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“There is no one that invests in early/early/early stage startups and this is bad.”
This was probably the incipit of a discussion I was having a few days ago. What we don’t see is a network of people who’s willing to take the risk to support really early stage companies. The argument was that less than £50k would be enough to support an early project in its first days and that to start something, you always need a team of people. You can’t be the lonely techie working behind a computer.
Although there is a bit of truth in those words, the reality is that your early stage is going to be a nightmare and that’s what should be. If you decide to start a company, you accept the risk of living the next two years as hell. If you are also lucky to find a co-founder, which is something everyone should aim at, you might not go nuts after sleepless nights spent on your computer.
Teams don’t show up out of nothing and that’s why the innovation that is the product of your idea is brought by only two co-founders. Trying to form a team of four/five people, because you are struggling, is not viable. People will start joining your company in two cases. They either see a lot of funding that might give them stability or they realise that what you are building might be the next Facebook.
No one does things for free, unless they are friends of yours, which sometimes might be a really bad idea, or they are willing to take the risk and see where that project might lead them. Stability is what people look for, no matter what, especially if they are not the co-founders. For this reason, one of the founder’s aim is to make them feel part of something, as a big family that believes in something.
Two people should be enough to at least develop a minimal viable product, market it, distribute it and build that 2.5% of early adopters. Once you have a product or something really close to it in your hands, with a bunch of people using it (1k - 5k), you should start thinking about trying to raise something and expand your team. Why?
The reason is simple, no one would give you money without seeing a strong team and something real (also usable). It’s so easy to have an idea, the hard bit is to develop it. Investors don’t take the risk to invest in nothing and that’s normal. The first investor you’ll ever meet, it’s going to be you. Starting something is already an investment and if you want to do it seriously, you better want to stop whatever you are doing and focus on one thing.
People usually take money from friends and family to support those 9-12 months of development or they self-fund their own project, which is the best option. Having the feeling that you owe money to your family while you should just be focused on your product is not the best thing and if you fail, you might end up creating useless frictions in an environment that should always support you.
There is a reason why no one invests in early/early/early stage startups and these few paragraphs explain why. Angel Investors “invests” because they want to see a return, not because they have fun giving money away. On the other hand, there are governments that throw money away just because they want to build the image of “caring about startups”, but you better want an angel that helps you rather than a lot of money without any support.
