investors, venture-capital, angel-investors, fundraisingI have a new project underway and am currently working on the web site, with an eye toward launching it by early October. I know that I could use crowdfunding, but I really don’t want to go that route just to find an investor or two for less than $10K in total funding. Can anyone offer suggestions on how I can find investors directly using the web?
For less than $10k funding, the transaction costs are too high to make it worthwhile for an external investor. You need to hire lawyers to draft documents, etc.
I suggest:
You may want to consider potential early adopters of your product as early investors.
You’d be basically killing 2 birds with one stone using this approach: reach out to potential customers (ideally the early adopter kind) and if they like your product and see its potential, you can present an opportunity for them to have a stake in it.
For your offer to them, you can either offer equity which is obviously a lengthier and costlier process, or offer them a profit-sharing incentive. You would still need an agreement, but it is much less drawn out and complex. You can offer for example: 20% of profits/revenue once sales hits $5,000/month in revenue with a max profit cap of $2,000/month, in exchange for $10k. Or something else that you can both agree on.
I don’t know your target market or customer demographic, but in my experience with people in the legal industry, some lawyers tend to be business-minded, have extra cash, and are looking to make this kind of investment. So try to look for those traits in the people and customers you reach out to. It helps that they are actually in the industry and can understand your product and business approach much better than just anyone.
It also sounds like you have been bootstrapping your way to this point, so this is IMO a good tactic to do. If you don’t succeed in attracting investors this way, at least you will have gotten great customer feedback from discussions and possibly signed up a few new customers as well.
EDIT: (real-world example) We had once reached out to some of my personal contacts in our customer demographic (practicing solo attorneys) who became interested in our product and eventually asked how they can be involved. We ended up having a healthy amount of discussion with them about our product and business approach over the course of 2-3 months. They eventually offered us office space and we are working on a profit-sharing agreement to acquire some capital to expedite our launch. I wish we were further along in the process to share more results, but this is an approach that has worked out for us so far. Most people you approach with this method probably won’t be willing to invest immediately, that’s why it’s so important to treat it as a customer relationship building exercise.
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