Bootstrapped startup needs $400K to move forward. Now what?

Thanks - I hear you. I've done that, our CFO has done that. $400K is really bare bones, zero salaries for founders (which raises another point I'll make below), it just covers employee and business expenses. There isn't a penny in there for marketing which is an issue in itself!

The upside is $400K sustains us very well, so if we have 1000 customers our bandwidth (so to speak) is great - scale us up to 20,000 customers and our expenses are still roughly $400K.

But it's that initial hurdle that I don't see a way over. Unfortunately this isn't a SaaS offering where you could throw (putting it lightly) something together and release it to the world for a $100/month Rackspace fee.

As for the founder comment - I call them founders, but in reality I'm the only one with skin in the game hence the 100% equity. So while I call them founders they're really "future employees who get some equity for helping here and there". Without them I'd be one person and that would certainly hurt my chances of moving forward. Still, no one has stepped up to throw money in but they all want to ride the success going forward because this is an exciting proposition.

I haven't given out equity yet because I'm the only one really doing anything. Everyone else is there for support when needed in their respective areas, but I handle everything (development, market research, web site, funding research, the financial models(although the CFO helps there)). All of these others are ready, willing and able but no one can quit their day job and the equity isn't going to change the current relationship and suddenly everything will fall into place. I'm still going to the one driving everything forward, so why dole-out equity in return for zero output from the others (yet). It's kind of like "ok if this goes somewhere, I'm in - and until then I'll participate in discussions"

I would typically agree with your points on the expenses, doing it all myself, and not being able to support 20K customers on $400K. But in this case with our tech and model I have to disagree with you. Your comments are fair, I haven't disclosed the uniqueness of what we're doing. Anyway - truly appreciate your time and feedback - thanks.

I disagree. These days you do need some traction to put together an angel round unless you are a true silicon valley insider.

I have made 30 angel investments so far and I require prospective companies to a) hit 40K MAU b) demonstrate amazing deep technology or c) make some revenue before even talking to me with the exceptions that I know that person well and am basically in for a friend and family round.

Thank you everyone for your feedback, it's very appreciated.

40K MAU makes sense for SaaS because you if you're an engineer founder you can create and launch with minimal expenses. But we have a hardware requirement that customers must own (inexpensive) so the model works differently. The nice thing is that we make the same gross rev with 4K customers as a typical SaaS-only with 40K customers.

In case anyone is wondering, I know I've been obtuse here anonymously, but we are going after the $40B television ad market with a very disruptive technology. Would that be considered deep?

Thanks again - appreciate all help and answers greatly.

Apologies, the tv ad market is $70B not $40B. Burning the candle at both ends too much lately.

Interesting, you disagreed with me yet 2 of your 3 non-related requirements have nothing to do with revenue.

So you're actually 2/3rds agreeing?