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This is a common stumbling block for founders. Investors aren’t interested in giving you money to give to other people to see if your business might work. You n
by PragmaticPulp 5y ago
This is a common stumbling block for founders. Investors aren’t interested in giving you money to give to other people to see if your business might work. You need to demonstrate that the business does work, and then accept investment money to scale it up.
> My cofounder and I have deep experience in this sector, working for the very incumbents we want to disrupt. At this point, we really think what's holding us back is scale -- we need to bring on reporters/editors/etc to actually have enough content to bring in an audience,
This would be a red flag for my investment senses. Are you trying to build a scalable company that does something new and innovative, where your only real remaining obstacle is investment money to gas up the business engine?
Or are you and your partner following in the footsteps of your previous business experience, but this time you want to be at the top of the org chart and you want someone else to provide the money so you don’t have to bootstrap?
FWIW, I don’t think you’re 100% in the latter category, but I wanted to highlight the two ends of the spectrum on which you’re going to be evaluated. Investors get pitched by a lot of former ICs who think investment money is a shortcut to being at the top of a business in their industry, but who haven’t actually differentiated themselves that much from what they’re familiar with. It’s not enough to take your old business, add a personal twist, and call it a disruption. It’s not enough to be the n+1 competitor in an already crowded space, because you don’t have any of the advantages of first-movers or established companies.
One way to try to bootstrap this is by simply filling those writer, editor, and reporter roles yourselves even more. Can you demonstrate that doubling your own work output produces more than a doubling of traction? It may be extremely hard, but you can slog through a 6-month experiment where you and your partner work harder than ever before to produce more of this content. If you can show, with metrics, that doubling the amount of content produced translates to a tripling or quadrupling of your traction metrics, then you have a solid case to show investors that money is your only remaining obstacle.
On the other hand, if doubling your content production only produces a 50% increase in traction numbers, you have a sign that money and hiring aren’t your problem. The business model isn’t scaling and you need to change course.
- fndrstrggl 5y agoThank you -- this is helpful. >> One way to try to bootstrap this is by simply filling those writer, editor, and reporter roles yourselves even more. Can you demonstrate that doubling your own work output produces more than a doubling of traction? My fear is that this makes a lot of sense for SaaS companies, but I think in our case its really part of the MVP. It's not so much that we have a feature thats great and then people will use it, when we have research that shows that our users go to places where all of the coverage they want lives. If we dont have that, we're not in the game. >> Or are you and your partner following in the footsteps of your previous business experience, but this time you want to be at the top of the or chart and you want someone else to provide the money so you don’t have to bootstrap? This is a really good point, and I think we need to emphasize this more. I really do believe this is new and innovative -- but maybe we need to show WHY we're doing this as a new company and not with our previous employers? Is getting a bank loan or something like that a terrible idea? I have no problem putting skin in the game, I just have a limited amount of skin...
- webmaven 5y ago> Is getting a bank loan or something like that a terrible idea? I have no problem putting skin in the game, I just have a limited amount of skin... It isn't a terrible idea... for you. The bank probably won't feel the same way (though you should still check out your local community banks or credit unions, just in case). The kind of business development or capacity building funding you're looking for is more the province of the Small Business Administration: https://www.sba.gov/funding-programs/loans https://www.sba.gov/funding-programs/loans