It’s possible to raise VC financing even if you have not built a real item, according to Charles Hudson, creator and handling partner at seed-stage company Precursor Ventures. It’s simply really, very tough.
I talked to Hudson during TechCrunch Early Stage, our virtual event for startup creators. He provided a brief talk entitled” How to offer an idea when you do not have a product,” then responded to concerns from me and from participants viewing in your home.
Hudson stated Precursor invests in about 25 startups every year and that a majority are pre-launch and pre-traction. When he’s considering start-ups where there “isn’t any evidence or traction,” he and other investors are generally thinking about 2 things: How well the creator understands the industry, and how well the investors know the creator.
Obviously, if you have actually already had success and you know everyone on Sand Hill Road, it might not be that difficult to get that very first check. However what about everyone else?
Below, I’ve estimated some highlights from Hudson’s ideas about how to raise cash pre-product. You can also view the full presentation/conversation at the end of this post.
‘You need to have a distinct and long lasting insight that will still be true in 12 to 18 months’
You need require have a unique distinct durable resilient that will still be true in 12 to 18 months … The unique distinct is important crucial due to the fact that still haven’t have not your product. Therefore whatever it is that you’re doing, if it’s not unique, if it’s a truly apparent insight, you’ll probably have 10 or 12 rivals that are launched in the market by the time you get your product out.
Article curated by RJ Shara from Source. RJ Shara is a Bay Area Radio Host (Radio Jockey) who talks about the startup ecosystem – entrepreneurs, investments, policies and more on her show The Silicon Dreams. The show streams on Radio Zindagi 1170AM on Mondays from 3.30 PM to 4 PM.