Who Will Fund Your Internet Idea? Reach for Your Wallet
Q: What is the best way for an Intranet entrepreneur to get funding for a great idea?
A: Reach for your wallet.
That's the key takeaway from David Silverman, who himself is in the middle of launching an Internet company called Jamseed. Writing on Harvard Online, Silverman counsels a would-be entrepreneur to use his own cash to build a prototype of the product, then seek capital.One alternative is to approach the Professional Money Men & Women with your business plan and a financial model, and beg them to place a bet on you. But you can take your perfect elevator pitch up and down Sand Hill Boulevard for years and have nothing to show for your efforts but blisters and elevated blood pressure.
More than a feeling
The fact is, VC folks rarely fund just good ideas. They want something more. A good idea in a fast-growing market is often a criteria. VCs also look at who is behind the idea. Who are you? What's your experience? Can you run a start-up through the product development phase? Can you lead people? Can you take advice?
Given those criteria, Silverman's advice feels right to me. To get the ball rolling, use your own money (and don't forget friends and family) to build a prototype of your smart idea. Show and tell is always better than just tell.
"It's nice to dream about an investor putting in a million dollars for 10 percent of an idea, but reality is, funding is easier the more proven the concept," Silverman writes.
And since your idea is in the Internet space, lucky you! Using your own programming skills, ginning up a decent prototype may not be that expensive or difficult. Just think of what inventor Dean Kamen must have gone through (and spent) to create the prototype Segway. (By the way, check out Segway's new marketing message: "Go Gas Free").
For more on the VC's perspective, here's an enlightening interview done with four of them by Harvard Business School's Mike Roberts.
For you successful entrepreneurs out there, how did you build financial backing for your great idea?
(Idea rose image by distinguish, CC 2.0)