When I was starting my last company an experienced founder of several companies offered me the advice "go ugly early." He was applying it to the money raising process and extrapolated the "affect" to the rest of the early-stage business approaches.
In terms of business approaches he felt like you need one hyper-focused idea that represents the business and then super-rapid iteration on that focused "nut" until you get all the info you need to make the larger business "work."
I was thinking about how AvantGo was founded...(I was NOT a founder there)...when it was founded it was Bombardier software...and it was little but crossword puzzles on a Palm device. They rapidly iterated, failed quickly, and even got a cease and desist from the "Bombardier" company (http://www.brp.com/): the international recreational vehicle company. Oops...wrong name.
Of course AvantGo was on an early path to a half million bucks and 100,000 users by that time...so a re-name was fitting anyways...but they knew enough to know that at that level no one really cared about what they were doing until they were REALLY doing it.
The worse thing a start-up can do is pretty itself up for the world long before it is anything. There are many famous cases of the 100 user / 2$ dollar in revenue "branded" start-up. Yikes...that is a scary place to be for the founders: high expectations with low delivery of results.
Anyways, the "go ugly early" strategy for funding is a process that used to mean Angel money or a third tier small VC. But both of these types of funders are no longer "ugly" and here in the valley have built their own vogue. To be a super-angel here in the valley is now a calling card. Super-angels are rock stars...at least in the start-up community. I differentiate super-angels from traditional angels based on capacity and participation. Typical angels will do $50-200k a super angel will do $1-5 million.
To be funded by a seed fund or angel group carries HUGE value...
Consider the popularity of:
Band of Angels
Founder's Fund
Garage Ventures
Sand Hill Angels
The Angel Forum / Halo Fund
And lesser known but high value money such as:
Rembrandt Ventures
Bay Partners (Seed Program)
Nekei
Lightspeed (Gemini Fund)
Inspiration Ventures
Catamount Ventures
Leapfrog Ventures
Crosslink Capital
Rocket Ventures
Charles River (Quickstart)
I won't list super-angels for obvious reasons. But the classic example of a super-angel is a guy like Paul Allen, of course he may need a category all his own. But for the naive reader a quick seach on Allen wiill give you the gist.
In this listing I am thinking of very early stage money--either pre-revenue or micro-revenue stage start-up monies, and I exclude the big boy brands such as Sequoia, Menlo, Trinity, etc... They can do seed when the feel like it...but would hardly be considered, primarily, seed stage venture capitalists.
Of course all of the typical caveats apply...even if you are brilliant, and technical, and you have identified a market opportunity in a sufficiently large market space and you are loosely capable of communicating the investment opportunity to a seed investor--even then you probably won't get funded.
You probably won't get funded because the investor can't hear you for about 100 different reasons as varied as they don't like the way you dress to the state of their current fund to what they ate for breakfast.
If you are a skilled entrepreneur, you already know this: no investor's "no" means anything if YOU really understand the value of your business.
Here is what I mean by that:
When you can measure what you are speaking about, and express it in numbers, you know something about it; but when you cannot express it in numbers, your knowledge is of a meager and unsatisfactory kind. It may be the beginning of knowledge, but you have scarcely, in your thoughts, advanced to the stage of science.
Lord Kelvin
(Stolen from Peter Rip's site)
Since early stage seed is no longer 'ugly' but vogue, founders and entrepreneurs now must find even wider ranges of "funding" their start-ups. What are the new, low-profile ways to get a start-up funded? What is the new ugly?
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