We have a great idea for a product in a niche market ripe for a paradigm shift on the way business is done. All we have is a kick-ass business plan with detailed projections, costs, marketing, etc - but we all have day jobs and the time involved with developming this web product is close to a year out - and that's best case. We don't want to get scooped on our idea, so we want to start fundraising now. What % of equity can we expect to give away with not tangible protectable asset and what is the best way to handle this without losing control of our company/product?
I see two huge warning flags -- and will get to them in a second.
Still at your old jobThat still holds true.
You have an idea you’ve been thinking about, been working on it nights and weekends and maybe you’ve pulled together some folks to help you work on it. You may have a prototype, you may not. Everyone is ready to quit their jobs, you just need funding and then everyone is on board.
Valuation range: Don’t bother. There is no market for your deal.
Now, to the two warning flags:
A few things you must know:
the team, so you better put together one. Again, you should consider
making a pitch deck. A team is more than calling your friend CXO.
You can definitly get funded for your dream idea IF you have a track record or access to the 3Fs.... Family, Friends, and Fools.
However, if you're just getting started you're gonna have to scratch and claw your way. We keep track of our time donations in a "Blood, Sweat, and Tears" spreadsheet. My advisor said it best "Investors due diligence on the team, NOT the idea"
I had this conversation this morning with a friend...
To answer your question, yes, you could get seed capital from angels if your idea is that great. Investors are interested by success (not the same thing as greed) and perhaps your current day job is the source of your insights.
If you are going to go that route and are thinking a seed of 50 - 100k, you should make your business plan into mockups, sketches, and designs. Spend 1k and get a logo.
WARNING SIGN ABOUT YOUR THINKING
detailed projections, costs, marketing - that won't matter at seed level and if that's the strongest point, that will be a huge warning sign to a savy investor. What they want to see is a kick-ass design / mock-up, an idea that seems legitimate, and hungry people focused on execution. Talking about those things will turn them off.