So, let’s say you’re still not ready for a pre-seed. How do you get there?
- Derisk Team: Go cofounder dating. Join communities like beondeck.com, talk to your former colleagues, meet like-minded people on online forums, etc. If it’s with someone you haven’t worked closely with (or even if you have), undertake a detailed heart-to-heart following guidebooks like Gloria Lin’s approach published on First Round or Ricky Yean’s cofounder dating ritual.
- Derisk Product: No-code tools have lowered the bar to create an MVP. You can build something pretty darn powerful with tools like Airtable, Zapier, Stacker.app, Glide, Webflow, Parabola, Retool, and so on. Check out Makerpad if you need a listing for a leg up on going this route. You can also consider hiring a contract designer on a platform like Fiverr, Upwork, Contra, etc. to create high-fidelity mocks. For many investors, it’s a red flag if a company asks for money before at least building a rough sketch of their product.
- Derisk Market: Set up a waitlist for customers. Take pre-orders for DTC. Get LOIs from enterprises. Figure out some way to prove that the market wants what you’re building.
- Derisking Traction: This is the hardest at this stage, without having checked multiple of the other boxes (since it’s hard to build repeatable traction without a great team and a solid product and clear market demand, for example). But if you’re unique and have a secret hack (e.g., maybe you’re a serial entrepreneur — in which case, I’m not sure why you’re reading this), proving traction can separate you in a pitch meeting.
Note that every path carries risks; if you soft launch a flawed product that doesn’t gain traction, you can actually hurt your prospects. So, remember: the real key for your pitch is to convince early-stage investors that the space is hugely lucrative and that your specific team is the one to capture it. If that means a detailed pitch deck and an unlaunched prototype, just make sure it’s compelling enough to feel derisked and worthwhile to an investor.
Make sure to play up your strengths and tailor to investors who care about what you’re best at. Some VCs focus on team to the exclusion of everything else. If you have a badass team, go pitch that investor. Some investors focus on a product they can touch, feel, and grok. If you hacked together a magical prototype, go pitch that firm. It’s hard to find who cares about your strengths, but leverage every network you have (particularly angels and other founders) to figure out whom you should go talk to. Even the best pitch will fall flat for the wrong audience.
There may be one other macabre way to look at it: your goal is to simultaneously explain to investors why your startup is a) much more likely than average to succeed and b) much less likely than average to die. Most companies die; the entire venture / angel investing model assumes this. It’s like the old joke of two people being chased by a bear — in order to survive, you don’t have to outrun the bear, just outrun the other person (i.e., prove you have better odds than other startups raising).