Should you seek funding if you don't yet have revenues or traction?


2

It seems that either revenue or traction are the biggest factors in being able to easily get venture capital. Should one pursue trying to raise money without either of those factors? At the moment we are have almost finished building an MVP.

In order to get customers, we'll need to spend resources (time and money) in marketing and sales activities -- which would be significantly easier if we had some funding.

Funding Venture Capital Pitch Investors MVP

asked May 28 '14 at 21:41
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Cheryl Febus
14 points
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1 Answer


4

You should seek funding because you need/have to, not because you can.

Typically, early stage (aka pre-revenue) funding is for building an MVP as that's the most expensive component of launching a product. Since you are close to completing an MVP, you are better off spending your energy on trying to get traction and early learning instead of chasing funding, which will most certainly get you off track from post-launch activities. Of course it would be nice to have money to spend on marketing and sales, but you are likely to not spend it wisely in the early post-launch days because you are going to focus on sales and revenue, rather than learning as much as you can and optimizing your product to get to product-market-fit. You need very few paid customers to generate early learnings via feedback - $5-20/day in Google AdWords can bring you enough to start learning. To encourage feedback, add widgets with questions or feedback forms into your product, something from WebEngage, Olark, Qualaroo, or similar.

Remember, having money doesn't eliminate the need for you to learn about various marketing activities and the time-saving aspect will not be huge if you want to make sure you spend your money well. Co-founders should invest into learning about marketing because it will be an ongoing effort and expense. You should only outsource marketing after you have a very good understanding of all the channels and what they do for your business, so you can set the right goals and ask all the right questions.

answered May 29 '14 at 02:26
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Webbie
2,835 points

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Funding Venture Capital Pitch Investors MVP