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Ask HN: Raising money for the first time, any tips?

20 points by jorgecurio ↗ HN
hey guys so I have narrowed it down to 3 or 4 domains with functional MVP. I had about 10 but I really asked is this a vitamin or a painkiller and was able to narrow it down to a 3.

I want to raise money to hire 1 engineer to polish up the MVP and be the go to guy for changes.

I want a sales guy who will work on base salary and 15% comission.

I want a marketing guy who will spin content and accountable for inbound lead generation.

I am located in Vancouver, BC. Here's why I think Vancouver is a great place to start, #1 salary is super cheap because of the exchange rate. I don't need a 100x engineer. I already laid down the bare paths and need a few more bodies to help maintain the ship.

So about how much I need to raise I'm thinking to cover salary:

1 intermediate engineer = $65,000 CAD / year = $48,888 USD / year.

1 sales guy + SDR intern ($10.25 cad/hr minimum wage in BC) = $45,000 CAD / year + 15% comission cap + $21,320 CAD / year for SDR intern = 66,320 CAD / year = $49,890 USD / year.

1 marketing guy = $35,000 CAD / year = $26,000 USD / year.

So all together salary burn rate is $124,778 USD / year.

$10,398 USD / month + rent + supplies = $12,398 USD / month.

So roughly 13k USD / month to upkeep with 1 year of runway will be $156,000 USD. I want to target 1 million USD in sales in that period.

These are all B2B SaaS products that I've been able to spin off from my main SaaS that I've been working on for 2+ years alone.

No free plans, no $19.99/month, charge money and earn revenue from day 1.

Is this a realistic figure to raise in the beginning? What local meetups should you attend? Do you think it's wise to raise money from your own network instead?

Basically I'm looking to see if anyone is interested in going naked call on an option that expires in 1 year without time decay.

absolutelynotalking@gmail.com

12 comments

[ 4.7 ms ] story [ 37.3 ms ] thread
twunde
You should probably put some money aside for tools and marketing budget. You probably need a server somewhere and a domain name. Marketing almost certainly needs an advertising budget.
hotcool
The salary for a marketing person is on the low side IMO. With rent prices being some of the highest in the world, can you even live in Vancouver for $35,000 CAD?
loumf
Does the main SaaS make money? Use that money to get your first 10 sales. Do annual deals for cash-flow.

If someone told me that they will make $1mio in sales on a $156k investment, and they wanted that investment from me (not just do it themselves), I would think it was some kind of scam.

ctstover
> 1 intermediate engineer = $65,000 CAD / year = $48,888 USD / year

The gross annual amount of an employee's base salary is very different than the cost of hiring an employee with said base salary. I know CA != US, but payroll taxes, benefits, retirement contributions, unemployment and disability insurance, etc can't be that alien of a concept. Or is it? In the US estimate 130%-160% of the salary for base employment. Or is circa 30k for an intermediate engineer normal in Vancouver? In which case what would the entry level position make?

benjismith
I had a similar idea as you originally with my startup: build a functional MVP, launch with beta testers, recruit co-founders, raise seed capital, and then (finally) start to focus on growth.

I wasted probably six months going down blind alleys with this approach. Here are some of the lessons I learned:

1) A small group of beta testers will not give your product the time and attention you need to find product-market fit.

2) High quality collaborators, willing to devote all their spare waking hours to your vision, are extremely hard to find (and even harder to get up-to-speed). Especially on a budget. You'll probably see several promising co-founders come and go before you find a good match.

3) Even if you have a really sexy MVP and a great team, it's nearly impossible to fundraise until you can point to a handful of satisfied early customers. You might think you can raise $100k (chump change!) to fund your first six months of operations, but you're probably wrong about that.

The only thing you should be doing right now is getting your product into as many customers' hands as possible. In your post, you say you plan to "charge money and earn revenue from day 1".

Today is day 1. Go get some customers!

jorgecurio
My comments are being throttled so I have to be picky to which I reply and I think this comment is excellent since it reflects real world case.

Yeah my previous SaaS I launched with beta testers two years ago was a totally misplaced end user targetting. In an effort to "capture" all opportunities I ended up building everything to compete on features alone which increased price sensitivity and led to bloat which made changes harder.

My experience from this was to start from top to bottom, not starting with code. Picking your market, knowing who is using your product and finding copies of him, I tried to do this on my own last year but developing product, website, documentation, tutorial videos, writing blog posts, sales quickly was way more than I can chew.

It's from this point where I clearly know that I focused on the entirely wrong group of customers. It was the naive belief that I could solve business problems with engineering and taking on more technical debt that ultimately led me to feeling burnt out (as you will see from my previous submissions).

1) I totally agree. Beta testers <<<<< paying customer. I've been there trying to aimless wonder the desert in hopes of finding water. It's so simple but I get it now after failing hard for a long time: "Be where your customers can pay you today not tomorrow or when this feature is ready".

2) Ironically this is where I feel the highest confidence but also where I take most caution. You don't know someone until you've worked with them for a while and sometimes I have misplaced expectations....they may not love your product, and not taking it personally....finding people would be quite hard as well and I think that in Vancouver there's a lot less people just striking out doing or hacking things on their own compared to SF probably.

3) 100% agreed.

> Today is day 1. Go get some customers!

I need to figure out how to get paid for the MVP and find people who will do that.

Eridrus
I'm not great at following this advice myself, but most of what I've read seems to indicate that the best way to actually find product market fit is to talk to potential customers and ask them non-leading questions about what their problems really are, rather than just trying to figure it out in your head.
maxxxxx
Realistically I'd say double or triple your expense estimate. You are low-balling yourself. Everything takes much longer and costs more than you expect.
icedchai
wow. around here (northeast US near Boston) you're lucky to get one decent guy for 125K.
debacle
You're being incredibly optimistic with all of your estimates here. If you are looking at 3 employees your burn rate is going to be much closer to $300k.