I was reading this article on traction and it had an interesting comment in it:
If you wait until you're "ready" to fund you're too late. Funding is about developing a relationship over time. Most of us wouldn't get married on the first weekend we met someone in Vegas. And most VC's wouldn't fund the first time we meet you. Given that many VC's base their decision on the team, the longer they have to get to know you the better.So here's the situation I'm in right now. Our startup is about 8 weeks old at this point. We are in the middle of building our proof of concept. Our business plan is basically complete, as is the pitch deck. We expect to have our first iteration of our product ready for "demo" purposes probably in another 4 - 5 weeks or so. It will probably take another 4 - 5 weeks after that to get an MVP put together that we can actually put out there.
While my business partner is building the app, I have been documenting requirements, attending local startup events, meeting people, working on the business plan, validating assumptions, refining the pitch deck, and working on our website and social networking accounts, as well as drafting some (unpublished) blog posts. We haven't incorporated just yet; I've been receiving mixed advice... cost is definitely an issue for us, we have put in a combined probably $1500 but I have read that a "real" startup lawyer is > $5k and I just don't have that available right now.
We are in the process of a business plan competition and were selected as semifinalists; if we win that we could potentially walk away with $25 - $50k, which would be enormously helpful in purchasing some required software licenses we need, as well as forming the actual corporation.
But when is the right time in all this to get the gears going? I want to now, but I'm paranoid because while we have a significant portion of the backend work the only thing I have to actually "demo" is some Balsamiq mockups I have been doing of our anticipated UI designs. The quote above makes it sound like I should just get out there and actually try to schedule some appointments with VC's that really have no purpose other than to just introduce myself and our business model at the highest level. Without any "closing" for $$.
The other question is; how do we actually find these people? I've been getting active on twitter and am going to begin attending local events (thank god I live in Massachusetts which has a pretty thriving startup economy, it's not Palo Alto but hey!) - like Ramencamp and some other networking events. Should I be cold calling lawyers? Should I be cold calling VC's?
I could also just start reaching out to other funded companies and talk to their owners, but I don't want to be intrusive either. And how do I figure out what VC's I even want to target? Is it based solely on their investment portfolio? (market size, stage of growth, and industry or target area?).
Thanks in advance - I just want to keep myself focused on the most important things so I don't waste time on making T-shirts. I have a vision in my head of us hitting our MVP and then just sitting around while I putter to investors for three months. Nows as good a time as any for me to be actively pursuing... that way when the product is ready for beta I can get out there selling!! (catch-22: isn't the selling supposed to come first?)
Thanks all for any tips / advice you have on this!
EDIT: I'm still interested in some more feedback. I can't figure out how to add bounties yet :) (Still waiting! Bump!)
Sounds like it is a really long time before you should focus on VCs. At this time it will be more of a distraction. You are better off thinking ahead how to self-fund your initial runway.
You usually find them via connections, which is the second best case, or if they contact you because you are doing great without them, which is the best case.
You can look for them anywhere really..Twitter, algellist.com, etc. But at this time it does not seem like they will be very responsive.
When you have proof of traction and conversion. Investors will not finance an idea, not unless you're a well known former CEO/founder with an existing track record of financial success.
Get your site/app up, get traction, build impressive funnel diagrams showing the conversion percentages and go after VC's.