Ask HN: Should I get investment?

11 points by jacksoncarter 15 years ago | 15 comments

I tend to be anti-VC because it seems so many fail. At this point though, I realize that I need additional capital. It's simply too much for me to do it all.

I've been working on this idea for a few years now. The product is quite good. It does amazing things for people. I do have paying customers. Everyone who knows about the product thinks it's absolutely amazing.

Here's the problem. the only way I'd be able to get investment is to knock on doors. There is a little projector in my brain showing me a movie of myself walking down Sandhill Road going into offices, asking if I can talk to someone. That's where the movie ends. I don't know if the receptionist would say, "Sorry, there's no one available right now. Can I take your..."

The other option would be, "Sure, let me see if Mr. X is available. Mr. X, I have someone here who'd like just a few minutes of your time. Okay, he'll be right out."

So I show Mr. X what I have and, "That's pretty good. What do you want to do with our money?"

Sometimes I think I just gotta do it. I am stopped by fear of wasting my time. I'm stopped by fear of rejection. I'm stopped by thoughts of my own grandiosity and knowledge that my personal bias -- of course -- makes me think this product is great.

I need some commercialization. I need some refinement, but I've got 3 years of R&D under my belt. It's one of the best products in its space. Customers who can understand it love it.

Sometimes I feel like I owe it to the world to help this thing get out there. With about $250,000 I could really take it to new heights. Refine the UI. Market it. Package it. How do I find that money? How do I connect with the people who would understand what I'm doing here?

Can I go knock on doors? I will if it wouldn't be a waste of time...

EDIT: Might as well let you know what it is. Here's a link to a new version of the site we'll launch soon: http://design.qrimp.com

ohashi 15 years ago |

I am curious who the customers for this are? How come you need 250k if the price tag is pretty big at 500/month or 5k/month? Why do you need 250k?

If 250k for to last you 1 year (12 months) =~ 21k /month or 4 medium business accounts or 40 small biz accounts.

If there was some product adoption like you hint at, I can't see why you would be asking for such a small amount of money.

I feel like you're hiding something... "Everyone who knows about the product thinks it's absolutely amazing." and "I do have paying customers"... so where is the money? Is your pricing/business model flawed and you've had some people try it really cheap but not willing to pay those advertised prices?

Another issue I see is "Customers who can understand it love it." Why don't others understand it? Looking at your site it wasn't exactly clear what it does. Does your mother understand it? How about your grandmother? If you can explain it to them, your target customers shouldn't be a problem.

jacksoncarter 15 years ago | |

Great questions. Customers are individuals and small businesses who want a web application or to web enable their business. Most of the revenue is from building custom apps on top of it, then charging a monthly rate for hosting, essentially. I don't want to get too specific about the details. I feel uncomfortable enough as it is just talking about it publicly. That's part of the problem I suppose.

The pricing/business model very well could be flawed. I'm constantly refining pricing. Some customers think $8/mo is too expensive, others tell me I'm not charging enough, so I experiment with pricing. I'm not really sure what the best price is. If I lower the price, I do get more signups, but I read all the time about charge more and people will think it is worth more, so you'll get more customers, so I wonder if I should just make it $5/mo and get lots of customers, or $5,000 and sell harder. The issue at that price point is that customers want to be sure the platform will never die and the bus factor is low. The largest sale was to a Fortune 1000 for an enterprise license.

I have got plans asking for as much as $2M.

But you're right. It's not clear what it does. My family does understand it, to some extent. I do need a lot of help on the marketing side. Explaining it. Helping customers understand how to use it. That's what I mean when I say customers who can understand it. The market is split between developers and business users. I'm a developer and have tended to focus on that route, but developers want 100% control like they get with PHP or RoR. Business users need more assistance and quite frankly, building information systems is hard, so it takes a lot of time to help them figure out how to create a system -- with any tool. I spend a lot of time helping customers define a model for their systems. There is a large learning curve and I continue to shrink it. That's what I spend a lot of time on.

Retric 15 years ago | | |

The other option is to have 5$:40$:300$ pricing based on a small list of new features.

PS: Once someone is happy with your product it's far easer to upsell them on new features even if the cost difference is crazy. Many people don't go I like new feature Y, is it worth the extra price. They go "I like Y and product X, is the product still worth it at the new price?" which is why people will pay far more for extras when buying a new car than they will for the same extras after they have the new car.

SemanticFog 15 years ago |

You should seriously think about finding some advisors before you raise money. The time and expense is well worth the effort.

Set up a board of advisors for your company, and try to get 1-3 successful entrepreneurs in your field (or related fields) to serve on it. Give them a bit of equity. Talk to them individually, but also try to get them all in one room at least once.

You can reach potential advisors through networking events, through service providers like lawyers, and by just emailing them (repeatedly if necessary). You might want to start by hiring a lawyer or accountant who is connected in the community, and asking for help with intros.

Among other things, your board of advisors will help you understand the type of investor that makes sense for you. If you're trying to raise $250K to ramp a business up to a few million/yr, then odds are no one on Sand Hill Rd will be interested. But that doesn't mean it's a bad business -- you just have to look elsewhere for investment.

vgurgov 15 years ago |

If you are looking for just $250k you should rather start with angels. Too small amount for most VCs.

michael_dorfman 15 years ago |

If you've got a product with paying customers, and a business plan that shows how an additional $250K in capital will bring you X% growth over Y years, you're definitely in a position to pitch to VC/Angels.

So, make some telephone calls, and set up some appointments with VC/Angels in your local area. Try to avoid the instinct to deliver the pitch over the phone; just paint the picture in broad strokes, and try to get the meeting.

Seriously: what's the problem?

byoung2 15 years ago | |

Seriously: what's the problem?

Like he said, fear of rejection. It's the same thing that stops guys from asking girls out. The reality is that the worst thing that can possibly happen is that you get a big fat "no" but your brain makes it out to be much worse. Like Hamlet says: "there is nothing either good or bad, but thinking makes it so."

findm 15 years ago |

Sorry, you might have "paying customers" and they might think it's amazing but I'm going to have to disagree with you on your perception of good. I don't quite understand what your product is, does or what problem it's solving or who it's even for and there's no immediate wow-I-get-it-ness to it. Custom Software App builder? Why do I need it? Is it even that? Are you building apps for people? Judging by the language on your site the level of sophistication needed to use your product, the person should be able build it themselves.

I highly doubt that anyone would give you money and why $250,000? how will that accomplish anything? It just seems like a finger in a wind number. Refine your idea then refine it some more. You're getting high on your own idea.

Your website is really off-center when browsed in chrome, try looking at it at 1024 screen.

shafqat 15 years ago |

If you tell us what the product is, there's a much higher likelihood of getting help. In fact, there are people here who might invest. FWIW, I can certainly introduce you to angels/VCs who will take a meeting, but I'd have to know more about your business first. So bottom line: share!

gyardley 15 years ago |

'Knocking on doors' won't work - that's just not how money is raised. Even if it got you meetings, the amount you need is lower than a Sand Hill Road VC invests. You need angel investors or 'seed stage' funds. Happily, there's lots of those. You also need a warm introduction from someone who knows them. This you can get through a little networking.

'Venture Hacks' is probably the best online 'how to raise money' resource.

dmillar 15 years ago |

To start any business you have to take risk. You've gotten this far with your idea, the worst that can happen is they say no. But, now you've got experience pitching to VCs.

Understand that the fear of rejection is just that: fear. It's part of the risk. Sometimes, rejection can be a damn good motivator.

davidw 15 years ago |

Now I'm curious what it is.

jacksoncarter 15 years ago | |

I added a link to the above, but here it is for you: http://design.qrimp.com

It is a cloud platform that enables application development using only a browser. No IDE's to download, databases to configure, servers to manage. Upload your data and Qrimp builds a relational model to support it and let's you customize reports, forms, build pages. Use AJAX to customize the interface of your app. etc.

Imagine MS Access for the web.

It seems more and more customers are looking to move their databases to the web and this platform helps make that happen easier than coding them from scratch with .net, ruby, even django and frameworks like that to some extent, because it's all on the web.

Of course there are lots of competitors: Salesforce, Caspio, Quickbase, even excel really -- the status quo. But the market is growing and will continue to grow.

mrtron 15 years ago | | |

Looking quickly at your product - here is my advice.

Raising funding will be hard for this type of product. MS Access for the web is an extremely hard business model to raise any funding for. You have a platform you can build stuff in - what is your market for sales?

So they may be worried for good reason. Your product has a lot of uses, but no clearly defined market.

What I would do is take your product and figure out what the top 10 tiny niches are for it and do some testing/analysis. A good example here is the guys who do the restaurant ipad/mobile sites. Why are they just attacking the restaurant space and not any website? Surely the technology is the same. The reason is they chose the best battle they could. Consider doing the same approach - you have a general platform that could be very useful for many individual uses.

Then when you have a very clear concise business, market, customer growth strategy, basically a good story in one little niche - you could have more success with funding.