Hey Startup! Want Funds in a Flash? Part II

lightning bolt public domainIn my first article on Flashfunders I described how they were meeting the needs of both startups and investors. They’re giving startups a fast and clean way to access seed money and they’re giving accredited investors an easy way to get a portion of their portfolios in startups. And, I need to mention, at no cost to startups or investors at this point.

Now I want to focus on additional information that is critical to anyone involved in a startup or with plans to launch one in the future. Vincent Bradley, from previous experience and through Flashfunders has some important insights into what makes a startup ready for seed money and successful.

What’s your MVP?

The single most important quality for a startup is to have a minimal viable product (MVP). Having an idea alone isn’t enough. There has to be enough groundwork in place to show how the MVP addresses a problem that needs to be solved. This is several steps further than saying, “I want to build a website where people can organize their music collections.” You have to design it to the point where it becomes something that people would actually look at and say, “Yeah, I’d buy that.”

“It’s very difficult to raise capital on an idea. Zuckerberg could probably raise $100 million from anyone he wanted on just an idea. But that’s because he’s a very successful entrepreneur…. For the everyday entrepreneur, having an idea isn’t good enough anymore. You need to have shown that you’re committed, that you’re willing to persevere and that you have a product,” Bradley explains.

Do you have traction?

At Flashfunders this is looking for “traction.” They want to see a project that generates enough enthusiasm and confidence that the originators of the idea themselves have been willing to spend their own money. That shows a real commitment and demonstrates that the founders are going to invest the effort needed to see their project through to the end.

These points make a great checklist if you’ve been mulling over a business idea.

  • Can you clearly define what your product is and how it solves a problem?
  • Are you willing to put your own money into the project?
  • Are you willing to put the time it’s going to take to make it happen?

I’ve explained how Flashfunders has all the paperwork and regulatory details taken care of for startups; they also help with the next steps, which involve finding the investors willing to put in seed money for a stake in your project.

Startups should come to the table with some idea about who will invest in their companies. It could be family, industry associates or other connections. Certainly, potential investors will find projects through the listings on Flashfunders, but it’s a smart idea to be able to “prime the pump” with your own investors.

Help with the details

But to get the process going you need to establish a valuation, have your pitch and develop good promotional materials. Flashfunders has professionals who have been through the process several times and they are available to offer feedback as you put together the package that investors will see.

There are already several startups on the site that are getting a lot of support from investors and Bradley says they are essentially working their way through a waiting list as they establish themselves.

If you’ve been wondering how Flashfunders can provide all of these services without charging either startups or investors, right now they plan to make money by reserving the right to buy into startups during their next investment round. So if you use Flashfunders to get your seed money, they have the option to participate in your next funding round.