software, fundingI’ve running a small software development business for several years. Lately I’ve developed, with my own resources and sleepless nights, a new product, I think innovative and unique at least locally, potentially targeting both B2B and end users markets. It’s currently working, with a few users and sold projects to be started, but a lot of development is still required and it’s getting difficult due to other compromises and lack of resources.
So now I’m looking for funding to finish the development, develop the brand, launch the product publicly and hire human resources (or be able to pay the bills while I do it myself?) for further development and sales.
Our access to bank products is really limited, only being able to get a really, really small loan. I’m interested in funding from other individuals or companies, both as loan or giving up participation in the management of the company.
Do any of you have experience with this? Have you been able to rise funding for this kind of projects before? From who (banks, companies, friends)? How do I even find potentially interested investors?
I’ve been reading other threads but the difference here is that I have a fully functional version, it’s just that it still needs new features to be marketable and publicity and sales force.
Any advice will be higly appreciated.
Do you have any contacts to potential partners in the same market? Did you perhaps talk to larger (medium-sized) companies that are having similar products or want to develop?
What I realised when going out talking to potential customers or partners is, that those contacts can be quite interesting, even though they might seem to be more of a competition to you at first.
If you established some of those contacts that are potentially interested in doing some common projects, they might also be interested in funding some of your expenses.
Of course in return, they expect to get access to your product or get involved in your company somehow. But that might just drive your business further.
Personally, I prefer those partnerships over anonymous investments, as you get a partner that is interested in your product and might even work as a sales multiplier.
We recently went through a process to seek funding for a very solid, very low-overhead software product. We even had a prototype to demonstrate proof-of-concept. We got a consistent response from everyone we spoke to that “no one is investing in bootstrap right now”, possibly an overcompensation for previous irrational optimism in such investments. On the upside, our startup is much stronger for not being subject to the draconian requirements of early-stage funders, and VC’s in general, who are not your friends.
We were advised repeatedly that family and friends or crowdfunding were the only options at this stage. (Crowdfunding was not an option due to the proprietary nature of the product, but we plan to pursue a crowdfunding strategy once the initial software is released.)
Alternately, you could look to set up pilot programs with strategic customers to get initial traction and demonstrate viability for future funding.
In terms of human resources, the strategy I ultimately adopted was to offer extremely generous, partner-level equity to the key collaborators I needed. As long as you are generous, fair, and transparent, you might be able to attract part-time collaborators on a pure sweat-equity basis, and get to the next stage of development without having to take on investors. I have even known salespeople open to such deals if they see the potential.
Entering product based competitions can be helpful in getting the attention of interested investment firms. Also look into venture capital firms that have invested in similar products and just reach out. They want you to be their next cash cow just as much as you do. Some aren’t going to be backing new projects but it’s about building a buzz about your company looking for capital in the right peoples ears. If that isn’t your thing and you would rather split with a percent of the company you can look into incubators though I really don’t suggest that as a first option.
All content is licensed under CC BY-SA 3.0.