An amazing number of teams that come up and ask for recommendations, help, or hands-on support in finding external funding. No real surprise given the sheer number of incubators, university entrepreneurship institutes, pre-seed funding programs from the various sources and programs.
The bad news: 9 out of 10 are not per se fundable. And either need to go home or work hard to fill the gaps.
Here are some simple filters that should help you look in the mirror and assess what you see:
Are we a team? One person is not a team. Two people who have met at a founders’ speed-dating event are not a team. Two MBAs and one engineer are not a team (if software is at all critical to your idea). Three or four people who have worked together for at least six months and are now more enthusiastic about their idea and each other than when they started out – that could be a team!
Do we have a product or can we build one? Can it be built? Can we build it? Is it a product, not a feature? All the usual caveats apply. If we don’t have a product, then how do we get people to take the leap of faith required that they will let us build one?
Do we have a market? How do we know that there are dogs that will eat our dogfood? Do we understand, and I mean really understand, our customer and what their pain is and how we help them and why they will buy from us and why they will buy now? How many customers have we actually talked to?
Passing these filters is necessary, but by no means sufficient.
Next apply these two sanity-checks. Ask yourself:
- Would I invest in this? If these guys came to me would I feel compelled to put my hard-earned cash on the roulette table? Or would I hesitate? If so, why?
- Can this be and can we run (or at least start) a 10/20/50/100 million company? (This question courtesy of Christian Ehl). You’ll never know if you can run the beast but you’ll certainly need to be able to get it off the ground.
If you have good answers to all of these you may proceed. Otherwise it’s back to the drawing board.