Is it better to launch a product and then seek funding or should you get funding based on prototypes and business plan first and then launch?

Both options exist. Both may however NOT exist at the same time. And both options may NOT be relevant to you at all times.

decision-making

In certain times, when the startup investing environment is vibrant and investors are looking for investments, there may be some who will bet on a ‘spray and pray’ model i.e. invest in many potential winners at very early stages and hope some of them make it big.

Also, launching and funding are related issues, but are NOT interdependent. You should launch as soon as you have a product that allows you to engage users in a meaningful way. I.e. if you are testing a new concept, a MVP should be good to go. However, if you are the 11th online music platform, the product better be great and awesome.

Now, whether you should raise monies at concept stage (powerpoint stage) or prototype stage or post launch stage, depends on a number of factors –  including when you need the money; what the funding environment is; what the competitive environment is and what the funding is needed for, etc.

Irrespective of the stage you begin to raise the monies in, investors are going to check the following:

  • Does the concept address a large market opportunity
  • Is the product/service good and will it deliver in the marketplace
  • Is this team competent and committed to doing this

If the answer to these three things is a Yes, then everything else can be agreed upon.

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Author: Prajakt Raut

Prajakt Raut is the founder of Applyifi.com, and author of the book for startups - ‘Starting Up & Fund Raising’ Prajakt personal goal in life is to encourage and assist a 100,000 people to become entrepreneurs. _____________ Prajakt is the founder of Applyifi - an online platform that provides startups a 36-point scorecard and assessment report on the venture's investment readiness [www.applyifi.com], and helps them improve their odds of getting funded. Prajakt is also the founding partner of The Growth Labs, a platform where growth-stage companies get sharp, incisive advice from senior professionals and experienced entrepreneurs. [www.thegrowthlabs.in] Before starting Applyifi, Prajakt was the head of operations at IAN, founding member of a leading incubator, and the Asia-Director for TiE (2004 - 2007). Previously Prajakt had co-founded Orange Cross, a healthcare services company, and was part of the founding team member of Idealake Technologies. While in college Prajakt had founded a printing business and has spent over 10 years working in leading advertising agencies. Prajakt’s book, ‘Starting Up & Fund Raising’, helps startups understand an investor’s perspective, and helps them improve their odds of getting funded. The book also helps entrepreneurs understand the building blocks of a business.

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