Background: Created a demo for an application that is very much like this website. It has its own purpose and untapped market, however.
I've already tried angel investors and networking myself to find potential investors. Couldn't find a sensible angel investor for web apps, and networking yielded some leads but no results.
Thanks in advance. If nothing comes about I may just have to prolong the development time dramatically and release it myself.
May I suggest you first find a sensible answer for the question any sensible investor is bound to ask: "Why is this market untapped?"
You may find a lot of startups discovered the 'market,' made similar fundamental mistakes in their approach, and so no longer exist. Failure to explain the market is the primary indicator there is no market. (Just your fond wish there were)
Not everything is a "market." No competition is just as dangerous as a niche crushed with competitors jumping on the bandwagon. Technical applications developers are not known for their intensive market savvy -- at least since the dotcom bust.
In other famous last words, if your focus is on traffic and "we'll figure out how to monetize later" I think I see your problem attracting investors.
How much are you looking for from an investor may I ask?
I can. Monetizing it is not the problem.
I was denied a business loan on the grounds that my credit line was too young. I've held the business account for less than a year, so I can't say I blame the bank being cautious. Unofficially, I've been running the business for several years. I only made it official to take advantage of tax breaks.
My partners have investments elsewhere, or do not have the available funds to cover what I asked for in my last reply. Note that I do not know any "big league" guys-- these are just industry professionals in my area who are above the median income level.
Just curious, but if you "monetize websites every day" why can't you do the same with this app?
Second question - have you thought about getting a business loan to kick start this business? If you're confident that this is your "big one" and your partners in the field would buy into it you should easily cover your costs in one or two financial years?
Enough to support me for a year, and potentially another developer. Plus costs of production server(s) and upkeep. This is negotiable. Shares in company also negotiable.
I assure you that I have done more research than anyone in this field-- I do this full time. The tools I need to run my business simply do not exist. I have created many of them, and the one I am working on now is the "big one" that all of my partners in the field wish they had. I have been developing on this for months, and not just on a whim.
The website I linked to can charge $50-$500/month for a reason: they have a monopoly on their 'market.' As I would with mine. The markup is near 100% on their application, judging on the demo I built that mimics their own.
I don't follow the Twitter model-- I monetize websites every day, run split testing, etc etc. Like I said, this is my job and I'm not some young kid with empty dreams.
Note on angel investors: most do not deal with web applications. The only one that does, and has sensible terms, is Y! Combinator. However, they demand that you have a team and I am running solo. (They will accept solo applications, but odds of 'winning' are dramatically less)
Y Combinator is a bit different from your typical angel investors. Angels are typically high-net worth individuals. Y Combinator is a structured "accelerator" program that offers a lot more than just money. In fact, I think most people would agree that the money is the least important aspect of the program.
YC is extremely selective, however, there are also over <snip> around the world that entrepreneurs can apply to.
I think the time to pursue capital is when you are ready to build not only an application, but a team. The biggest expense your startup will have is human capital - so if you need to put together a team of developers to effectively achieve the vision for your application - then it's time to look at bringing in outside capital; via either debt or equity financing.
Having been down a similar route about 1.5yrs ago and having to make virtually the same decision I think you made the right decision! I know I did! Best of luck with your venture!!
If you're so sure it's going to be a profitable venture then I would suggest trying to go at it on your own as well.
One of my questions is how will you promote this product/service? You could build the greatest app in the world but if you don't have a market strategy then it's going to be tough to monetize anything.
Also, you said you've been working on it for 9months....??? How much longer do you need?? If I were an investor that alone would shy me away... 9 months and nothing (other than a demo) to show...? Seems like you could have completely built it during that time...? Is the app really that complex?
Basically what you're asking for is an investor to come in and pay for you (your salary) and everyone elses salary.... Sounds like you just need somebody to hire you? Also for this type of arrangement all you are basically bringing to the table is your 'idea', the investor would be paying for the development... given this any investor worth his salt is going to want a HUGE stake in the company, most likely more than you would be willing to give up. In essence they are assuming all the risks (money) and you are not putting anything 'real' in the pot.
Other than your salary and possibly a second developer what other expenses would you have?
Thanks everyone for the new information and advice, I definitely appreciate it.
rustybuddy- I'm an Internet marketer primarily. I have no problem marketing something through SEM/SEO. Plus I have some great contacts in the industry.
I don't recall saying I've been working on it 9 months. The demo took a couple weeks to build. The technologies I've been researching took several months of going at it when I had free time. I would assume I would be done in under a year.
But yes the app is extremely complex. It would involve cloud computing, and probably a dedicated server just for putting in information into a massive database (that is optimized, thankfully).
My expenses would only be servers and such. All the code is my own and has no dependencies.
However, all that being said, I've decided to develop the application on my own, without investment capital. Everyone feel free to add more advice in case someone else comes to this post seeking the same advice.
If you happen to be in Silicon Valley, there are lots of people involved in startups that get together at the Hacker Dojo.