Ask YC: How do you get money | Hacker News Reader

Ask YC: How do you get money

2 pointsmeterplech5 comments

Simply put, my business partner and I have developed a prototype of a product. We believe that we have found a niche inside a large market for a product that people would be interested in. However, we don't know how to take the next step. We think that we would be much better positioned with capital to help us hire other developers to help design new products. We have participated and won seed money from a local competition, and have put our own money into the business. However, we are looking to grow quickly, and realize that in order to provide great products for our users we will either need more time or more developers. As of now we have a solid idea, a working prototype, but no revenue. How do we begin the process of attempting to raise capital?

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Network like crazy. Investors invest in people they know or who know people they know.

If you don't know any investors or people who know investors, start with your family and friends. They know you and are more willing to take a risk with you than someone who doesn't know you.

I once asked an angel investor when the ideal time was to come and ask him for money. He told me "when you don't need me". If you can do anything to get closer to generating revenue now, even on a small scale, you will be in a much better position when you go to raise money.

Just to follow up on parent post here, what is the difference between your prototype and a product? Why do you need to hire additional developers? Why do you think paying someone else to develop this product will make you better instead of worse off?

Surely a working prototype is something that you can ask people to pay for. And even if you are not covering costs, getting money in the door will cover SOME development costs and help convince someone else that people will pay for what you are building, which is the only reason they're investing in the first place.

Maybe you just need customers, not capital.

It is probably perfectly possible to locate customers if you have a prototype, depending on what you do.

Don't underestimate sales.

we will either need more time or more developers

With the economy tanking you'll soon have enough of both. Is it possible to open source enough of your concept that you could get community interest, but without losing your value-add?

Using open source will only get us so far. I've heard the VC and angel idea that you should raise money when you don't need it, but right now that is painfully circular.

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