Startups: Your first step to raising a MILLION DOLLARS
Building your minimum-viable-product.
Your first step to raising a million dollars for your business idea is not asking someone for the money.
Nor is it telling someone about your idea and then asking them for a million dollars to build it.
These strategies have been constructed by popular mass media (Shark Tank, for example) and should be completely disregarded.
Your first step to raising a million dollars = building your minimum viable product (MVP).
A minimum viable product is to absolute minimum product or service that will solve the problem for your customers.
Examples of this include:
Listing your restaurant on yelp/Uber Eats with a limited menu
Building a personal finance website that only provides a singular budget tool
Building an app that only is used for uploading business receipts
Additionally, you need to build this MVP at the lowest cost possible.
Your target total cost should be as close to $0.00 as possible.
By altering your frame from "how do I build the most amazing app ever" to "how do I solve my customer's problem in the simplest, least effort, and lowest cost way", everything you do afterward will be more efficient.
As you will soon find out, time is the biggest asset to any entrepreneur.
Time should also be included in your "cost" calculation.
I mention this because spending a small amount of money to speed up your development/MVP build by 3-6 months is worth it (and that's coming from someone who does not like to spend any money, ever).
Ugly, but it works is OK.
Many early-stage entrepreneurs (including myself) spend too much time attempting to make their MVP as pretty as possible.
Although I agree with this notion generally, and customers certainly do "buy with their eyes", perfection is not your goal for the MVP.
A basic "essentials checklist":
Does it solve the problem?
Can customers understand how to use it without reading a users-manual?
Does it look slightly better than laughable?
If the answer is "yes", to all of the above - you are on the right track.
Over time, you can adjust your logo, fonts, colors, messaging, branding, and UI/UX based on customer feedback.
For now, good enough will do.
Get some (honest) feedback.
Once the MVP is built, ask friends and family to try your product/service out.
No, you should not charge them for this.
Yes, you should take notes on their general comments.
They will obviously be biased (they do have to see you on holidays) but at least you will see where they ran into problems or got confused.
Congratulations! If you've made it this far, you now get to experience the first of a lifetime of adjustments & pivots.
You probably found out a few things from your friends and fam that you did not expect (ours was the compatibility across web browsers).
Take a second to adjust your almost-finished MVP to correct for the biggest flaws found that would harm your company's ability to solve your customer's problem.
DO NOT start to add the million "ideas" or "it would be great if it could" to your product/service.
Just like the lifetime of pivoting ahead, you are also about to get tons of terrible feedback that will send you astray unless you learn to write it down BUT hold off adding anything until you have the basics perfected.
Launch your MVP.
By now you should have a working MVP that has been through initial vetting and only does pretty much one thing.
If you were silly enough to ignore but prior advice, you may have 10+ features, be 18 months further down the line, and have 0 customers.
Our next basic objective is to get our MVP to our target market (this will forever be your objective but it's slightly different with zero budget).
Although I will save your early traction strategy for the next article, your basic plan for getting your MVP out there will be:
Build a landing page (website)
Have a way for customers to request access to your service/app or pre-order/purchase your MVP product
Regardless of the marketing plan pursued, having these 2 touchpoints ready for users/customers is crucial as it will allow you to obtain additional feedback for your MVP and also gauge early customer demand.
After you have completed all of the above.
So you have a working, single-function, MVP, a landing page, and a way for users/customers to use or pre-order (waitlist to use) your product.
If after all of this effort you still believe that you are going to need funding to successfully launch your company, you will need to prepare for the game that is fundraising.
If you are lucky enough to realize that you actually do not need a dime to launch your business beyond the money you spent building your MVP - you have saved yourself from giving away a sizable chunk of your future fortune. Just keep building, pivoting, and listening to your customers.
Fundraising will be easier now that you have a working MVP - but "easier" is a relative term.
I will conclude by explaining "easier" and tying this all together.
Imagine someone asking you for any amount of money. They then tell you that they are going to use the money for something amazing that is going to change the world for the better.
Your first thought is going to be "why don't you use your own money?".
Imagine you ask them that and they respond with "I don't have any money to use to create the product/service".
Not a great start.
So then you ask them "how do you know how much it will cost to build this product/service?"
They respond "I'm not really sure how much it will cost but I think I will need $XX,XXX".
You then say "OK, but how do you know people actually want this product/service?"
They respond with "Well we don't actually have any real proof but there are a lot of people out there that would likely buy it".
Are you going to give this person your hard-earned money?
Now if this person would have come to you after completing all of the aforementioned steps for the MVP, the conversation would have gone quite differently.
Without doing a line-by-line convo again - essentially they could tell you "I already built this product, here it is for you to try out, I've gotten feedback from people already and we've made X & Y changes, we are incredibly cost/time focused and built this for practically nothing, and with your money, we intend to improve A & B (based on waitlist user feedback) which will allow us to gain X thousand more users and earn $X thousand each month in revenues.
My point is, don't be the first person.