Many entrepreneurs planning their first software startup get stuck on funding and ownership issues. Here are some simple rules of thumb that may help you reframe an issue:
- Revenue, especially break even revenue, is never dilutive of your ownership.
- The right co-founders, while dilutive, substantially increase your chances of success: they give you a smaller piece of a much more valuable pie.
- Paying customers are real proof that there is demand for your product. Getting funded is proof that an investor thinks there will be demand for your product.
- A software startup in 2009 normally doesn’t need more than 10-25K to get started, if the founding team can provide the bulk of the labor to develop and market the first version of the product.
- If the founding team cannot provide the bulk of the labor to develop and market the first product, think about adding co-founders not seeking funding.
- If you need a salary from day one of your software startup don’t seek investment. Instead keep working at your day job, save your money, lower your burn rate, and work on your startup part time. This is hard.
- Your most important investors are your spouse, friends, and family who will provide you with emotional support on the entrepreneurial roller coaster.
- Professional investors don’t want control of your business, they want a return on their investment.
Pingback: 8 Tips for Evaluating Alternatives to Outside Funding « The SiliconANGLE
Pingback: SKMurphy » The Snow Lay Round About, Deep and Crisp and Even
Pingback: SKMurphy, Inc. » Ben Kaufman on “What Raising Money Means”
Pingback: SKMurphy, Inc. » Quotes For Entrepreneurs–May 2013
Pingback: SKMurphy, Inc. Q: Should I Tap My 401K To Bootstrap? - SKMurphy, Inc.
Pingback: SKMurphy, Inc. Quotes for Entrepreneurs-July 2015 - SKMurphy, Inc.
Pingback: SKMurphy, Inc. Newsletter: When and How to Seek Investment - SKMurphy, Inc.
Pingback: SKMurphy, Inc. A Viable Business Model Embraces Ebb and Flow