Ask HN: How do I approach investors?

[norcode]

Hey guys. I'm at kind of an interesting point that I have never really made it to with any of my previous projects.

Without getting into too much detail we've developed a mobile application with some pretty heavy server technology behind it capable of gathering very interesting crowd-sourced information.

I have a few customers lined up now ready to go, however capital to buy all the tablets I need and continue to pay my developers while we build this is becoming an issue very quickly.

What should I be doing from here? I mean really all I need is $50k (for now), which doesn't seem like a lot, but to a startup corporation it is next to impossible to get that from a bank or lending institution.

I'm based out of London, ON and there isn't a lot of venture cap's or angel investors floating around up here.

Any advice would be appreciated at this point.

[trussi]

Friends & Family (F&F) is the quickest and easiest. Spread it out over several people and spread it out in 3 month payments. Make sure you set very specific milestones and a very concrete go-no-go milestone, so you fail as quick as possible.

I'm assuming you're a smart person who can make $100k+ in a real job. If so, add a guarantee that you'll pay back the full borrowed amount within one-two years if you don't make the go-no-go milestone. This option opens up more funding sources. For example, an older relative with savings in the bank near retirement will need that money, but not for a few years. If it were a typical investment scenario where the money was borrowed and if the company failed, the money was not repaid, that person could not invest because they need the money.

The other option is to get a loan from a local business development department. I don't know what ON looks like, but most cities in the US have these types of BD programs that have a goal of creating jobs in the community. Relatively easy to get, just have to jump through a few hurdles. The requirement in my town is the "get rejected by a traditional funding source." Haha...that's a pretty easy thing to do!

I would be very hesitant to receive any money from a professional investor at this point in your startup. You'll have to give away too much of the company and you'll have a boss that has your balls in a vice for the rest of your time at the startup.

Wait for professional investment until your profitable and then it makes way more sense.

Keep us posted!

[norcode]

You hit the nail on the head and I do believe I can probably round up the money from friends and family in the shape of a loan. Especially with the go-no-go system laid out in place ready to go.

The idea of small 3 month increments working towards it is also very appealing.. Thanks for the solid advice.

EDIT I also noticed that you recommend staying away from investment firms in order to preserve control of the company, but I'm honestly a bit scared to grow something like this myself with my limited experience in this area. Do you think my chances for success change at all with a 'professional' at my side?

[martinshen]

Hey norcode. You're pretty close to Toronto. There are a lot of angels near there. Hit them up. I'd recommend talking to the StartupNorth guy, David Crow. I'd also recommend talking to the Globalive guys... specifically Anthony L.

There are also a whole number of incubators you can talk with in and around Toronto (and Montreal). Year One is a good choice but take a look around.'

Im originally from Toronto but I'm out in SF now working on my own startup, UpOut. Let me know if you need extra advice (martin at UpOut)

[norcode]

I will certainly check them all out. Thanks for the comment.

[dirkdeman]

Have you applied to Angellist yet?

[norcode]

I listed the project on angelList - http://angel.co/fleeter

I'm not so sure anything will happen with it but at this point, it certainly doesn't hurt to at least get the word out.

[norcode]

UPDATE I've read some very mixed reviews about using sites like this. It's really hard to apply the garbage filter.

There are definitely some investors that seem solid though. Thanks again.

[norcode]

No I haven't yet, will look into it now thanks.