Seed Funding
Last Friday I sent out an email to a possible investor about a $30K - $50K seed funding to help us continue to develop our product(s).The principal investors and founders (myself and my partner) are doing a "decent" job making sure that all of our expenses are covered. Our employees are fed, though they're slowly starving, and all of the bills are being paid. However, we would like for our employees to eat a little better, and we'd like to pay for some the services that are being given to us. [Why? Because I've noticed over the years that people have a tendency to jump and help you when they're being paid. However, if their helping you from the kindness of their heart ... they just may not be as ready to help you when you need that help. Free work has a tendency to only occur on their time.]
I also hate stopping our forward progress so that I can play catch up w/ the bank account (it's painful to have to choose between a board revision or a software widget or a patent application).
Turns out that our investor is actually more excited than I had anticipated, and he's proposing coming up with 5 investors w/ $50K each. In exchange, he feels that 25% (5 each) would be a good trade off. I'm pondering this greatly ... because equity / startup capital is a bit like porridge. It can't be too much, and it can't be too little.
In this case, if we had $30K - $50K, it would be scarfed up, and gone in a matter of months. If we had $2 million, we might not know exactly how to allocate it all and might do some floundering around. But, with millions, we'd have enough to leave our day jobs, hire an entire crew, and get the project well off the ground.
$250,000 is right in the middle. It's not enough to leave our day jobs, and it's not enough to retain everyone we might want. But certainly, it is enough to help us w/ all of our incidental costs, and probably to make our programmers a bit happier.
I'm most excited about the opportunity to retain members on our R&D advisory board (paying their summer stipends), and possibly a grant writer ... to see what type of collaborative work (grants?) could be secured.
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