• Breaking News

    Monday, December 31, 2018

    Home Unlabelled Startups Help With Seed Funding Strategies

    Startups Help With Seed Funding Strategies

    December 31, 2018

    Startups Help With Seed Funding Strategies

    Help With Seed Funding Strategies

    Posted: 30 Dec 2018 04:50 PM PST

    Hi all,

    I'm going to pitch for some seed funding and have never done this before so I need a sounding board to see if my plans are reasonable.

    The business is a B2B SAAS product and the Alpha Release is developed. Basically it needs to be made into something thats secure and scalable. This will require development expertise beyond mine that I need to hire, but not a lot of development time in my opinion.

    I have estimated that for the first 12 months will probably need about $500K for expenses. For the first 6 months it will be closer to 200K.

    I am planning on pitching to former employer in the industry for Angel/Seed funding. I need the industry connections just as much as I need the funding.

    Since it's software and is scalable, one large client would be enough to pay the overheads. If that happens I will be in a much better position to negotiate for a series A round.

    I've put some cap tables together based on getting the first 6 months of funding and getting a post-money valuation of 2.9M when it comes to the Series A. I want to know if my terms are wildly off from what's considered "normal" for seed funding…..

    • Should I ask for the full 500K and give away a much larger slice of my equity? Or should I ask for the first 6 months of expenses and do everything I can to get cashflow positive within six months?
    • Are the terms of the SAFE (50% discount with a $1M pre-valuation cap) note too generous? Or not generous enough?
    • I've put a post-money valuation of 2.9M for the Series A. I think getting cash-flow positive before the Series A would allow a much better valuation for series A.

    I understand there's WAY too many variables to consider here for the "right" answer. But any thoughts or ideas will help greatly. I basically don't want to look like a fool when I come to the negotiating table.

    I can answer more questions in the comments.

    ​

    EDIT 1: As mentioned in some of the replies. I'm probably more at the Angel stage of the company than Seed. But the same questions apply for what sort of investment terms i should try to negotiate.

    EDIT 2: As a side note, i can contribute funds to demonstrate "skin in the game", but I cant cover all the costs (otherwise obviously i wouldn't be here). Whats normally the convention in investing own funds here? I.e. would i just inject it directly to the business without issuing any loan or equity to myself? Would investors usually think its improper include myself as one of the Angel investors and issue a SAFE Note on the same terms as the other Angels?

    ​

    Initial Setup
    Shares % Owned Funding Valuation Discount Cap
    Founders 700,000 70%
    Employee Pool (3 Layers) 300,000 30%
    Seed Funding SAFE NOTE
    Shares % Owned Funding Valuation Discount Cap
    Founders 700,000 70%
    Employees 300,000 30%
    Seed n/a n/a $200,000 n/a 50% $1,000,000
    Series A
    Pre-Money Valuation $2,000,000
    Pre-Money $/Share $2.00
    Seed Cost/Share $1.00
    Seed Shares Issued 200,000
    Shares % Owned Funding Valuation Discount Cap
    Founders 700,000 48% $1,400,000
    Employee Pool 300,000 21% $600,000
    Seed 200,000 14% $400,000
    Series A 250,000 17% $500,000 $500,000
    100% Post-Money Valuation $2,900,000

    ​

    submitted by /u/specialsauce11
    [link] [comments]

    Freelancers Vs Development Companies

    Posted: 30 Dec 2018 07:57 AM PST

    Anyone have stories, advise, or simple general insight in hiring a freelancer vs a development company to create an MVP?

    I am looking at creating a web application that will involve front-end and back-end development. Also, Multiple API integrations into the platform will be necessary.

    The talent seems to be there from both freelancers and development companies. So is there a right choice? Or is subjective?

    I've read that freelancers are good for being cheap. I've also read development companies deliver a quality product in a short amount of time. Are there any other pros and cons that are out there?

    I'm just trying to navigate on how to best get my idea off the ground.

    submitted by /u/BennytheNerd
    [link] [comments]

    How long did it take to get your first customer?

    Posted: 30 Dec 2018 12:05 PM PST

    I'm in the middle of building a B2B SaaS startup, and I've been wondering - how long did it take you to get your first customer? Sales is something I've got almost no experience with, and I'm not sure what to expect. I've been doing a ton of reading and research on building a sales pipeline using Crunchbase, Mailshake, and HubSpot, but I'd love to hear any advice on growing from zero and what to expect. If pricing is relevant, we're looking at charging $49/mo for each seat we provide, with heavy discounts to companies with less than 10 employees.

    submitted by /u/i47
    [link] [comments]

    Should one get insurance for their MVP before launch?

    Posted: 30 Dec 2018 08:20 PM PST

    Intend to launch a website that would be a marketplace where users will meet up in person (take an offerup app for example). The website when launching won't be making any money; I'm mainly focusing on seeing if it will even gain users. In trying to cover my tracks I'm seeing that even though companies are LLCs or S-Corps they may still get insurance as they are not entirely covered from how it sounds. From the few threads I've seen it sounds like insurance can range into a few thousand which is a huge chunk for me right now. Ultimately should I go the never too safe route or make sure people show up before worrying about the additional costs?

    submitted by /u/lemony707
    [link] [comments]

    Not able to set up business

    Posted: 30 Dec 2018 07:16 PM PST

    Due to certain situation I do not have the time to set up my new business, and having done market research I have seen the idea is being done by some new startups, and i know I won't be able to do anything myself for about the next 6 months to a year. This is something I'm really passionate about and don't want to have to give up because some other people are already doing it. Mine will start off the same module as theirs, but my plan is to use the customer base I would build up to include a massive new feature ( I won't reveal it) for the app that blows the competition out of the water. Firstly, should I be worrying too much about others doing the same thing, is it just healthy competition or...?

    submitted by /u/Pesoot3
    [link] [comments]

    What was the cause of your launch anxiety?

    Posted: 30 Dec 2018 07:12 AM PST

    Really close to launching a product that we've been working on for 3 years or so. To be honest I'm anxious and I'm not sure why. It's a mixture of fear of rejection and fear of success. It's quite confusing.

    For those of you who have been here what was the main reason for your fear or anxiety of launching? You can order them from the greatest to lowest
    1. Fear of rejection?
    2. Fear of success?
    3. Fear of responsibility?
    4. Fear that you don't know what you're doing?
    5. Fear of letting your team down?

    Thanks.

    submitted by /u/Steve_Dobbs
    [link] [comments]

    Help me decide what to do with our (unused) ERP tech project.

    Posted: 30 Dec 2018 11:58 AM PST

    Okay, trying to explain this in brief, but also to make sense.

    We have an ERP system that is actually being used since 2014, heavily tested and proven. The problem is, I cannot personally take this further. There's no time to put a B2B sales system in place for it, reasons below.

    Right now I'm deep into a major project (far larger than an even such a full-blown ERP system), where things are much more clear and contracts signed, and chances are this will get me tied for years to come. This leaves existing tech an unused, wasted asset. It is not even being sold - at all. There isn't even an active website right now showing off the product.

    My question is, what to do with it. It would be a pity to simply let waste of multi-year investment and a fine software product.

    Here's what it is/does. Unlike various things ("labelled as ERP") out there, this is a full-blown product. It is geared primarily for heavy stock inventory, ideal for wholesalers, retail chains and in general where you deal with a lot of stock. Multi-currency, multi-inventory, multi-whatever. Split and merge items, FIFO/LIFO stack, transfers, invoicing, proforma, import/export, etc etc. It also includes double-entry bookeeping system and some CRM features. Has passed review of ERP specialists that worked with top products, and we've been even negotiating a multi-million implementation contract at some point. But it didn't go. The product is also blazing fast and inexpensive to host (designed for that). It is a product that can handle load and needs of more complex firms.

    Down the line we've also built a separate entry-level flavor (SaaS) that has been in live testing for a while. Didn't get the marketing right at the time, so we decided to iterate. Both flavors still exist in our code storage and just a couple instances are used.

    So - what can I do so it doesn't get wasted? Some options I've been thinking of:

    1) Selling to mid-size and larger companies: Out of question for myself, as there's no time left for me to put that kind effort in direct, B2B sales. (Need to focus on the big project.) However this flavor can be highly lucrative as products having our features start from $3k/mo and upward. But without a specialized partner to handle the sales, we can't do it. Tech part can be taken care of 24/7 with no issues though.

    2) I've even considered rolling out a free, lightweight SaaS version and let it build momentum with minimal effort and find monetizing ways later. Note, we already have it in our code storage. But for certain reasons this seems more like a half-baked plan. It would still require marketing to get that needed critical mass. That's investment, time and effort.

    3) Let it waste.

    Any ideas? For some reason I don't see this going ahead without another company, strong in marketing and sales, that can take care of it while we handle the tech - sort of a joint-venture where each part is specialized into half of it.

    TL;DR; Having unused ERP system, little time available, looking for ways to repackage and sell it, maybe through a partnership.

    TIA

    submitted by /u/emsai
    [link] [comments]
    Read more
    at

    No comments:

    Post a Comment