Tip #2: Hit the road, Jack!
🎯 Today's objective: How much do you need, when do you need it and who can help you?
Hey there!
Today, my friend, we set the stage. There might be a few things you care about that are useless, and we often figure that out too late.
🎯 Today's objective: How much do you need, when do you need it and who can help you?
Do you remember this timeline we sent you in Tip #1? It explains how exactly we will help you validate and develop your idea until you can pitch it properly in front of experienced entrepreneurs, investors, and incubators.
Well, we can do better to help you understand the way ahead.
💫 What if you could know…?
When you'll need to invest some money?
How much money we are talking about?
Who can help you, at each step?
What are the legal things you need to care about at this stage?
Here we go! Same steps, all the answers, for each step.
🙌 Basically, you don't need to invest more than 150$ to look for information about raising money nor about legal aspects, nor to know how to code, for at least the next 6 months.
✔️ Legal
You really don't need to care about any legal aspects until you’ve validated your idea and youre about to start offering your product/service. In other words, until you're really close to
having a paying customer, or
talking to investors to raise funds, or
signing a contract (for questions of liabilities), or
splitting (legally) the shares with your co-founders,
the only thing you need to check earlier is if the name you picked is still available.
Do you need proof? We understand. You can check this article from Stripe Atlas, specialized in incorporating a new business, and check articles from Clerky, so that you have the opinion of the 2 leaders in the market.
✔️ Raising funds
Before raising money (even business angels/pre-seed), you need at least a few clients, or strong signs of traction, ensuring the investor that people are interested in buying or using what you want to sell or provide.
Read here what YCombinator (THE most famous and successful accelerator and investors in early-stage startups. They know what they are talking about) says about it.
✔️ Personal investment
It will be mostly your time, not your money. With mangoUP's toolkit you can have 6 months of premium access to the tools you need to build your business for less than $50. You just need a domain for your website (< $30), and we can help you find the best deal. Basically, stay with us and it'll be cheap. We did it for mangoUP, it works.
✔️ Skills
You don't need to have all the skills or equipment to build your idea. For instance, if your idea is to build software, don't limit yourself now because you don't know how to code. Nowadays, there are a lot of ways to learn skills, tools that can help you get the job done, and a lot of amazing people out there with the skills you don't have and who could be willing to jump in your project.
👄 Since we are setting the stage, let's briefly talk vocabulary
Accelerator
An accelerator is an organization or program that offers advice, mentorship, and resources to help small businesses grow. Usually, you join an accelerator when you already have clients and you've proved your business is scalable (= can grow very fast). Usually, you need to pay the accelerators, in cash, or in equity.
Incubator
An incubator differs from an accelerator in that it supports startups in a slightly earlier stage than an accelerator. It’s essentially an organization that nurtures young firms during their first few months or years. However, because there are so many projects out there applying to join incubators, you'll need to prove that you are really committed and to show nice progress before being accepted. Incubators usually help startups in exchange for equity. You got it, their survival depends on your survival as a startup, thus, just like the accelerator, they don't accept too early-stage projects.
Angel investment
This type of investment typically happens when a startup is in its early stages; it’s when an investor, or a “business angel,” provides startups with initial or growth capital for a stake in the company. Having invested in big names like Google and Uber, CEO of Amazon Jeff Bezos is one of the world’s most well-known angel investors.
MVPs (Minimum viable products). What I called "prototype" in the timeline, to keep it simpler for now.
An MVP is an experiment to see how customers would react if your idea existed. You will actually build many MVPs and each MVP will help you understand if parts of your idea will work or not, by measuring real customer behavior.
Bootstrapping
What mangoUP helps you with. It's the period during which you try to validate your business idea, using very little capital. Basically, the rule is: until you are not sure there is a real opportunity, don't take too many risks.
Pre-seed / seed funding
The first rounds of small, early-stage investment from family members, friends, banks, or an investor are commonly referred to as pre-seed or seed funding. We often talk about the FFF (Friends, Family, and Fools), to mention the people helping you financially at a very early stage. To keep it simple: pre-seed is less than 300,000$ and seed is less than 1M$.
VC (Venture capital/Venture capitalist)
Venture capital is financing provided by firms to small, high-risk, startup companies with large growth potential in return for equity. Investors working for venture capital firms that choose to invest in specific companies are typically called VCs. VCs can invest a Seed, Serie A, Serie B, Serie C... (Pre-seed < Seed < Serie A < Serie B < Serie C...). Usually, Pre-seed investments are made by Business Angels, the family, the friends, and VCs enter later in the equation.
🔥 You got it, The Tipsletter - by mangoUP, helps you build your ideas from its earliest stage.
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See you next week guys 🤙
Nico, Marie, Raquel