We have discovered we need $500K to fund our project. So far this has proven to be our biggest obstacle. We haven’t the cash ourselves. To investors we are asking for too little to be taken seriously. This is what you get by being diligent. Forecasting to the dollar, and finding innovative ways to produce and promote your business.
VC’s incorrectly believe that the size of the opportunity is proportionate to the size of the capital required. They are stuck in the post war TV industrial complex . Heard of Google? They started in 1996 with $100K USD. It would have been the easiest thing in the world to put a $7 million advertising launch campaign into the financials. Thereby boosting our cash requirements to $7.5 million. Would the VC’s then stand up and look? If they do, you don’t want their cash. They simply don’t ‘get it’.
Business funding in Australia can be place into 4 categories:
- Family & Friends ($50k – $500K)
- No Mans Land ($500k – $1m)
- Angel Capital ($1m- $3m)
- Venture Capital ($3m+)
Attitudes vary significantly by category. We realized quickly that we were not in traditional VC territory. Only in no mans land can you invent your own funding rules. However, you need to move up or down the funding food chain to make it happen. You need to ask if you can ‘bootstrap’ the idea with less cash, or sell the dream to some hardened investors. Also, not to be underestimated is the ‘close knit consortium’. Topic of the next blog.