...I believe (probably rather niavely) that my site has great potential and would like to take it to the next level. Unfortunately I also believe that I've taken it as far as it can go when it comes to the coding side. So, in order for this to happen I think I need to approach a venture capitalist - I realise that this could just be a friend who's willing to part with a few bucks or it could be a professional venture capitalist. My questions are: 1. How do you go about this? 2. Whom do you approach? 3. What are the pitfalls of entering into this type of deal? Cheers, p.
Hi Guys, Thanks for the responses - each of your questions has made me realise that I don't know how much I'm looking for... I kinda should've thought about that! Doh! The site I'm talking about is http://www.AddAnImage.com As a very rough estimate I think would be about $15,000 (USD). I think the majority of this would go on re-coding the site and including Ajax feel on the forms and over the site generally (I like the way that the Ask image search is presented...). I'm working on a Facebook application that will plug into the site also. So lets say $10k on coding and then $5k on marketing to give the site some decent exposure. Am I being realistic? Cheers, p.
If you setup your project on elance and other online freelance marketplaces I'm sure you can get all of the recoding and ajax done probably for under 3k depending on how complicated you want the recoding to be. I suggest you save up your money and do it yourself instead. If you don't need a large investment I would avoid venture capitalist if you know what your doing in terms of having a business plan, and a business background. Otherwise once you accept money from a "professional" venture capitalist your going to have big brother watching every step you make.
Background: I have been in the high tech industry for over twenty years. Mostly start-up software companies and internet start-ups, too. I either am brought in as a partner in the company or sit on their board. Most were boot-strapping (self-funded) companies, but I also dealt with VC (vulture capitalist) investors, including top tier companies like Kleiner Perkins. A true VC company is not interested in investing anything less than $2 Million and probably wants to invest more than that in any company that it gets involved with. So, to start off, you are looking for what is called an Angel Investor, not a venture capitalist. Angel investors generally invest small amounts of money and get involved with companies at a much earlier stage. Any serious Angel investor will first ask you for your business plan. The business plan covers a lot of issues, but mostly tells how you will spend the money and why that expenditure will result in a good return for the investor. You can google 'business plans' and find a lot of more specific information out there on this. However, my initial comment is that you should double the amount that you are asking for and include some marketing activities with the extra funds. An investor wants to know that you get the big picture and just having a nicely coded website has very little to do with whether this will be a good business venture. You need to show how you will get the attention and visitors to support a solid business model for the website.
It should be $5,000 on coding $10,000 on marketing. It takes more to market then it does to develop or at least from my experience. I dropped over $100,000 in just a few months a while back and the outcome was terrible considering I've done well before.
Excellent and well written advice! Thanks! I've never even heard of an Angel Investor before. You're spot on that I need a business plan - something that will solidify what expectations I have for my site. Wow, that's a lot of capital to lose! I think your balance between coding and marketing is correct. I think that the coding can be done a lot cheaper than I expected. As another poster has already said I think I'll try funding the updates myself... or perhaps I can find an Ajax course (I've tried books and not really got very far..) and learn it myself ... but then again time is of the essence and this is a very fast moving market. Thanks again for your input on this thread - it's very much appreciated
I suggest you use your money , you can easily earn that much in a few months. If you take money, you will be accountable to some one else.
San Francisco Bay area has the worlds most renowned and up to date VC's and Angel Investors - Sounds like you know what you're doing with the tech-side of things - but what is the great grand goal for you? Do you need the capital to re-vamp because the market and feedback suggest it? Or are you now emotionally attached to the project and don't want to see it fade away? Just curious as this may be your downfall downstream. Even with 15K - let's make it 150K, that's a drop in the bucket for a real VC, and they won't care about versioning or ajax etc. they will rip apart your EBIDTA, your sales history, your business plan, your ass kissing and if you prove yourself chances are it may not be on your enthusiasm to to re-vamp something but to bring a dream to life. If I gave you 15K, would you promise me that back + x points on my money within x time? How would you do it? What if I said I'll give you 15K to market my website or an affiliate program, would you know how to monetize the money (no pun)? Don't misdirect your focus, if it is to further monetize a market or need for consumption that is currently being missed or executed poorly than write up the world's best and lengthiest business plan, grab your best suit and start meeting with local VC's just to go through a few meetings and get your feet wet. Don't show emotional attachment, just show business - numbers, promise of progress, etc... Maybe I'm preaching to the choir, if so I apologize, just be careful with VC's it's a whole other ballgame. Best of luck to you with your venture, would be interested to know how you make out - keep us updated. Norb.
This is the best advice here. You need to prove that you're serious, know exactly what you're doing, how you're going to use the money and how you're going to make them money. Going by what you've already said, I think you won't get any kind of investment. Firstly, $15,000 is relatively small and I would be shocked if most people couldn't beg, steal or borrow $15k from somewhere. Secondly, blindly stating that $5,000 will be used for 'marketing', to me, means you will spend $5k on whatever you think will get you visits. $10,000 for 'coding' makes me think you don't know how much it costs to revamp image coding. Lastly, I don't see what's so special about the site, it looks like a badly designed, template website which is piggy-backing from a stock of (illegally used?) copyrighted images. If I can spot this, an investor who's willing to throw $15k around will spot it from a mile off.
Again great advice - I didn't really know what I was looking for until I asked the question. Yes I have to agree that I'm emotionally attached but I do believe that the site makes financial sense but I don't have the data to put together a forecast of earnings - or possible earnings. It's something that I have to seriously look into - I have a few friends that are seriously into business (but not e-business) so I'm going to start trying to convince them that it's a worthwhile venture. I trust them so if I can get them nodding their heads then I know I'm not blinkered by my emotional attachment Thanks very much for your input. You've given me a lot to think about and a direction that I need to take to push things forward. Cheers, p.
Thanks - I think! No it's not a template - badly design? Yes, i'll have to agree with you on that one - design is not one of my strong points. Illegally used. Nope. I've covered this off with legal advice and because of the Google test case a few years back it's equivalent to a google image search. The site doesn't hold permanent copies of images and it provides a direct link to where the 'owner' of the image is hosting the site. The site as it stands is a proof-of-concept really - nothing more.