June 25, 2010 at 10:49 A new approach to startup financing. Questions to the collective mind of the habrasociety
Not so long ago, I started a serious Internet project with partners. On the current day, he was tested on a regional scale and the question arose of reaching all of Russia (possibly the CIS). In this article, I will not specifically refer to the project itself (of course I will talk about it later), the details are not important yet, my task is to get fundamental answers from the habro-community to the questions posed in order to understand in which direction to move.
1. An excellent (in my deepest fanatic belief) idea and development plan.
2. A working prototype launched in the micro-region, covering a small part of the functionality.
3. A modest revenue from the sale of project services.
1. Fully implement all the intended functionality.
2. Go to the wide open spaces of the Internet.
3. Ensure stable and safe operation under heavy loads.
4. Receive high project profitability.
5. Never stop there.
To implement the project while maintaining competitive advantages, resources are needed. By the way, money is not the most important thing, and more on that in our further considerations.
1. Self-financing.
It’s clearly not enough money, besides earning and promoting a project is not very effective at the same time, you need to invest all your mental abilities into it, and not by the residual principle.
2. State support for innovative projects.
I tried to participate in state competitions to support innovation a couple of times, but, firstly, on the jury, most of the old-timers do not understand the Internet, and secondly, they are overgrown with connections and pull out their projects. There was even a time when the submitter of the project himself was in the tender committee, in general, guys, without hesitation, but it's not about that, so do not get distracted.
3. Venture funds and business angels.
There have been, I confess a few, attempts to contact such people / organizations. In some cases, I didn’t reach those whom I identified as potentially useful for the project, I received an answer somewhere that at this stage of development the project is not yet interesting. I’ll draw attention to this nuance - sometimes applications are received by performers with a lack of qualifications and a desire to delve into the application. On the one hand, I feel sorry for the time for such work, and on the other, experience is gained only and, most importantly, you better structure the idea and think out a development strategy.
For the first (experimental) stage, I attracted a few third-party investments, but for the full development of the project, for it to earn millions of dollars, more significant funds are required. Which I am currently searching for.
A business communications service with which company representatives can talk about their organizations and products, and users can rate and recommend to others. Moreover, the crucial point is that all basic capabilities are free and even small business representatives, if desired, can attract the required number of customers.
The idea was retold partially and very vaguely, but you can’t talk anymore so as not to get away from the essence of the discussion.
In the process of thinking about the project, I had an idea - why are everyone looking for one investor, why not attract millions of people as co-founders ? After all, this is the Internet, here you can automate the process of processing applications and reduce costs. Those. the project has millions of investors, each of whom, in addition to money, can give recommendations to developers and affect the popularity of the project. In fact, there will be a blurring of the commercial model in the direction of a self-regulatory organization that has an important social function.
Cons of the idea:
1. It is necessary to allocate funds to a small site where you can purchase a share in the project and as a shareholder work on the development of the project, vote for certain decisions.
2. Resources will be required to advance the idea itself (advertising)
3. Small offline costs will be added for the legal registration of many transactions.
Pros:
1. Savings on promotion. The project does not receive just money, it receives a lot of adherents of the idea - a powerful core capable of providing the project with such vitality and popularity that you cannot buy with any money.
2. One head is good, and two is better. Owners are users, so decisions will be made based on real needs. The project will develop in the right direction without unnecessary marketing research.
3. The best workforce. The community will put forward the best experts to work on the project. People will be able to work on a project that belongs to them, so the return will be completely different.
So, question number 1. Is the idea realistic to attract millions of investors who will be interested in the development of the project or is it a utopia?
Question number 2. What marketing tools to use to attract micro-investors?
The idea of attracting millions of people to the project logically continues in attracting them to work on the project itself to the best of its own abilities. In ordinary joint-stock companies, in order to vote on any issue, you must have a certain shareholding. In our case, everything is different, even one vote, amounting to a thousandth of a percent, should be taken into account when voting, moreover, not once a year, but as important questions arise. In addition, working groups can be formed to work on small tasks. Question number 3. Will people appreciate the new features? How to convey the reality of personal participation opportunities for co-owners and explain the importance of each investor and his voice for the development of the project?
It is clear that in the beginning there must be a firm hand in order to give the project all that is necessary to prescribe procedures and regulations and bring it to the mass market. If you look at this project more broadly, then its value is much higher than commercial social service. Therefore, the question number 4. Should there be any restrictions on the size of the share of one person in the long term?
For a long time already, almost every day I look through all the posts of Habr and see that there are a lot of reasonable people who can help with advice and participate in good undertakings, so I wait for real statements, as is, without diplomacy.
UPD (March 2017): I already forgot about this article of mine. How it all ended: We still did the project, we even sold it, though with an effort. Due to the lack of sane investments, development was slow and there was no chance to conquer the market outside our region, so in the end they closed the project, well, without serious losses. But the experience is wonderful. Everything was not in vain.
So, today we have:
1. An excellent (in my deepest fanatic belief) idea and development plan.
2. A working prototype launched in the micro-region, covering a small part of the functionality.
3. A modest revenue from the sale of project services.
What do we want:
1. Fully implement all the intended functionality.
2. Go to the wide open spaces of the Internet.
3. Ensure stable and safe operation under heavy loads.
4. Receive high project profitability.
5. Never stop there.
What is necessary
To implement the project while maintaining competitive advantages, resources are needed. By the way, money is not the most important thing, and more on that in our further considerations.
Where to get resources?
1. Self-financing.
It’s clearly not enough money, besides earning and promoting a project is not very effective at the same time, you need to invest all your mental abilities into it, and not by the residual principle.
2. State support for innovative projects.
I tried to participate in state competitions to support innovation a couple of times, but, firstly, on the jury, most of the old-timers do not understand the Internet, and secondly, they are overgrown with connections and pull out their projects. There was even a time when the submitter of the project himself was in the tender committee, in general, guys, without hesitation, but it's not about that, so do not get distracted.
3. Venture funds and business angels.
There have been, I confess a few, attempts to contact such people / organizations. In some cases, I didn’t reach those whom I identified as potentially useful for the project, I received an answer somewhere that at this stage of development the project is not yet interesting. I’ll draw attention to this nuance - sometimes applications are received by performers with a lack of qualifications and a desire to delve into the application. On the one hand, I feel sorry for the time for such work, and on the other, experience is gained only and, most importantly, you better structure the idea and think out a development strategy.
For the first (experimental) stage, I attracted a few third-party investments, but for the full development of the project, for it to earn millions of dollars, more significant funds are required. Which I am currently searching for.
Super short about the project
A business communications service with which company representatives can talk about their organizations and products, and users can rate and recommend to others. Moreover, the crucial point is that all basic capabilities are free and even small business representatives, if desired, can attract the required number of customers.
The idea was retold partially and very vaguely, but you can’t talk anymore so as not to get away from the essence of the discussion.
An alternative way to attract investment for the development of the project
In the process of thinking about the project, I had an idea - why are everyone looking for one investor, why not attract millions of people as co-founders ? After all, this is the Internet, here you can automate the process of processing applications and reduce costs. Those. the project has millions of investors, each of whom, in addition to money, can give recommendations to developers and affect the popularity of the project. In fact, there will be a blurring of the commercial model in the direction of a self-regulatory organization that has an important social function.
Cons of the idea:
1. It is necessary to allocate funds to a small site where you can purchase a share in the project and as a shareholder work on the development of the project, vote for certain decisions.
2. Resources will be required to advance the idea itself (advertising)
3. Small offline costs will be added for the legal registration of many transactions.
Pros:
1. Savings on promotion. The project does not receive just money, it receives a lot of adherents of the idea - a powerful core capable of providing the project with such vitality and popularity that you cannot buy with any money.
2. One head is good, and two is better. Owners are users, so decisions will be made based on real needs. The project will develop in the right direction without unnecessary marketing research.
3. The best workforce. The community will put forward the best experts to work on the project. People will be able to work on a project that belongs to them, so the return will be completely different.
So, question number 1. Is the idea realistic to attract millions of investors who will be interested in the development of the project or is it a utopia?
Question number 2. What marketing tools to use to attract micro-investors?
Rationalism ethics and reality
The idea of attracting millions of people to the project logically continues in attracting them to work on the project itself to the best of its own abilities. In ordinary joint-stock companies, in order to vote on any issue, you must have a certain shareholding. In our case, everything is different, even one vote, amounting to a thousandth of a percent, should be taken into account when voting, moreover, not once a year, but as important questions arise. In addition, working groups can be formed to work on small tasks. Question number 3. Will people appreciate the new features? How to convey the reality of personal participation opportunities for co-owners and explain the importance of each investor and his voice for the development of the project?
It is clear that in the beginning there must be a firm hand in order to give the project all that is necessary to prescribe procedures and regulations and bring it to the mass market. If you look at this project more broadly, then its value is much higher than commercial social service. Therefore, the question number 4. Should there be any restrictions on the size of the share of one person in the long term?
For a long time already, almost every day I look through all the posts of Habr and see that there are a lot of reasonable people who can help with advice and participate in good undertakings, so I wait for real statements, as is, without diplomacy.
UPD (March 2017): I already forgot about this article of mine. How it all ended: We still did the project, we even sold it, though with an effort. Due to the lack of sane investments, development was slow and there was no chance to conquer the market outside our region, so in the end they closed the project, well, without serious losses. But the experience is wonderful. Everything was not in vain.