Mike is the Author of "Startup Seed Funding for the Rest of Us", a book about raising capital outside of Silicon Valley. Mike also leads Product + Strategy at Movable and is the Entrepreneur-in-Residence for the City of Lakewood, Ohio.
Mike's products and businesses have been featured by major media outlets like CNN, New York Times, and The Atlantic; on the nationally syndicated PBS television show "Startup USA"; and in a NYT bestselling book by Clark Howard.
It doesn't look like any of the answers given have actually answered the question you posed -- so I'll do my best:
The best place to look is within your OWN personal networks. At the end of the day, a co-founder is very similar to having a husband or wife. Your life will be tied to this person in almost every conceivable way. In fact, you may even spend twice as much time with this person than your actual husband or wife (if you have one). For that reason, it's important that the level of trust you have in this person is second-to-none.
Finding co-founders at networking events, local universities, etc is fine -- however, be sure to spend a lot of time with this person before you decide to bring them on board as a co-founder. Starting the conversation off saying "I'm looking for a co-founder" is similar to meeting a girl and saying "I'm looking for a wife."
But, again, this is why your own personal networks might be the answer. It's likely that in this group of people, you'll find people you trust who will be in your startup with you throughout the good and the bad (because, yes...there will be good and bad).
I hope this is helpful...
You seem to be in a similar position that a lot of seed stage startups are in. At this stage, angel investors are usually appropriate to talk to about making a seed investment.
Keep in mind that "traction" can mean different things at different stages. At your stage, traction could include early customer interest, pilot program commitments, etc. Of course, it's always better to have customer/revenue traction but use what you have.
We raised several hundred thousand dollars before we ever launched. But we were able to show prototypes, early customer interest, and confirmed lead customers.
I'd begin the rounds with angel investors in your area and in your field for "feedback meetings." Try to find mentors that are willing to advise you, even informally. Remember, ask for money -- receive advice. Ask for advice, receive money.
Best of luck and let me know if I can be of help.
Exciting stuff! I see a few questions here:
1. When is the right time to look for seed funding?
2. How do I appropriately talk to angel investors about said funding?
As for the first question, consider what your goals are and whether this funding can help you achieve those goals. Hopefully, one of those goals is to step out of your full time job and concentrate on this project full-time. It's perfectly acceptable to be doing this on the side, however, you'll find it VERY difficult to get any sort of funding unless your plan is to "quit your day job" the minute you accept your first bit of funding.
If you think some amount of seed funding will help you accomplish your goals short term (perhaps getting to prove out product-market-fit and position yourself to scale), then I would say that you're ready to begin talking to investors when you're able to articulate what your business is, your plan for getting to product-market-fit, AND you can visually show them something. Whether this is your MVP or a visual demo of some sort -- be at a point where you can *show* them your product.
In terms of how to position yourself to potential angel investors:
I'd specifically seek out people in your area that have something to add aside from just money. Angel investors invest money, yes -- but they also invest their time, knowledge, and connections. At this stage, you need this just as much as the money (whether you realize it or not). Position the meeting as "getting feedback." Meet with as many people that fit this mold as possible. You'll start to get a sense -- very quickly -- for who is a real potential angel investor for you, and who is not.
I'm happy to talk things through with you more, if needed. I hope that some of this helps...
It's difficult to answer this question for a couple of reasons:
1. When you're a startup -- it's quite possible your revenue will be little or nothing at first. 100% of nothing is still...well...you get the idea.
2. Every business is different -- and requires a different approach at marketing.
I'd ask yourself these questions:
1. Where do you see your startup going in the next couple of years? Is your goal to bootstrap? Is it to raise funding from VC's?
2. What marketing activities can help you get to the important threshold you're setting for your company (whether that's achieving profitability -- raising a Series A VC round -- etc)?
3. How much do those marketing activities cost?
It could be perfectly reasonable to spend $50 - $100K in marketing (or more) when you expect zero in revenue IF you're achieving other milestones that will help you achieve a Series A investment (and that's your goal).
However, if you're bootstrapping a business and your goal is reaching profitability as soon as possible, it could STILL be reasonable to spend $100K in marketing, IF you're confident that every dollar invested returns 2.
Short answer: There's no magic percentage to your question. I'd spend more time being thoughtful about the type of marketing activities you think would be helpful, and what end result those activities lead to than planning for a percentage of sales.
I hope this is helpful.
We've raised close to $1M in seed capital. We've done things right...and done things wrong...so take this with a grain of salt.
Your question was about SEED capital. One answer I saw (from Brian) was thoughtful, however, he's talking more about early stage capital (repeatable sales, profitability, etc). The reality is, many startups find that they can't get to this stage without seed capital to get started.
One answer: As soon as you have a prototype, and thoughtful feedback from customers. Being able to show an investor (literally) the vision for your product -- and, at the same time, that you've done due diligence with customers in the form of customer development. If you've done these two things, then you might be ready to talk to *seed* investors. Might you give up more equity at this stage than if you're profitable? Sure. But again -- but if seed capital is what you *need* to get to that stage, then this is the time to attract it.
And once you're at this point -- have *as many* conversations with potential seed investors as possible. It may take 10 no's to get to 1 "yes -- and even then, you want to make sure the investor is the right one for you.
Don't go after seed capital at all. Bootstrap the company, and skip this stage altogether. Fund the company with customer revenue. Keep in mind, when you take on investors, you have a very real responsibility to them. Instead of "no boss", you might have ten. Although, who are we kidding -- even bootstrapping founders still have multiple bosses (employees, customers, etc).
I hope this helps.