There are two ways to fund a startup, depending on if you’re technical or not. If you’re technical, build a prototype and get actual users on it. Period. Cry me a river if you can code, but can’t design. Save up a few bucks and get it designed. If you can actually code things, you’re not worth investing in if you can’t get something to launch on your own. Just get something, anything, that’s useable and demonstrates where you’re going while providing at least a morcel of real value now.
If you can’t code, you really shouldn’t be doing software startups unless you have 10 years of experience in some obscure niche where the only one that could imagine a startup to create efficiency in that niche is an experienced professional/manager at a large company in that niche. That obviously wouldn’t include coders, so therefore only your non-technical self is the only person able to imagine how to create efficiency in that industry. The good thing for you is that because of your senior expertise, you probably have connections to people that would easily invest in you and your idea, even though you have no coding skills. You’re not who this article is written for because you’ll have an easy time raising money. Who this article is written for is the dime a dozen twenty and thirty year-olds that can’t code themselves who are trying to do startups in niches that others have way more experience in or in niches coders can easily compete in since not too much industry experience is required to make the startup.
So, poor soul you, you’re most likely going to fail--statistically speaking at least. However, I’m not one to ever consider myself a number and let statistics hold me back. So this article is for you and the warriors out there that refuse to give up on their dream, even though they are not resolute enough to go learn how to code, which I’ve made very easy in many of my tutorials and have stated many times that you really need to do if you plan to have a successful startup.
What you do is this: get some money together. You need to at least be able to get 3 grand together. If you can’t save that up over several months at your waiter job and your other part time job, I don’t know what to tell you, but you’re a loser and I’m not writing for you. Take that $3k and do two things:
1) build a simple company site (with a blog) on your own domain that pitches your product. It doesn’t need to say you’re looking to raise money, but it should hint that you’re looking for investors. The purpose of the site is to raise your next round of money based on what you’ve already put together--though quite minimal.
2) graphically design and brand your product, or at least the core pages it has, and put this up on your site. Make a video presentation with you explaining it in a voice-over.
Now armed with these two things you are about 10-100 times more serious than you were with only an idea constantly foaming from your mouth. Just do it. Just get it done. You may have some cockamaney idea that you can get your application done for $15k, and therefore $3k is to precious to spend on this middle-step. But 99% of you guys will simply run out of money before your product is ever launched.
The next thing you do is put a team together--not immediately go looking for money. Tell the potential team members (who should mainly be coders) that you’re very close to raising money, even though you’re not. When you have you’re roster setup, put them on an About page on the site, as if you have the team already built. Give them all descriptions explaining their technical skills and how great they are.
Now, go raise money from whoever you can. If you are savvy enough in the “Techcrunch Web 2.0 scene” to raise seed money from pro Seed investors--think Dave McClure, etc--then go for it. Here’s a quick list off the net:
Keep in mind that all these seed investors want the primary founder who will put this project on his back to be technical. They invest in people, not ideas. You’re going to have to be damn good at product speccing, managing coders, maybe graphic design, and dealing with people if you’re going to pull this off. If they do invest, it will most likely be because of the up and coming team you put together.
Side note: if it’s not clear, the reason I’m not recommending you go after traditional Venture Capital firms, like the ones in this list:
is because these guys don’t invest in something until it has real users and/or is making money, or you and your team are already super established, coming from Facebook, Google, etc.
...Now, if and when those Seed investors don’t bite, you’re just going to have to raise enough money from somewhere to build your MVP (“Minimal Viable Product”). Your site and specs/designs should greatly help here of course too. The trick will be the more prepared you are the better. Prepare the contracts, and setup professional meetings where you’re invite your potential coders, and generally make it look like you know what you’re doing. At this point, you have everything to start, except the money to pay coders. Your spec should be exceptional by this point in time. After talking to all those seed investors, you probably learned a bunch more about your product. So you may need to re-spec, and re-hire you’re designer to hook up the graphic designs for cheap. Overall, you should be simply more prepared to start executing.
Try to come up on at least $50k, and give your coders tons of equity, and have them do it part time. The key thing here is don’t go offshore it. Just don’t. Really focus on getting those coders in your city to really fall in love with it that when you offer them some decent cash and excellent equity that they’ll devote serious time when not on their day job executing. Make sure you’ve reduced your spec to as little as possible, and followed all the FaceySpacey Speccint Tutorials, etc, and generally make it so your coders don’t have to do much and will get a good amount of money from you per the amount of time they have to work. This will guarantee it actually gets done.
Now, when you’re done--which is easier said than done ;) due to how hard it is to execute software applications--go back to the same seed investors that you met before who rejected you and pitch them on how great you’re doing because of all the real users you’re using your launched application.
That’s pretty much it. It’s pretty basic. The main ingredient that you don’t hear too often is to build that mini company site representing you and you’re spec, and use that as a stepping stone. The point of company websites is to make you’re self look bigger and more important than you are. I hardly ever see this done, but I’ve done it many times, and it works wonders. Potential investors will be impressed with how professional you are. It’s the best you can do since you can’t code.
Otherwise, I’m not gonna say things like go to kickstarter.com, because you should already know places like these. I have no experience with that site, but in general all these sites that help you meet potential investors I’ve found to be a waste of time if you can’t execute yourself or have an amazing track record. You’re going to have to go through contacts you already have (friends and family, friends of friends, old bosses, etc) to get that seed funding in a worse case scenario. I’d skip the grandiose hope of some stranger across the web funding you’re startup, and just get to convincing everyone you already know with your beautiful site, spec, and other presentation materials.
The more materials you can present, the better--provided they are concise and in video format. Huge business plans, hockey stick graphs, etc are not used in this industry of inventions where you really have no idea how things will turn up and will ultimately have to alter your product many times as you iterate and learn what users really want. That’s how the pro seed investors think. They invest in people, specifically people that have the skills and fortitude to keep chipping away at their product according to user feedback until they get it right.
That said, maybe the less sophisticated investors in your network may be impressed by the hockey-stick curved graphs in your metrics, even though you’ll never actually attain them. And the same with huge business plans. But I find that short and poignant videos that hit the spot really get people going--all people across the board, professional investors and less sophisticated investors in your extended family. Videos show that you can put a complete something or other together. It’s a complete package, and that deserves merit. A huge business plan requires reading several times over many hours, days, weeks, to know if it’s really quality work, or just a bunch of words jumbled together to fill up as many pages as possible. Business plans for startups aren’t taken seriously. But product is.
Any product you can deliver will help you get funding, and high quality video production certainly is product at this stage. You get the idea--package something, anything, up, and use it to pitch, and if it doesn’t work, figure something else to package up. Try a site. Try some videos. Try a powerpoint. Try the business plan. Try an in person presentation with a pointer using your videos, powerpoint, designs, specs and site, etc. Completing all of these will just make you look even more and more prepared to handle the actual execution of your product. If you’re that determined, you’ll figure out more and more that you can do to prop yourself up. And if worse comes to worse, take a year and learn how to code. I’ve seen startups spend 2-4 years raising funds because they can’t code. They should have just learned to code and coded it themselves!