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You won’t fund my startup? I give you a free software tool!

On the onStartup Linked In group someone posted what boils down to the question “what do you do when you realize that no VC would finance your startup”. Among the many “combat” answers, there was one that I picked up as the path I would follow in such case.

Some months later I have in fact been contacting some VCs and I’ve got a bunch of negative replies, directly or indirectly. I have understood the arguments and made some realizations. So I got back to that one answer and now I’m going to  follow that path.

  1. Why did they turn me down
  2. What did I understand and
  3. What is the path I will follow,

you’ll ask? Well here it comes, but first comes the answer to another fundamental question:

0. Why did I spoke to VCs in the first place?

0. To try and get funds of course, but also and most importantly to come out of my comfort zone, to stop coding and start thinking, that is, to start relating to reality as it presents itself on the market place, VCs being a part of the market.

This means that I used VCs more like sparring partners than possible sources of funds. Of course, if they would have chosen my startup to invest in, that would have been an added bonus, however not getting funded has not been a complete failure at all.

Question 1. Why did they turn me down?

To make it short, among the different reasons they gave me, the fundamental one is that I’m out too early, the project is untested with real people so as things stand now, although lots of proof of concepts has been done on the critical technical aspects, the whole thing  to them is not much more than pies in the sky. (Other untold reasons deserve their own post, stay tuned for more).

Question 2. What did I get out of this exercise (speaking to VCs)

The fundamental result of doing this is that I had to prepare myself for speaking, that is I had to speak out my ideas, so people understand them. I saw the reactions on their faces when I spoke, I heard the arguments used to test my ideas. Still more important: I heard the many people I spoke with to prepare for speaking to the VCs. Further, each VC  wants you to present your idea in a different way, someone wants you to make an “odd presentation” that shows whether you’re able to stand out of the crowd, others want a 3 minutes pitch, others again want to see your exec summary first, while some wants to see the whole business plan, before engaging in any discussion.

Staying in good shape

This alone got me at work to refine my ideas and plans to make them viewable from all these different angles. It compelled me to cut down the fat and get to the essence of what is the product, what makes this different from others, what will make it or brake it.

It’s a heck of a lot of work to be doing for getting nothing, isn’t it? Yes, It ‘s a lot of work but not for getting nothing. What I got is very important. And I’m still glad I did this “too early”. The real outcome of this exercise is the cutting down, so that the shape of my business proposition is clear and explicable to many different people. Guys that not just listen politely to you, but that are there to question you and to doubt your skills and plans because they themselves have something at stake.

When you prepare to really try and convince such people your mindset changes. It is a big step closer to reality. Of course, as it is said, the biggest step is making the first person to open the wallet and pass over some money to you.  However, when that happens, you will want to know exactly why.  For an IT entrepreneur the exercise of speaking to possible investors is a more involving test than just putting up some functionality with a link to a payment gateway.

“No I don’t like coding

The irony of this is that  one VC told me, “why do you do this, because you like coding, don’t you?” Well it was just a test from him, because he meets so many “business people”, programmers that put up a system because they like coding and they like what they code, no matter if this is what the market likes, and it would be lovely if someone would pay you for doing what you like instead of the other way around. And no, that was not the case, however he was still not so happy to hear that, “no, I don’t like coding for the sake of it, as a matter of fact I haven’t coded anything at all yet”. In the end he wanted to try the system out with some would be customers, while in the end I wanted to try my ideas out with him.

What now?

Now the one path to follow, remember? the answer I picked up on the group forum. The path is to think an MVP,  a Minimum Viable Product, cut down on dreams, functionality and – most important – time and cost, and bootstrap the whole thing, i.e. just doing by myself. This is what I’m working at now. The technical/design principles however are the same as I told you last time. As a demonstration of that I want to give you the promised goody, that is a preview and a tool that follows those same principles, having some elements of the described principles 2 – 4. For you that don’t bother reading the last post these are:

2. Don’t make me think
3. Software as candies
4. The fun theory

A free software tool

I will use this tool myself to wrap in my webapplication the day it will hit the market (keep your breath, it’s within view). You can use it too if you are skilled enough to understand how to bring it to good use. NB! It is not for everything or for everybody.

The tool is a 3 panes Split Desktop. You find it on its project page with detailed explanation for how to install and use it.

I would love to hear from you, either here on this blog or on the YUI Library forum for the SplitDesktop

See you soon, Paolo Nesti Poggi

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