

Ask YC: How do you get money - meterplech

Simply put, my business partner and I have developed a prototype of a product. We believe that we have found a niche inside a large market for a product that people would be interested in. However, we don't know how to take the next step. We think that we would be much better positioned with capital to help us hire other developers to help design new products. We have participated and won seed money from a local competition, and have put our own money into the business. However, we are looking to grow quickly, and realize that in order to provide great products for our users we will either need more time or more developers. As of now we have a solid idea, a working prototype, but no revenue. How do we begin the process of attempting to raise capital?
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answerly
Network like crazy. Investors invest in people they know or who know people
they know.

If you don't know any investors or people who know investors, start with your
family and friends. They know you and are more willing to take a risk with you
than someone who doesn't know you.

I once asked an angel investor when the ideal time was to come and ask him for
money. He told me "when you don't need me". If you can do anything to get
closer to generating revenue now, even on a small scale, you will be in a much
better position when you go to raise money.

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trevelyan
Just to follow up on parent post here, what is the difference between your
prototype and a product? Why do you need to hire additional developers? Why do
you think paying someone else to develop this product will make you better
instead of worse off?

Surely a working prototype is something that you can ask people to pay for.
And even if you are not covering costs, getting money in the door will cover
SOME development costs and help convince someone else that people will pay for
what you are building, which is the only reason they're investing in the first
place.

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mixmax
Maybe you just need customers, not capital.

It is probably perfectly possible to locate customers if you have a prototype,
depending on what you do.

Don't underestimate sales.

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petercooper
_we will either need more time or more developers_

With the economy tanking you'll soon have enough of both. Is it possible to
open source enough of your concept that you could get community interest, but
without losing your value-add?

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meterplech
Using open source will only get us so far. I've heard the VC and angel idea
that you should raise money when you don't need it, but right now that is
painfully circular.

