Your first Angel-Seed Stage investment is a key part of a startup’s emergence into the real world.
Before Raising Your First Angel-Seed Stage Investment
Before you start raising your first Angel-Seed Stage investment for a hitech startup, you should have completed the following tasks:
- Product definition (you know what the product is)
- Co-Founders in place (your key executives are in place)
- Corporate Formation (you have a company)
- Technical prototype created (you can demonstrate the technology)
- You can describe how you plan to manufacture and deliver your product with a significant margin from the perspective of this target market
- Market traction demonstrated (you can prove that a target market wants your product)
- Initial paying customers (you have paying customers who will tell potential investors why they must have your product (or service). It is very difficult to raise funds from well-informed investors without having paying customers from the investor to interview. Those who invest before paying customers are usually only Friends, Family and Fools (FFF).
- There is a compelling Business Plan or Go-To-Market plan
- The Business Model is sound. You can discuss it in detail. The more stable it is; the better
- You have extensive knowledge of your competition (never tell a potential investor that there is no competition)
- All debts have been paid (well informed investors will not invest in your debt)
Of course, you can try to omit one or two items from the above list. But, the more you are missing, the harder it will be to raise money. Most of the above must be in place to achieve the existence of Paying Customers. In some cases you can have only non-paying online participants and raise money. But, you will then have to make a strong case for how you have demonstrated Market Traction.
When you envision your new venture plan for how you will establish market traction before you raise funds from outside of FFF.