I was recently introduced to a wantrepeneur building a platform with an experiential method of consuming media with an ecommerce side to it. I’m skeptical of the experiential component. Then again, I’m skeptical of a lot. Instead, show me the numbers (user engagement, traction, and any revenue numbers). However, she has none to show, and isn’t actively able to provide any.
She has a great v1.0 already that can be marketed to test traction and gather feedback, but she’s reluctant, opting for a feature-full release. After months with v1.0, progress is on hold as she seeks funding to build her “needed” features.
ZERO users. ZERO revenue. Ideas on business model, but that’s it. Trying to raise six figures. That’ll be tough.
Some thoughts:
  • Seeking funding takes TIME! My friend underestimates the efforts to raise funds — prospecting potential investors, setting up meetings, creating pitch decks, etc.
  • With or without funding, what’s happening? Her “startup” is stagnant. There’s no feedback from users (none anyways). No product development. Each day that passes, the market evolves, and a competitor entrenches itself with the market.
  • Life happens. How do you cope? My friend’s early partners have left due to life complications. This happens. However, she’s stuck unsure of how to proceed like hoping a good, cheap developer falls into her lap.
  • Raising funds with no traction in a difficult-to-defend market?! Startups and entrepreneurship are today’s “it” thing, so there’s lots of noise from those seeking money. Investors mitigate some risk by startups’ traction.

I like TechCrunch’s “Wasting Time with the Joneses” article calling funding as “hyperdrive, not a joy ride”. That is, “If you lay in the proper course, it will take you far. If you haven’t, you’ll just be way off the mark and beyond the reach of anyone to save you.”

What are the traps of seeking funding while still in the early stages of product development? How could entrepreneurs be successful in raising capital without traction?
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