Is it possible to get funding before any sale?


3

I am curious, is it possible to get funding from investor before doing any sale? Any experience?

Funding Investors

asked Jul 2 '11 at 00:24
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Jazar
123 points

5 Answers


5

Yes.

An investment -- funding from an investor -- is a "sale" of sorts. It is a sale of (usually) equity of the company. It is based on the investors believe in the potential of the company to deliver customers, profit, strategic value (or a combination of the above)

The amount of (or promise of) equity the investor receives is the "cost of the money" The more the potential of the company to deliver customers, profits, or strategic value is based on promise, conjecture, assumptions and extrapolations -- the more expensive the money will be.

What that means is if you don't have sales -- you will be selling a significantly more amount of your company to receiving money then if you can hold out until you do have sales.

answered Jul 2 '11 at 01:22
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Joseph Barisonzi
12,141 points

3

Yes. Especially if founders are serial entrepreneurs with successful startups.

answered Jul 2 '11 at 02:27
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Ross
2,288 points

1

Yes, people do it all the time. I worked for a Silicon Valley startup that landed $47 million in venture capital before they sold anything.

answered Jul 2 '11 at 00:40
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Bob Murphy
2,614 points

1

But any startup that seeks funding needs to hold either a promise of future sales or being developed for sale itself. Remember, investors are not charity -- they are looking for the best return on their money.

answered Jul 2 '11 at 00:58
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Usabilitest
1,698 points

0

Nobody mentioned crowd funding, which is another way of getting funding before any sales. Check the "Design" section in Kickstarter's Most Funded projects. Two projects have raised almost $1M.

answered Feb 8 '12 at 23:15
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Dan Dascalescu
168 points

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Funding Investors