I’m finding conflicting information about how early is too early to start conversations or apply to Angels and Seed firms. It seems (recently) that all you need is a strong idea, strong team, and some provable market/revenue assumptions and if you’re on the west coast you can raise $500K at a $3M-5M valuation. I’ve even read on certain VC sites that “it’s never too early to contact us”. But I think in reality if you don’t have customers, revenue, or are on the west coast then you’re out of luck.
The problem is we’re on the east coast. We have a working prototype, marketing plan, a mailing list of interested beta users and a patent application in progress. The problem is we’re a software solution that requires a piece hardware that isn’t fully in the market yet (the OEM’s are shipping later this year). Additionally, our offering is software with a service backend that requires a chunk of capital to get off the ground. I’m hearing from my east coast advisers that we need to prove market fit with customers, but we can’t get customers without both of the above (cash to gets operations started, and hardware saturation).
Now, we can solve the hardware problem by OEM’ing the hardware ourselves. We have the design and a factory, we’d just need to pull the trigger. But that’s a waste of time if we can’t turn operations on first, which is why we need a cash infusion.
So what are our realistic options here? Engage only with west coast investors who may be more willing to take a chance on a solid pre-rev company? Or do I heed my advisers who say we need to (somehow) find a way to get paying customers, which is practically impossible without a sizable investment because we need to fund operations.
I’m thinking about Kickstarter because that would do several things for us: 1) prove there’s a market, and 2) give us a lump sum of cash needed to turn operations on. What are your thoughts and advice? Can you recommend an Angel/Seed firm that may want to talk to us even though we’re pre-rev? Thank you very much in advance!