Lots of people, myself included, have written lots of posts on how to get funded. In fact, a whole section of this blog is devoted to that topic. While all those details are great, it struck me recently that there are three keys to getting funded:

Team: A founding team (being a sole founder is tough for investors) consisting of one product / UX person and one well-rounded developer. At least one of you needs to be completely consumed by this idea.

Later stage teams are different of course. There, investors are looking for deep industry expertise and relationships and management team members that know what scale looks like.

Vision / opportunity: A clear problem or opportunity for a large market. A unique technology or market insight that no one has exploited yet. One that can be rolled out into a very large company.

Traction: Nothing gets investors moving faster than traction. If you’re acquiring users at a furious pace expect investors to be knocking your door down.

It only takes two…

While the three keys are each very important, in my experience it only takes 2 out of 3 to get your funding:

If team is missing, this is very tough for sure. After all, we invest in people. But if you have a crazy big vision and already have results, we can recruit in heavy hitters to round out the team.

If the vision’s not big enough, but you have a killer team and are generating early results, then many investors will work with you to flush out just how big the idea can be.

And if you don’t have traction yet, but you’ve been there done that, got the t-shirt and are coming back for more with a new idea, you’ll always get funded!

Simple, right?

Category:
Angels, Raising Capital, Venture Capital
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  • Mike Anderson

    Nice to se some info on seed funding like this. I found a good one by sam zaid of getaround.com that touches on the 1-1.5M raise. He talks a lot about structuring milestones in a way that hooks investors in before you even come to them. cool stuff.
    http://startupplays.com/plays/build_a_fundable_st

  • Armand Konan

    Good. Your point reminds me what Jason Calacanis of TWiST said one day about guys Evan Williams or Jack Dorsey. Basically these guys could get funded on a simple idea. People are willing to take any risk with an entrepreneur with Twitter in their track record :-)

    • http://startupcfo.ca Mark MacLeod

      That's exactly who I was thinking of when I wrote my response. You can't teach what it;s like to ride a startup rocket, you just have to live it. So, it's always better to back some one that has lived it before.

  • Armand Konan

    Mark, what if you had to chose just ONE of these 3 condition? Which one would you pick? I think I would go with traction hands down.

  • http://twitter.com/jlearmonth @jlearmonth

    Mark — to what funding stage are you applying these goal posts? The first $100k type of thing, or the first $1M, or…?

    Cheers
    Jesse

    • http://startupcfo.ca Mark MacLeod

      Definitely more targeted at seed stage. Beyond that, the strength and depth of the management team and the pace and magnitude of your traction become super key. That and your ambitions: do you want to build a $100m business?

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  • http://epilogger.com Michael Nus

    Oh so simple! By rights we should have all the money now, right? :)

    • http://startupcfo.ca Mark MacLeod

      See how easy it is to get funded? :)