I just launched an online platform that allows inidividuals to video chat based on their interests. Unfortunately, Sean Parker launched a similar concept last week but it just means we are both on the same page.
Since the site is now live (in beta) I need funds to really drive traffic and build the environment so we can take the next steps.
I am looking for some guidance on what steps I need to take to gain an investors attention. What do I need to prove and how can I get them involved from the beginning so I can continue to drive engagement?
Since the site is now live (in beta) I need funds to really drive traffic and build the environment so we can take the next steps.Actually you have it backwards - one of the key metrics that investors use before making a funding decision is traction - the number of users you currently have, the number of people who use the site daily and other metrics related specifically to your site - like the number of video chats, the number of chats per user.
Without traction you are raising money based solely on your reputation and track record. And if this is your first raise you don't have a reputation to bank on. Sean Parker and Sean Fanning can raise a ridiculous amount of funding because they have a long and storied history.
Investors tend to invest in a business. Users are great. Traction is great. A business is better.
In a very small cross section of opportunities, for a very select and well connected few, and/or those with a lot of luck of being in the right market at the right time there is a possibility of securing investors purly to aggregate user with the hope of monitize them later. You might be able to make it all the way to IPO before the faceplant -- but who cares then? Well, if your goal is to build a business, not just spend prospective investors money and earn stock options -- then you should.
Build a business. And then go find investors who want to invest in the business. There are lots of video chat sites. Video chat is not new. It isn't trailblazing technology. So what is your business? Who are your customers? What will you charge them? How do you know they will pay? What is the cost of delivering the service?
Then prove that you can scale it.
Now it is time for investors.
Perhaps now you need friends and family (or a good credit card with some room) -- people who believe in you and want to support you. they don't really need to see the business yet, they know you will get around to that.
But get around to it before you go to investors. They want to invest in a business.