.
2. Accelerator/incubator.
You have one more option actually - get some traction without a product. LOIs or early revenue for B2B and 1000s of people on your waitlist for B2C.
My experience raising a pre-seed round at a pre-product stage:
I'm building a bot that finds investors and gets meetings with them. I've been able to get $1,000 in revenue and $90k in pre-orders (not pre-paid) without a product. I needed money to finish the development of the product and double down on user acquisition.
I decided to run a 4-week experiment to see if I can raise funds (and test my bot):
1. I built a list of relevant investors.
2. I got warm intros to 20 investors.
3. I cold emailed 50 investors.
I met with 20+ investors and all of them said it's too early. BUT now I have 20 investors on my "investor update list". When I will hit the milestones they want me to hit, it will be super easy to close the round - they already know me and I have enough traction.
Even though I wasn't able to raise money, I still think it's worth it.
If you're interested, I shared some tactical advice on getting funded on my blog:
- How to find investors: https://shizune.co/blog/how-to-f...
- How to cold email investors: https://shizune.co/blog/how-to-c...
Happy to answer any questions!
@pavelgvay excellent response indeed! @gibin_michael We raised a *small* convertible round with a basic MVP on no-code and a small waitlist (100s). It was tough. Kept hearing it's too early. It taking a tooon of time. So, we decided to go on with what we got, focus on our product, update the investors on our progress and start again in a few months (early next Q).
Definitely worth talking to them to refine your pitch and see what they're looking for. You can also kick off these discussions as pre-raising discussions. Make it very clear that you're not in fundraising mode right now. The purpose is to get to know them, start building the relationship with the ones you have a good rapport and get insights into what they want to see from you. Good luck!
@new_user_640526a97c thank you so much for sharing your experience absolutely amazing !! Good luck with your product though
@new_user_640526a97c @gibin_michael Pavel, this is an excellent response and. I entirely agree. Gibin, I think the biggest thing to consider is can you get a POC/MVP out there that is low fidelity but strong enough to show traction. If you have paying customers who want more, it is far easier to turn around and raise/be admitted to an accelerator.
@dafnihnd thank you for the insights and yes i am trying to build relationship with investor with prototypes and seems hard but i am getting some feedback on pitch deck that is also really valuable - and many asked me to get back and update the progress - every journey is different know? would you mind connecting? so i can learn more about your journey!! TIA
@gibin_michael Absolutely! Happy to share more from my journey. My Twitter DMs are open.
KaraboAI
pre-product funding is non-existent, you will struggle to find any investor that will be willing to put money on an idea, most start-ups bootstrap their initial idea or MVP and validate the idea with some initial clients before they can get even a cent through the door from investors.
Perhaps it was easier in the past, but these days there is so much competition with startups that even when you can prove revenue, you still struggle to get investors.