equity, funding, investors, angel-investors, fundraisingLet’s say I have an idea for an app, but not the technical skill to make it, nor the money to hire a developer. To get funds to hire someone to build it, I approach a VC or angel investor and they’re blown away by my pitch and agree to fund me.
Looking at it from the investor’s perspective, after our initial meeting, I have no value. I have no product and as far as they know I can’t contribute anything meaningful through management or development. The only thing of value I had was the idea, which no longer matters.
I’m trying to imagine a scenario where I get funded but retain both control and shares. For example, could we work out an agreement where I get 51% of the voting power and some arbitrary percent equity? Or would they be likely to let me stay on as CEO anyway, because somebody who comes up with an idea is likely to be the most passionate about it? How much equity could I reasonably be expected to retain if my idea is the only value I have?
Ideas are worth nothing without execution. Investors usually look for your capability in running the business. You either need to have good technical skills or have experience in running the business.
My point is that you need to bring something to the table other than your idea.
What happens when another better idea popup on your mind next week? What guarentee your investors have that you are gonna stick with the old idea when you have 51% voting rights? You need some leverage to get 51% voting rights.
If you have a next billion dollar idea, then its easy to convince some programmers. Start to create some product mockups. It doesn’t require any technical skills.
Then start to hire some programmers either for some money from your pocket or by giving equity. Most likely you can create a Minimum Viable Product without spending a fortune.
If you have a Minimum Viable Product, then you have some leverage. Now you can bargain with your investors.
With just an idea, you are only a Wantrepreneur, not Entrepreneur
An investor is not going to listen to a pitch and then invest. If you find one that will send them my way - i have plenty of ideas.
To get investment you need an idea, a team, a plan and an exit strategy at the very least. Plus the ability to communicate the strength of all of those things to many investors in ways they’re able to easily understand and withstand strenuous questioning. All of this has to assure the investor that their money is in safe hands and likely to grow and give them a profit.
Investors rarely want to control your business. They are too busy. They want a return on their investment.
I’d advise speaking to an accelerator in your area. They might be able to intro you to a technical co founder and assess your idea
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