The whole “I need to raise money” thing is an interesting topic. As I’ve mentioned before, most entrepreneurs think raising money is their base need when in reality it’s usually something else (or could be done by someone else if you convinced them they should).
What is an investor actually investing in?
I borrowed this graphic from Gabriel Weinberg and think that it’s simplicity demonstrates a lot – the more people are using your product the more an investor is likely to invest… but it’s still a long shot!
More than that, your traction (market maturation) dictates what an investor is investing in. When you’re early it’s all about the team but as you mature they’re also betting on the business itself as momentum means the team or members of the team could be replaced if needed. It comes down to risk mitigation and depending on how much and what type of risk you have will determine in part which type of investors can back you – Friends/Family/Fools, Angels, VCs, a bank etc.
There’s also a nice checklist of things to cover in raising a seed round by Travis Kalanick – a very nice read about how to identify and engage with angels – if you aren’t a great salesperson then this is a VERY high value post.
Finally, if you aren’t reading Mark Suster you’re missing out. His latest post about working at a startup to Learn or to Earn is a great read (a long-ish blog post0) and it will help you understand that learning by working at a startup is a great thing you just need to know what your goals are going in.
