Hello Terry.
Taking it from the top:
1. Business plan et al: noted
2. Industry validation: what is the validation? Sign-ups, etc?
3. Document with research and how you came to the numbers is good; show how and what you based assumptions on, as well as (hopefully) clarity of thought
4. Angel Networking sites, some are legit, some however I do not agree with, for example, paying to pitch to them. Some will take a bit of equity, additional to whatever an investor gets in exchange for his/her cash, if indeed it is equity financing you seek; again something I do not agree with, but their game, their rules.
5. Investors wanting to see skin in the game, for the most part yes. Not all though. You don’t need to be in debt, but they do like to see that you have financially contributed in realising your idea, be it from savings, cash from your day job, etc, etc. You say you have not invested a large amount, that’s ok, it’s relative.
6. Ideas; some are good, some are crap. Make sure it is a good idea, doesn’t matter how smart you are, you won’t have a chance to show that if your idea is crap.
7. You have domain expertise, that is in your favour.
8. Who is making the MVP? You, or someone else? I ask for that shows, if someone else is building it, that at least one other person has bought into your vision, granted you could both be deluded, but investors do like to see others believing in the dream.
9. Your stage at the moment is Pre-Seed, well at least you will be once you get the MVP up and running.
10. The amount you are asking for; Pre-Seed it is on the high side (for the UK), and on the low side of Seed. However what you do need to make sure of is that the amount requested is enough to get you to be able to attain the metrics to be considered for the next funding round. And then add another 15% - 20%. Runway: 18 months, not 12, otherwise you only give yourself around 6 months to solely focus on building the business.
11. Pre-Seed metrics that will aid in you getting funded, and indeed being seen as a Pre-Seed startup is an MVP, some paying users, double digit growth (MoM). I can’t be more exact as I do not know your specific niche, and indeed investors will have their own criteria, so take that as a general guideline.
My advice:
1. Do contact investors, get on their radar, for it will take a good few months for them to check you out, see how you think, how you work, progress, etc, because they are investing in your ability to navigate and see things through. Obviously they will take into account other things (market opportunity, market size, etc, etc, too long to list here), but you control what is in your hand, which is you. Show what you are made of. No investor funds off-the-bat (although the Americans and Chinese certainly seem to have an appetite for risk that others can’t match), so don’t go to them when you need them, go to them when you don’t, and build the relationship for the time when you do need them. When you need them, is when you want to grow, not survive.
2. Only contact investors who have shown an interest in the area you are working in, but don’t contact the ones who have already invested in a startup that could be a rival (obviously). They do due diligence, you do your's on them as well.
3. So, you contact them, straight to the point email, say you have noted their interest in such-a-such an area, you are currently founding a startup in that area. Mention your MVP will be live in period of time, mention a little of why your startup needs to exist, and if they would like to stay informed of your progress. Make it clear that you are not looking for investment at the moment. And end it on if they have any specific metrics they would like to see being attained in order to be considered for investment evaluation. But by jove you better make sure that MVP is made, and that it doesn't take too long.
4. Touch wood, some may even offer you some advice. There are some gems out there.
5. My final bit of advice is, research, talk to, etc, in order to get into the minds of investors, how they approach investments, due diligence, etc, etc. That will aid you immensely and will make you look at things in a more holistic manner.
Where to find investors:
1. VC’s and Micro VC’s: Google, some fund pre-seed
2. Angel.co
3. LinkedIn
4. Go to places that have startups and founders, get acquainted with them, certainly with the ones who have got funded. They can do intro’s if you seem like you are on the ball, investors do love their warm-intro’s, for better or worse.
Cheers, Ace.
