Ever submitted a b-plan to VC? PLEASE HELP
Ok so I have a tech idea thats in line with the cloud-computing bubble. I've been developing this idea for about two years and I initially submitted the plan to a local VC firm/incubator (I was 19 and ignorant). I've also been looked at by a few development firms on the west coast. The idea is good and has growth potential with a nice exit strategy (a couple million valuation).
Heres my problem: When I initially submitted this idea to the VC/incubator through their proprietary submission process...they chose not to accept me after the second round and a few months later I found my idea online and it was being "beta-tested." Pretty shitty that they did it but I am not even going to pursue at this point.
So it has opened my eyes to how easy they will take your idea. So how do I go about submitting and contacting other VC's with the idea. I am targeting tech funds in Chicago. Should I call and ask to print, bind, and send my business plan in the mail? Has anyone sucessfully gone through the VC process for seed capital? Any suggestions?
You will have a tough time getting attention via cold-mailing. The VC community is really all about networking. You might want to open up an account on the ycombinator message board and ask for advice regarding Chicago VC there (http://news.ycombinator.com/). In addition, you might even want to ask for seed incubation from Ycombinator/techstars etc. This way you can get that YC branding plus the network of entrepreneurs and investors from the organization.
In addition to YCombinator/TechStars (who will both want to see at least a basic demo by the way), you should also look at AngelList - great way to raise a seed round while avoiding traditional VC. Keep in mind though, very few people are going to throw a few hundred thousand at you when you lack both a proven track record as an entrepreneur and even a very basic prototype. Spend a little bit of money (I'm talking less than $1k) and hack together a super basic proof of concept. It will help you light years more than a slick powerpoint.
Also try angel groups. A lot of VCs don't do seed stage.
Thank you guys. I do have a prototype and design lay out as well as some coding examples. I will check out these avenues.
Would the seed money be for hardware/ scaling or to pay for someone to develop/ code your product?
You will have a very hard time finding funding if you want to outsource the development.
It would be purely for development. I would offer money and equity. I would love and have searched for awhile to partner with a developer and set up a 70/30 equity ratio for that person. But the more I get into the more I realize there are a limited amount of people my age that could do that or take that offer.
I think its a common trap to think that a web idea has legs to attract development cash. If you are serious about the idea than teach yourself the code. Most seed funds carry that same sentiment.
Ill add that many people believe that coding and web development are extremely difficult. They really are not. There is a considerable time commitment where you will have no idea what the hell is going on but once you grasp the conceptual framework of your first programming language it is just creative problem solving.
If you really believe you have a million dollar idea than go buy yourself the dummies computer language desk reference. If you cant make that commitment the odds of someone else making that commitment for you are slim.
Its the execution not the idea.
I've started a couple of internet businesses with varying degrees of success and also worked in a small vc shop.
Learn to code: Without a proof of concept, your idea is worth shit. No developer worth their while is going to partner with you for a 70/30 split. The split would be more like 50/50. The sooner you realize that your idea is worth nothing, the better.
Coding is easy to pick up. You don't need to do a good job. It has to be bootstrapped to be good enough to get some traction. When you have some traction, you either use the funds generated from your early users to reinvest or you get some angel investors. VC rounds are later. If your idea really is that good, then do a friends and family round before you seek angel investment.
If you're not willing to risk your friend's and family's money (and yours), then why the hell would an angel investor invest in you?
Going back to my first point, even if you do hire someone to code your prototype, it's beneficial to be able to read code and understand it. Why? So you don't get screwed over and have an idea of how long something will take.
It's all execution. Everything else doesn't matter.
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