Money for Entrepreneurs

We get inundated with internet projects and I thought it would be helpful to write about what is required before we look at an internet project.

It is important to understand that most Investors do not fund ideas. Investors want companies that have started in which  the principal(s) or founder(s) has invested his/her own money and time.

Because so many people have great ideas that are never executed, ideas are rarely funded unless you have lined up an impressive management team.

Most investors for web based applications want to see an application that is at least in Beta testing, with a certain percentage of users ( whether free users or paid subscribers).

It is important to understand that a website that is not functional is not going to get Investors money. Maybe at this stage you can get friends and family money. If the website is not functional yet, it can take many months to a year to actually work so Investors are very hesitant to fund companies at this stage.

Most web based companies  talk about the market that they will capture by siting  the number of users of websites such as Facebook, Linkedin, etc.  and make presentations based on capturing a percentage of their users and this is a turn off to most investors, because which ever percentage that an entrepreneur chooses from those figures is going to be very hard to capture for a while.

They say things like: “We are going to capture 1% of the 400 Mill users of Facebook in our first 6 months and then it will go viral from there”  and we have seen that most applications  never  capture even a small percentage of what they expect.

So if you want your web based application to have a chance to be funded, have it working and prove that there is a need for it by having a percentage of the users that you plan to capture before you call on Investors, it makes our job so much easier.