How much time and effort is required to raise money from outside investors for your early startup?
It can take most of the founder’s time for six months to a year if your startup has these characteristics:
- Product not built yet or it’s not close to being sellable
- No paying customer or revenues yet
- No happy customers using your product yet
- No believable plan for how you will efficiently get to $1M in revenue with happy customers
- Inexperienced founder who doesn’t speak fluently about SaaS, pitching, building products, selling, and marketing
- An “everything to everybody” product and growth strategy
- No clear passion for the product or the market
- Not capable of building a serious team
- No experienced advisors who know your market and startup stage deeply
- You’re outside Silicon Valley and are a first-time founder
- A business model that isn’t the blessed recurring revenues, like e-commerce transaction, ad models or app purchases.
Really, it’s going to take a lot of time and effort for a long time.
And it often doesn’t result in a successful funding at this stage.
Most founders should hear this and think:
“So really I need to find creative ways to build a product and get revenue traction and not waste my time raising a bigger round right now.”
Exactly. This is time much better spent for most founders.
If you had $1-2M or more in recurring revenues, 10%+ month-over-month growth, raving customer reviews, experienced founders and leaders, AND established investor relationships, your fundraising process will likely take a few months and look easier.
It won’t be easy for these founders either, but it will look easy compared to fundraising for startups with minimal traction and no momentum.