Startups raise funding outside of family and friends after they have a product with some revenue.

Founders who have a track record of building and selling startups can raise on an idea.

Everyone else must validate the business before investors will consider funding it.

Pre-selling the product is one path to funding a startup.

This is commonly used in the crowdfunding space, where a founder raises funding to build and sell a product.

The same concept can be applied to venture-level businesses.

One can sign up customers with a $1K prepayment to be part of the product-building process.

This works well for funding software startups.

This creates a list of interested customers who paid something to engage with the process.

In addition to a small investment, the founder could also ask for a half day each week to build the product specification and gain feedback on the results.

Just as in crowdfunding, where the average investment ranges from $15 to $100, so in the tech space, one can sign up customers with a nominal amount of $1k to $5K.

Consider pre-selling your next product to engage a customer base.

 

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.
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Thank you for joining your host Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing.
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Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.