If you read tech blogs and news sites like TechCrunch, Mashable, CNet, and the like, you most likely see new startups getting funded every day. Some of the ideas are great, some are….well, pointless. You wonder why the amazing idea that you built, whether it be a website, a mobile app, or product isn’t getting the funding you need to take it to the next level. Well it seems as if the common trend when investors put up their greenbacks are some of the following:
- Entrepreneurs who previously (or still) worked at Google, Facebook, PayPal, etc.
- Entrepreneurs who have already had successful startups
- Entrepreneurs who are amazing programmers
- Startups based out of California, Boston, New York, etc.
- Co-Founders with Ivy League degrees & Masters or Doctorates in their field
- Co-Founders who happen to have great connections to investors
Based on the above observations, it seems as if really good ideas aren’t really the motivating factor to investors. When you have a potentially breakthrough website or mobile app, and you present it to an investor, you are hoping they see the big picture. But instead, most likely they will say, “You are too early stage for us.” or, “You have to get more users.” or, “Come back to us when you are revenue positive in the $1 million range.”
Then you probably say to yourself, “But I thought I was meeting you to get an investment…to get to that point?”
How can you get users for your site or app without marketing money? Grassroots & social media will only take you so far. You need money and time to get users. Which takes me to my next point. Investors should be investing in entrepreneurs more than companies. Basically, when you meet with an investor, they see your idea, listen to your pitch, and decide if they want to help you grow your company or not. Well I don’t know if they realize this or not, but most of us (entrepreneurs) work on our ideas full time. Most days are 12 hours long, if not longer, sitting at computers, coding, designing, tweaking, projecting financials, having meetings with marketing or development teams, testing, and much more. We do this without any pay at all for years at a time.
Most entrepreneurs are filled with ideas, literally ideas are pouring out of their brains every minute. Imagine if instead of not being paid at all, they were being paid to just spill their ideas, and then create or implement them. Instead of an investor funding just one idea, they could in fact invest in many ideas for a fraction of the cost. Every month or so, the entrepreneur would pitch the investors with as many ideas as he / she could come up with, and whatever piques the investors’ interest is the idea the entrepreneur will start to develop. Then the investor can fund the idea once it’s ready to grow. This way, the investor had a say in what they were funding in the first place, instead of having to be bombarded by pitches from a multitude of startups.
Whether or not this model would work is unknown, but I think it would give entrepreneurs a little bit of breathing room, and would allow them to not just focus on one idea, but show all of their ideas instead. The ones that shine could be created, and the others put to the side. Also, if investors were paying the salaries of a group of entrepreneurs who worked well together, imagine what they could accomplish then! Instead of funding a startup with $1 million that will potentially fail, they could pay five entrepreneurs $50-100k each ($250-500k total) for a year to see what they could come up with. In that one year (or even a few months), they would most likely come up with ten or more viable ideas, wire frames, prototype demos, and the investors could pick the best one to fund.
If you think this is an interesting idea, and one that you would like to see an investment company try out leave me a comment! As always, subscribe to this column to read more great stories, and share this story with your friends on Facebook, Twitter, or your blog!