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Ask HN: The Secret Sauce of Angel Investment?
I am a single founder who has put a lot of work into the product that I have.
Joining up with a YC type system wasn't going to happen for me for various reasons so I instead sought after some small investment money from individuals and that has worked for me. I am about to close another round and I wanted to share the document I used this time and the formula that I believe will work for people like myself:
The Formula:
1. Create a version that works good enough,
2. Add users, even if it is for free.
3. Continue to enhance the software,
4 Once you have some traction, find people who see the vision to invest in that vision
Once you have a strong product you can find people who believe in it and in you since you are the one who created the product. Your product lends you credibility.
I found myself needing more resources to get to the next step, which is to finish the programming for a vertical market on the officezilla.com system. I have been working too much to pay the bills and I needed some room to maneuver so I was stuck with selling off another 5% which will leave me with 90% of the company.
Here is the document I used to close the last amount I needed... I had a hard time with OpenOffice on the formatting and my grammer isn't great... but people tend to focus on the strengths of the system and not your grammer if your dealing with the right person.
The document:
http://www.officezilla.com/officezilla2008.pdf
For the single founders out there, I am not nearly as smart as most of the people on HN but regardless if you have passion and don't give up you will be successful. I am not quite there yet, but I can see the light at the end of the tunnel and it is really pulling me forward.
Funding from a "VC" is next to impossible but there is money out there from angel investors, people who see your vision and like your product.
- deleted 18y ago[deleted]
- tptacek 18y agoYou are extremely impressive. We need 1,000 more hacker founders like this. This is, incidentally, exactly what Paul Hawken says he did for Smith and Hawken in "Growing a Business".
- whacked_new 18y agoThis is so awesome. I read this thread, upmodded it, and left. But somehow I started feeling really happy, and had to come back to write! We do need 1000 more hackers like this! Persistence!
- phil_KartMe 18y agoGreat post. you followed some important start-up rules: (1) get a prototype or "good enough" version out early and be prepared to iterate (2) hit a milestone that impresses investors before raising funds. measurable customer traction is an impressive milestone (3) only raise money when you need it, and make sure to raise enough to safely hit the next milestone that will impress investors
- webwright 18y agoAmen to #2. I'm stunned by the # of people who are in the "I have a brilliant idea and a couple of powerpoint slides!" phase who expect to get funding.
- aneesh 18y agoYeah, and there continue to be lots of people in that phase. It's even more surprising because you'd expect the market not to give them funding, and eventually people would learn its not worth their time to seek funding at that stage. So that means either some people are getting money with just an idea, or the market is really slow and inefficient.
- LPTS 18y agoI think this kind of bullshit is the new conventional wisdom. It all depends the idea. Ideas are valubale in exactly those cases where the idea is an elegant solution to a big problem. There was a point where the Polio vaccine was just an idea. Would you rather of funded the polio vaccine or some crap web app that has a missing vowel in it's name with half a million users? The thinking that an undeveloped idea is not valuable is symptomatic of the lack of vision in the tech world. People interested in elegantly solving big problems know a solid idea is way more important than a little traction. This thinking is wrong for a class of ideas that is essential for solving the big problems in the world that represent the best business opportunities. Silicon Valley and it's associated culture has become the new tired conventional wisdom. This is why silicon valley no longer solves big problems.
- wumi 18y agoWhat is a Pro Version? "Finish “Pro” version. This is simply the current offering but with the menu moved to the top so space is freed on the width of the page for more user data. New features would go to Pro version users and not to Free version users. Eventually the pro version features would be very compelling." Congrats on funding.
- gscott 18y agoOne of the biggest problems is with the left hand menu taking up too much room. People want to fill up the system with more data but there just isn't enough room on the screen. Since I give everything away for free, I had this amazing idea that the "pro" version would use a different template and not taking away anything from the free version it wouldn't have any new features yet but would as I make them :) So for the moment, the grand benefit is a different more usable template, longer term there would be "Pro" only features, everything that I do that is new, wouldn't get passed onto the free users so that I could have something for the Pro version people to be happy about (new stuff!).
- wumi 18y agoPerfectly understandable, just initially, I laughed. Just imagine telling users that a pro version is the same thing but with a different template.
- edw519 18y agoI am not nearly as smart as most of the people on HN All evidence to the contrary. Excellent overview for a potential angel. May not tell them everything, but it's a good starting point for questions and discussion. It also shows that your "finger is on the pulse," perhaps one of the most important things. I'm sure this will inspire other single founders. Thanks for sharing.
- vaksel 18y agoCan you tell us how you happened to find your first investor? Since he is in Italy it doesn't seem like this is someone you got through connections.
- rms 18y agohttp://news.ycombinator.com/item?id=80773 http://news.ycombinator.com/item?id=80773
- gscott 18y agoThrough HN. I posted a document that I wanted to send to angel investors, I didn't get too much excitement from those who replied, they were not so sure it would work but some gave excellent suggestions. One of the people "lurking" but didn't reply was this guy in Italy. He emailed me, personally I wasn't sure if he was for real or not but he turned out to be totally real. So that really moved me forward a great deal and I am greatly indebted to him. I have never actually spoken to him on the phone, we did all of this through email. Pretty soon I am about to register his 5% of the shares with Nevada so he is going to be good to go, totally official owner of 5%. I am presonally excited about kicking this thing into high gear and returning his investment many times over.
- LPTS 18y agoYour story sounds inspiring. I'm just about to pull in some money from an angel kind of like you are. We are in a very similar boat. My start up in not software related though. In the spirit of helping you to make your business better, I was much less inspired by your name. officezilla? Really? Maybe one problem of working by yourself is that there is no one to tell you when you are making a huge mistake you are blind too. Officezilla? You are pouring your life into something you are calling officezilla? You want that on your tombstone? The thing that was your life's work is officezilla? You can't find a better name for what will be your customers primary way of mentally representing you? This will have more of an impact on what people think of your product initially than almost anything else you do. I would suggest you use a little bit of the money to find a good person to help you pick a better identity for yourself. This is just an unacceptable name. I'm sorry, thats what I think. It's not the same skillset as the work you do for a website. But it's important enough you should change it, before your next round, in consultation with an expert, even if it's a really big pain in your ass to do. Good luck with your funding and your business. You sound like the type who will be successful. I hope you change the name though. It is really bad. I'm sorry for being so harsh, but it really is an epic fail, and you really should recognize your limits and hire someone talented to help you change it. Good luck.
- gscott 18y agoI own the domain "sharecircle.com" as well. I have been buying domains that fit for specific verticals like RealtyGoLive.com, etc. I am also not hoping to have a tombstone http://en.wikipedia.org/wiki/Freejack http://en.wikipedia.org/wiki/Freejack
- LPTS 18y agoThat's a start. The next step is to not present officezilla to anyone you want to think positively of your project. You look like you are doing very good work and are going to get a good shot at making it. It'd be a shame to have it unfairly tainted by that bad name. This matters a lot to how people perceive you. sharecircle is much better, BTW. Like a million or billion or million million or million billion or even billion billion times better.
- mediageek 18y agoGreat work. This is a great advice for folks like us who are looking for some heads up. I know its hard, you have proven that with confidence and passion, nothing can stop you from acheiving what you want to
- clb22 18y agothank you a lot for sharing this!