Ask HN: How should a 17 year old go about getting seed funding?
7 comments
I'm 18 and have learned a lot in the last year or so. I've spoken at length to investors and founders to get advice so understand your situation. I've been able to build a profitable startup with 100k+ users and am now working on my next thing.
Firstly, your age won't stop you raising money. Believe me, it's a huge bonus IF you're ready and serious. But if you want to start a company it has to be something you dedicate all your time to and spend years building. VC's invest because they expect you to build a company and then IPO or exit one day. I don't think you can live up to building a company if it's a summer or part-time gig.
Secondly I'll email you so you can tell me your idea as I assure you very few things are unique. In social networking almost nothing as there are hundreds of thousands of competitors.
You won't get investment by emailing investors sadly, you have to build relationships. This is the perfect time to do it.
Here's my advice. If you are interested in building a company (while doing college), raise some seed funding under 10k from an angel you build a relationship with or one of the many LA incubators and then build it through college with a co-founder. You'll be able to take your time, gain traction and if it does do well then you can take it further but will probably have to drop-out.
You don't have to have a co-founder but it makes sense for product decisions and actually building a great product. Freelancers are a waste of money and require a lot of work, if you want to build something real you'll eventually hire and having a co-founder makes sense for most. You can use what you already have towards it as it'll help to get a co-founder if you have something tangible.
By the way I'm not advocating college as the sole option, I'm not going at all but it really depends on what you're looking for any where you are on your journey.
By the way, you're in LA. A pretty huge tech scene, you should be making the most of it by going to lots of meetups and meeting founders and potential investors and partners! You have no excuse.
Firstly, your age won't stop you raising money. Believe me, it's a huge bonus IF you're ready and serious. But if you want to start a company it has to be something you dedicate all your time to and spend years building. VC's invest because they expect you to build a company and then IPO or exit one day. I don't think you can live up to building a company if it's a summer or part-time gig.
Secondly I'll email you so you can tell me your idea as I assure you very few things are unique. In social networking almost nothing as there are hundreds of thousands of competitors.
You won't get investment by emailing investors sadly, you have to build relationships. This is the perfect time to do it.
Here's my advice. If you are interested in building a company (while doing college), raise some seed funding under 10k from an angel you build a relationship with or one of the many LA incubators and then build it through college with a co-founder. You'll be able to take your time, gain traction and if it does do well then you can take it further but will probably have to drop-out.
You don't have to have a co-founder but it makes sense for product decisions and actually building a great product. Freelancers are a waste of money and require a lot of work, if you want to build something real you'll eventually hire and having a co-founder makes sense for most. You can use what you already have towards it as it'll help to get a co-founder if you have something tangible.
By the way I'm not advocating college as the sole option, I'm not going at all but it really depends on what you're looking for any where you are on your journey.
By the way, you're in LA. A pretty huge tech scene, you should be making the most of it by going to lots of meetups and meeting founders and potential investors and partners! You have no excuse.
> Now that I've just about exhausted the $1000, it's time for me to start seeking seed funding.
No. It's time to get your hands dirty, and get as much traction has possible on a shoestring. This could be -
* building a landing page, start blogging and building a list of interested people
* creating interface mockups
* building a demo
* networking to seek out a cofounder
* preparing to apply to an accelerator or microseed program
Idea-only concepts from first timers aren't ready for full seed funding, in general. You can push it to the next level without that.
No. It's time to get your hands dirty, and get as much traction has possible on a shoestring. This could be -
* building a landing page, start blogging and building a list of interested people
* creating interface mockups
* building a demo
* networking to seek out a cofounder
* preparing to apply to an accelerator or microseed program
Idea-only concepts from first timers aren't ready for full seed funding, in general. You can push it to the next level without that.
Thanks for the suggestions. The landing page, mockups, and demo are already a work-in-progress, although I'll begin taking the others into consideration and building a more productive plan for the next few months.
Your virtual server experience showed that you you have higher priorities than a successful business and walked away from a business with good potential. Besides the idea what are you bringing to the table? The ability to hire a freelancer to do work for you? Software is only a small portion of a business. How are you going to reach this niche group of users? How many of them are there? How are you going to make money off of them? why not just leverage facebooks apis and create a niche app for facebook? How much money would you need? To get your first 10k users? Facebook makes something like 60 cents per hour a user spends on facebook. Are your numbers going to be better? what's so great about this niche of users? Do they have more buying power? Personally I would finish working on what the freelancer was working on. I would also come up with some SAAS tools that you need to build anyway and work on selling them to get ramen profitable.
What about incubator or accelerator programs? I see you've gathered a freelance team, but do you have any plans on bringing in another founder soon?
Honestly, if your idea solves a real pain point, it shouldn't matter that much that it's a social network. Also, I see a trend in the popularity of niche social networks (Instagram for photos, FamilyLeaf for family, Badoo for sex, Pair for couples, etc).
Before jumping straight to seed money, have you also considered freelancing yourself for a few hours a week to help keep your project afloat for a little while?
Honestly, if your idea solves a real pain point, it shouldn't matter that much that it's a social network. Also, I see a trend in the popularity of niche social networks (Instagram for photos, FamilyLeaf for family, Badoo for sex, Pair for couples, etc).
Before jumping straight to seed money, have you also considered freelancing yourself for a few hours a week to help keep your project afloat for a little while?
That's exactly how I see this project - a niche social network. It's definitely not the end-all social network. I have been doing some work on the side and can continue to sustain the project at a slow and steady pace, however, I'm just starting to think long-term.
As far as a co-founder goes, there's not many people around my area that have any interest in development and/or being involved with a startup. I'd love to spend some time up north and make some connections, although I'm not quite sure how I should go about getting my foot in the door. Definitely need to look into that though
As far as a co-founder goes, there's not many people around my area that have any interest in development and/or being involved with a startup. I'd love to spend some time up north and make some connections, although I'm not quite sure how I should go about getting my foot in the door. Definitely need to look into that though
I think you're asking the wrong question: The right question to ask is if you have the resources to build a prototype of your idea? Even if that prototype is a bunch of sketched wireframes you can then take those and see if you can get some seed funding to build something bigger. I'd also dare say that even if you did this and failed, you still might open some doors. Part of future is going to be meeting people, so a prototype is the best sort of business card.
The sketches and cleaner wireframes have already been created. In fact, the developer has them and is already implementing them. But like you said, I think networking will likely be my next step. Thanks for the advice
Well then I think you're on the right track!
Considering the largest social network in the history on man tanked their stock price right after their IPO, I would venture to guess that VCs aren't answering emails from 17 year olds wanting to start a social network.
Is it what you want to hear? Probably not. Is it reality? Yeah. Does it suck?cjust wait until you have to pay your own bills and your parents don't throw money at your ideas.
My advice? Restart that business you created that had 100 paying customers in the first 7 days. Seriously, you shut it down to focus on school but took money from your parents to start your own social network? Seems silly from where I'm sitting.
Is it what you want to hear? Probably not. Is it reality? Yeah. Does it suck?cjust wait until you have to pay your own bills and your parents don't throw money at your ideas.
My advice? Restart that business you created that had 100 paying customers in the first 7 days. Seriously, you shut it down to focus on school but took money from your parents to start your own social network? Seems silly from where I'm sitting.
>tanked their stock price right after their IPO
Why is this relevant? The VCs made plenty of money and even though the price is less than asked for, a social network just got validated as worth over $60 billion on a public market.
There may still be issues with creating a new social network, but I don't think FB's IPO price tanking is one of them. (Unless success requires a $100 billion exit.)
Why is this relevant? The VCs made plenty of money and even though the price is less than asked for, a social network just got validated as worth over $60 billion on a public market.
There may still be issues with creating a new social network, but I don't think FB's IPO price tanking is one of them. (Unless success requires a $100 billion exit.)
It shows the lack of appetite from consumers for social networking companies. Sure, the investors for Facebook got rich, but will then next ones? The post IPO stock price would suggest that the next party won't be as big.
I suppose I looked at Facebook's suffering stock situation a bit more optimistically (at least in the eyes of potential competitors), as I figured it would've opened new doors for competition.
In regards to the hosting business, I was a freshman at the time and didn't have the same opportunity I now have to be an early graduate. If it had been up to me, I definitely would've kept it going, but at this point, that market is far too saturated.
In regards to the hosting business, I was a freshman at the time and didn't have the same opportunity I now have to be an early graduate. If it had been up to me, I definitely would've kept it going, but at this point, that market is far too saturated.
Social networks aren't open for competition like VPS hosts are. People us hosting for certain features, uptime, or price. People use social networks simply for the fact that others are using it too. It entrenches players easily.
Look at Craigslist. The UX sucks and they haven't done anything with it in a while. But people use Craigslist, with no one able to displace it at scale, simply because it has gravity and users don't go elsewhere. Niches is the best way to unentrench a social network, but these are just as saturated as vps hosts and aren't likely to get investor attention. I would cut your losses and find lower hanging fruit.
Look at Craigslist. The UX sucks and they haven't done anything with it in a while. But people use Craigslist, with no one able to displace it at scale, simply because it has gravity and users don't go elsewhere. Niches is the best way to unentrench a social network, but these are just as saturated as vps hosts and aren't likely to get investor attention. I would cut your losses and find lower hanging fruit.
I wouldn't quite consider social networks and VPS hosts to be just as saturated as one another. Building a social network from the ground up requires time, some creativity, the ability to bring something unique to the table, and forming a team that's just as passionate towards an idea as you are. Running a VPS company, on the other hand, requires an install of a hypervisor and a ticket/billing system. I'd prefer to contribute something that requires a bit more thought and energy. First, I'd like to weigh my options for this particular project, rather than jumping ship this early and heading down another path.
You make a valid point. Vps is spessentially a service industry vs a product. That said, wih a social network you are 99% likely to fail. Proving me wrong is worth a billion dollars, the question is what kind of goals are you setting for yourself.
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For the past month or so, I've been jotting down notes on an idea I had for a social network. After passing the concept by family and a few close friends, I've decided I want to go ahead and make it a reality. That's just what I've begun to do.
My parents gave me $1000 to get the ball rolling, and I can proudly say that I used that money as effectively as I possibly could. I spent $300 on a down payment for a designer and $600 for a freelance developer, so far. Albeit a $300 down payment for a designer may sound cheap to some, it's turning out to be very clean looking and contemporary. In regards to the developer, I pay him $300-$350 for a set of tasks every 5-7 days. This way, it's much easier to keep track of his progress and pay him accordingly. As of now, the basics of the website have been developed, and it's now to the point where you can play around with the very basic functionality of the social network.
Now that I've just about exhausted the $1000, it's time for me to start seeking seed funding. I had considered a business loan, but even though I have my own LLC registered, I'm unable to open any type of account under my name with any financial institution, due to my age. I reached out to a few firms that I found on CrunchBase that focus primarily on early-stage investments, providing them background on who I am, what I feel I'm capable of, and then asked if they could grant me a few minutes of their time to pitch my idea. Unfortunately, I've yet to hear back from any of them. I'm unsure if I'm just not being taken seriously of if they're simply not investing in anymore companies at this point in time. A simple reply to my email would've definitely been helpful to help me determine what I'm doing wrong, yet that wasn't the case.
In 2009, I started a hosting company that offered Xen-powered virtual private servers. Within the first week of being open for business, I was able to get over 100 paying customers to sign up and buy a VPS. It became quite successful until I had to shut it down to focus on school. In addition, I've taught myself Objective-C and have experience with Linux and managing servers (I have also been running an IRC network and managing it myself since 2007). Now, I'm an early high school graduate. I finished my last day of school a few weeks ago and can now pour all my time and energy into bringing this project to life. Additionally, college doesn't start anytime soon, and I don't have a job that would occupy my time.
I assure you my idea isn't a "Pinterest for dog lovers," or an "Instagram for sports photos." I consider my idea to be pretty unique, thus the reason I'm going forward with it. I apologize if I sound arrogant or cocky at all (I promise you, I'm not like that!), but I just want to make sure nobody thinks I'm here to waste anybody's time.
Would you guys be able to point me in the right direction? Do you know of any investment firms in the position to make any new investments? Anyone I could talk to for advice? I'm in the Los Angeles area, but flying up north to meet with investors wouldn't be a problem at all. I'm very eager to keep the ball rolling and continuing to build this website the way I've visioned it.
Thanks in advance for the advice!
Michael Goss [email protected]