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The question you'll have to figure out how to answer is then: how would you pay back $100,000 and in what time frame? Think about the other side. As someone wit

The question you'll have to figure out how to answer is then: how would you pay back $100,000 and in what time frame? Think about the other side. As someone with $100k, why should I chance it with you if the reward doesn't warrant the risk? Angel investors are just that: investors. They would likely put the money into a situation that is less risky. Also, the number of people in the market is only an important metric when you also include what kind of conversion rate you can get of those, and what dollar amount would the average sale be? Take Ford and Lamborghini. One makes a lot of different models that cover a large portion of market possibility and sells a large number of cars at a small profit, while the other has few models, sells a much smaller number of cars, and has a higher profit per vehicle. If each customer nets you $100k, and you can get 0.1% of the possible market, then of course it could be worth an investor's time. If this is a web app you want to charge $2 one time for, then even if you could sell the whole market it may not be worth it.

sedev 15y ago
I definitely hadn't thought of the Ford vs. Lambo angle - thank you for pointing that out. I think one could also phrase that as the Apple vs. Dell angle. Revenue-per-customer is definitely important. I think that I could offer an investor a positive return - the revenue model is subscription-based with strong network effects - but not an explosively positive return. So if I were developing a pitch, I think I'd want to include something about the opportunity cost there, and like any founder, would want to explicitly say "here's why I'm less risky than other things you might fund."
- noahc 15y ago
  Some Investors (many?) need HIGH risk, HIGH return. You probably have a lifestyle business on your hands and people tend to not want to fund those.
  - sedev 15y ago
    That's what it's starting to look like, yeah. Which is reassuring, in a way - the upside of a lifestyle business is that you're not particularly beholden to investors.

sedev 15y ago

I definitely hadn't thought of the Ford vs. Lambo angle - thank you for pointing that out. I think one could also phrase that as the Apple vs. Dell angle. Revenue-per-customer is definitely important. I think that I could offer an investor a positive return - the revenue model is subscription-based with strong network effects - but not an explosively positive return. So if I were developing a pitch, I think I'd want to include something about the opportunity cost there, and like any founder, would want to explicitly say "here's why I'm less risky than other things you might fund."

noahc 15y ago
Some Investors (many?) need HIGH risk, HIGH return. You probably have a lifestyle business on your hands and people tend to not want to fund those.
- sedev 15y ago
  That's what it's starting to look like, yeah. Which is reassuring, in a way - the upside of a lifestyle business is that you're not particularly beholden to investors.