Raising funding as a first-time founder

Investors invest in people and not product/services unless that service has some traction. If the product/service has traction then the person generally becomes someone of importance.<p>Generally speaking, someone with a track record will have an easier time getting funded with a shitty product/service than a first time founder who has a great product/service, will have a more difficult time 9/10 times.<p>The strange this about this is that a 'track record' seems to be loosely defined. In SV, it seems like if you're associated with a success story as an employee you will also have an easier time raising money than a first timer. So working for a funded startup can be helpful.<p>I am wondering if anyone has stats that shows it is better to invest in someone with a "track record" vs someone who is going at it for the first time. Seems like hitting it out of the park twice is rare unless you are the the "lucky" exception, which doesn't seem to happen often.<p>All in all, I think the easiest way to decide whether to invest or not is... traction.

My experience so far as a first-time founder is similar. We invested thousands of hours of our spare time into building a strong foundation and a working product running on top of it, but lack traction mainly because we had day jobs and truly pushing and marketing our product was impossible.<p>The incubators and investors we've talked to seem undeterred by our presence of a product without traction, but the equity they're seeking puts us more on par with a couple guys with an idea. It makes sense, but the low valuation means we're now looking at consulting options and other means to build out enough infrastructure to attract paying customers.<p>I don't regret the route we've taken (yet) and I'm excited to see how creative we can get, but it is interesting to see our experience eloquently presented by someone else and some reasons why. It's obvious now, but like most obvious thing it wasn't obvious until it was.

Loved the info. Very informative. Thanks for sharing. We are building a web command prompt portal <a href="http://www.kaanzi.com/" rel="nofollow">http://www.kaanzi.com/</a> . We have a working prototype out there. We've pitched the idea to a few investors, and as impressed as they are, everyone seem to have their eyes on traction. We are working to push our prototype to the next level, get real traction, and then hopefully raise money for this. Your post was very reassuring in that we are giving priority to the right problem at the moment.

How Buffer (150kUSD/y runrate for 60k users) makes money: <i>Buffer is freemium based on number of tweets you load into the buffer. Up to 10 tweets is free, 50 tweets is $5 a month (with three Twitter accounts and two team members per account) and unlimited is $30 a month (nine accounts, four members per account).</i> <a href="http://www.readwriteweb.com/archives/take_the_hassel_out_of_tweet_scheduling_with_buffe.php" rel="nofollow">http://www.readwriteweb.com/archives/take_the_hassel_out_of_...</a>

Makes sense. But if I should delay fundraising until I have enough traction, how do I fund the development of the product. Should I keep a day job with a high risk of slowing down development a lot? Or should I just jump for it, reduce my expenses as much as possible and hope for the best?

This is a great post. I loved seeing the numbers behind it too. And the stages.

The general statements go too far.<p>You can absolutely raise a strong seed round from high profile investors without either traction or a strong track record. I know because I've done it.<p>You have to compensate with either a great product that you've already built or an ok product with a great concept of where it can go. As a founder you have to be able to craft that storyline and make it believable. It's extremely possible.

Can you shed some light on what percentage of the company do the investors own now? How did you or they did the valuation?<p>I see the funding numbers everywhere but rarely see how much equity was given away in the transaction.