Ask HN: We launched 2wks ago and just hit $700 MRR. Should we chase funding? | Hacker News Reader

Ask HN: We launched 2wks ago and just hit $700 MRR. Should we chase funding?

7 pointsnaeemtee14 comments

I launched a SaaS business recently in the sales automation space, with a product that's better than anything else in the industry (especially at our price point). Without a ton of marketing, we've gotten to around $700 in MRR already with really high conversion rates (1-2% of our total visitors pay us).

We're not profitable yet, however the cash flow is modelled in a way that we'll be profitable after 250 users (we're at around 30 right now). In the long run I want to build this myself without venture capital, but right now a quick $100-$200k seed investment would immediately give us the influx we needed to become a sustainable business.

So, I need your suggestions: do we continue to just slowly grow ourselves, haemorrhaging 1-2k a month until profitability? Do I take time away from the business to focus on early-stage accelerators? Are we too early to look for investment?

Congrats on getting traction.

I think you are too small to consider funding.

Even though you are downmarket I would look at raising your plans. Looks like your average is around $23. Even though you are downmarket of clearbit they should be higher.

You can grandfather in your existing customers. But I would rework your pricing so you start at $49 min and move up from there. Structure your plans where the more value your clients get their plans increase accordingly. So build in a way to upgrade them to higher plans as they use your app more.

$1-2k per month sounds like a lot to support 30 customers. Look at ways you can still provide a great app/support and lower your burn rate.

Don't look for funding, maintain control and keep adding signups. That $1-$2k is you investing in your business and then you can have 100% of the profit in the future. I think you can lower your burn rate though.

Good luck taking it to the next level.

If you haven't checked these out yet give them a listen:

DHH Startup School Talk https://www.youtube.com/watch?v=0CDXJ6bMkMY

Listen to their archive, great tips and inspiration from what Rob has done over the years. http://www.startupsfortherestofus.com/archives

Search for patio11 on here and check out his posts, podcast and book.

I remember my first dollar in MRR so well. It's an incredible validation that you have something that can work. Going from $0.00 to $1.00 in revenue is difficult and impressive, so take a minute to appreciate that.

That said, as I'm sure you know, you're a long way off from a sustainable business.

To answer your question, it's not too early to look for investment, there are plenty of businesses that get funded without revenue, but it may really not be the right decision for you. Do you have a lot of competitors that are breathing down your neck or a large entrenched market that you need capital to get into? If so, then you may need the funding.

Sales automation is very competitive market, so in this space I would generally lean towards yes, you need it.

But on the other hand, it sounds like you're making some money without that. IMHO, with what little I know about your company, I would try to hustle your way to $7k/mo in the next 6-12 months. During that time, figure out what you and your partner/contractor/buddy are good and bad at and where the bottlenecks are (e.g, coding, marketing, sales, customer support, etc). Get a good idea of your growth through different marketing channels, your churn, and generally how much your customers like your product. While investment makes your feel good and can get you some press, it's a necessary evil, not necessarily something to be proud of.

Keep going on your own for a while.

Sounds like you are off to an incredible start, so why not just run with it and see how far you go? Without VC pressure to get HUGE super quickly you could have a great business on your hands. So if you simply need funding for cash flow or to support yourselves, then try friends and family. You might be surprised how much people are ready to take a chance on your idea.

If you have some degree of product-market fit, then an accelerator likely won't be a great use of time.

Set a goal of 100% growth per month, achieve it and you'll be profitable in about 3 months. My point is, maybe make a spreadsheet that has various growth rates and see how many months it takes at whatever growth percentage, and see if you can stand that.

I think taking $100/$200K from VC when you're making $700/month is going to cost you a TON of equity.

If you launched just 2 weeks ago, then you still know absolutely nothing about your churn and I suspect that will be something you should be monitoring month over month to see if those initial customers stick around at month #2 or month #3.

dont do it. that quick $100k means you will never be in full control

instead look for how you can cut/delay/share costs until profitability.

smugmug self funded, and just bought flickr

What would the 100-200k let you do that you can’t do now?

Congrats on the initial traction.

I asked this in your Show HN thread, and I'll ask again: where did you get the list of emails belonging to "over 350 million professionals?" This is clearly your main value-add and the reason people are paying you money. But was the data legally sourced? This is the first question any competent VC will ask, and you better have a damn good answer to it, especially in today's political climate around personal data.

you can

A) increase the price, without knowing your product, you have market fit, it could be because of the pricing, or it could be because of the product.

B) Offer 3mo/6mo/full year bundle w/ light discount, this way you can increase cash flow up front to use to get to your next growth target.

It depends on a lot of things. Do you need the money? What will you do with it, and how the will the value of your share of the pie compare with/without investment.

What's the product?

It's a lead generation tool - same space as Clearbit, just further down market.

https://www.uselio.com/

Very cool. As long as you are getting traction and burn is met, avoid raising. :)

Reply on news.ycombinator.com