How I raised equity-free funding of $15,000 on idea stage of my startup.
How I raised equity-free funding of $15,000 on idea stage of my startup. Recommendations for startup founders
It’s a story how my team-mate and I raised $15,000 having only an idea when nobody believed in it. I’ll share our application form which won The S Factory program by Start-Up Chile and advices to applicants from YouNoodle application estimator. So, here we go.
Intro. How we found out about such a possibility
Since 2011 I’ve been developing a chain of English schools but all this time I’ve been thinking about launching a startup. Inspired by all these stories how someone raised money only on idea stage and then made a stunning exit, I thought that I’m not worse. I can do the same! On this wave in summer, 2016, my team-mate and I decided to visit San-Francisco, the oasis of funding and startups.
But when we came there, all the people whom we met at different meetups sadly shrugged and said that time of idea stage funding passed away and now you should have much more than only an idea, to raise any money.
Once short meeting changed everything. At one meetup we met a girl with whom we shared LinkedIn contacts. It was a 3-minute acquaintance which totally changed our lives (not because of money but because of experience we’ve got). Two weeks later she sent me information about The S Factory Program by Start-Up Chile. This program was focused on female founders of startups on idea stage and we fitted perfect for it. So, we decided to apply.
By the way, currently I know that there are much more programs than only that one. There’re a few big platforms which combine a lot of acceleration programs. They are:
- YouNoodle — the platform unites both equity-free and for-equity opportunities. Moreover, you can subscribe for its Facebook page; however, check programs at the website because in Facebook not all the opportunities are announced.
- F6S — the platform which unites both equity-free and for-equity opportunities, lists of startups and founders, open positions at different companies. So, it’s like a mix of angel.co, YouNoodle, and some job portal. Here’s a link to their Facebook page.
- Gust — it is not designed so much to ‘raise investment’, such as with a crowdfunding platform like Seedrs or (for projects) Kickstarter. Rather, it provides a full set of tools for both startups and investors to manage their fundraising/investment activities.
Moreover, there are a lot of single programs which you can just google or find at specialized local sources. Google for programs and find those which fit your topic and your current stage!
When we’ve got to know about The S Factory Program by Start-Up Chile, we had only one week until application deadline. In our heads there were approximately 10 different ideas and we even didn’t know what exactly to concentrate on. So, we decided to discard ideas one by one making their minimum validation because, unfortunately, we almost had no time for this!
If you should do the same, i.e.choose one idea among several, you can take the course 1 Day MVP at Udemy with step-by-step guidance (it was helpful in our case) or join the mentorship group at WeMent where you can do this under the mentor’s guidance and get his weekly support. This topic was also discussed by Y Combinator Startup School.
So, finally we decided to stop on idea of BeeHive which later was renamed on GuideFly. Initially we planned it as a management tool for SMB systematization but later during participation in Start-Up Chile we changed an idea a lot, to make managing tool for business manuals and guides at chained and franchising companies. But later about this.
We had really tough deadlines, a lot of ideas and a huge form to fill during only one week. Good thing I had positive experience of participation in different student programs, so I had some understanding what should be written in the form. But what we had a headache with was pitching. Huh, it was really a challenge! Ha-ha, I even don’t want to share our first records! Our final video which we applied with was this one:
If you prepare your pitch, here’s a service which helps to prepare the presentation and structure your pitch. Looking a little bit forward, I can say that I have improved my pitch a lot while participating in The S Factory, thanks the program and my mentors!
By the way, if you’d like to watch video of the Seed Stage participants of Start-Up Chile, here’s a good example. This is pitch made by Anastasia Gutkevich from Bifidice, participant of Start-Up Chile, Seed Stage, Generation 16.
And here’s a really good example of pitch at Demo Day of Y Combinator. It’s short, precise, structured and extremely focusing on the most important points which the listener should remember when the presentation finishes.
Hope, you’ve got some understanding on this topic. So, let’s get back to our case.
It was July, 18, 2016, the last day to submit application. All the recommendations were collected, the form was filled, the pitch was shoot. 3 hours before the deadline we submitted our application, and in the beginning of August we knew that we won. Here you can download our final application which was shortlisted among winners.
My final recommendations
In conclusion, I could recommend the following:
- Get expert’s advice. If you haven’t ever participated in any programs, it’s better to fill the application to any acceleration program under the guidance of a mentor, who did it successfully at least a few times or who checked such applications as a judge. Why? Because having no experience in this sphere, you can’t estimate your application objectively and risk of failure increases considerably. Where can you find such mentors? You can find them personally (my advices how to do this you can find here) or using our current service WeMent, online mentorship platform, which works on solving such issues.
- Contact previous participants. Before applying to any program, contact its previous participants, ask about the program’s focus and what should be included into the application. Ask about the real stage of the program’s participants because sometimes requirements are much lower than real level of successful applications. You can find such people at specialized Facebook groups or at platforms like Crunchbase or Angel.co. For instance, group with Start-Up Chile participants is here.
- Team matters. No matter the idea, bad teams lose, perfect teams have much higher chances to win. You should convince the judges that exactly your team is the best one for accomplishment of this startup. The more confirmations of this you notice (e.g., your experience, education, working in this sphere previously, etc.), the better fit you do.
- Think globally, act locally. Don’t apply with a startup focusing on everything at once. Concentrate on something small but say about the possibilities to grow. If your startup does everything, you won’t be able to implement all these at once, so chances to fail grow.
- Make a perfect pitch. Don’t overtime! Don’t answer questions which were not required. Do your pitch short, clear, structured and smooth going! Ask someone to listen to it and specify what they understood from your pitch. Add your logo to video and some texting underlining the most important information of your pitch. It allows to keep audience concentrated on it. By the way, here you can practice your pitch in online mentorship group which I assist personally.
- Ask for feedback. Ask someone who is not aware of your idea to check your application form and pitch. Don’t explain this person anything before. If she cannot understand your idea and strengthens of your team from your application and your pitch, probably, they are made badly.
- Make attempts. Sometimes people are afraid to apply because are not sure whether their idea and results are worth. My advice is to make attempts. In our case we succeeded from the first time but some of our fellows got positive responses only on the 20th or the 30th time. It’s quite fair because competition is high (average, there are 20–50 applications for one place). So, improve your application, develop your product and apply again!
Recommendations of one of YouNoodle judges
YouNoodle provides all the judges with specific quantitative value to each topic, among which there are 1) Product & Service, 2) Market and Competitive Positioning, 3) Composition, Qualification and Experience of Team Leader and Team Members. Meanwhile, it is necessary to have a good understanding of the problem and a compelling solution that has an unfair advantage with an organized plan to execute and commercialize the product.
So, concluding this, I think, a successful applicant is the one who knows about the market size, product benefits and differentiation and, what is even more important, has a compelling team to execute the biz idea.
Tony Cueva Bravo, CEO & Founder at Drop Technologies
Here’s a video from Y Combinator Startup School on the topic How to Raise Money, and How to Succeed Long-Term.
If you already tried to apply to a lot of acceleration programs but didn’t succeed, don’t despair! Possibly, it’s time to ask for advice of someone who has already succeeded with this? Maybe you should strengthen your statements or focus on your key metrics. Don’t rely only on fortune, do everything to succeed and Universe will be on your side!