Ask HN: How would you raise $600k for a boring software co?

If you came to me with your pitch, I'd be very suspicious of how you came up with your $ and people requirements, and my response would be "Don't waste time looking for money and designers and developers right now. Instead, lock yourself in a room for 3 or 4 weeks, code some of that boring business software you have in mind (even if you end up having to throw it away), then come back and demo to me what you've accomplished. Then we'll talk money."

Since this isn't about big growth (sounds more like "life style business") typical VCs aren't going to be interested.

I've also heard good things about tineyseed https://tinyseed.com

With friends/family (and to an extent, banks) you can ask for a loan instead of a gift, with the idea of paying them back (or with interest, if they're needy friends or banks...). You can also just straight up ask for donations (food, shelter, live with family/friends) to get your thing up and going.

There's also "slower funds" out there for tiny projects if you look around. You can also shop around for angel investors who want something like a fixed revenue share for certain years, without "owning your thing" or "being on the board". But the more people you take money from, the more "needy people" you'll have to deal with, even if on paper they don't own a thing.

Pick where you get your money from, and pick your friends...

Find a designer and two other devs to act as cofounders instead of employees. Pay them in equity. Find an accelerator and/or grant or work from someone's garage or basement or what have you.

That said it is not a business if you get to $300k ARR when you need that staffing level. Can it get to $1m?

So apply your salemanship to the investors.

Boring companies don’t get funded here—-you either go big or go big.

Then look for local venture capital via your local Startup groups. You will find that they are frequented by all the "usual suspects" and you will meet serial entrepreneurs and business coaches etc.

Build the minimum viable version of your software. Don't add all of the possible features, just add those to the TODO list. Build something that works and be prepared to re-write when it grows bigger.

Going live and gaining real users (free or paid) is how you prove your idea deserves further investment.

You are competing against glitzy show-off projects involving the latest craze (typically AI at the moment), don't let these things distract you.

You may find you actually do need to work alone and build out your idea prototype first though. People hear "good ideas" all day long.

Networking is how you find angel investors. The best time to start building the network was 10 years ago. Ask everyone you know for introductions to anyone that is interested in angel investing.

If you have an idea for a business you’d like to build, don’t even worry about the software part yet. Get out there, make cold calls, get customers and do the boring thing with as little or no software. Show there’s demand and that you can make money doing it.

Once you have even a few hundred bucks in revenue, that’s more than $0.

Then write as little software as you can get away with to automate some part of the work you’re doing. See if that translates to more revenue with less effort.

That’s when you start raising from family and friends. You use that money to get some tools you needs, buy some AWS credits, take a few weeks to automate more of the process, hire some people part time to make your cold calls for you/do deliveries/assemble things/configure the giblets/etc, etc.

Once you have self sustaining revenue and a clear path that’s when you raise the seed money to get a dedicated team going. You use that money to expand into new markets, write more software to automate more things that help you grow.

It starts small.

I would say you’re pretty well connected and lucky if you can get someone to give you more than half a million dollars to mess around and find out if you can make a business out of it.

The thing I think you have to keep in mind that is that risk of failure (where "failure" is defined as "returning the same or less than the same money invested in low-risk investments would have over the same time period") isn't linear; by scaling down your ambitions, you do scale down risk, but probably not so much that you open up new avenues of equity investment.

I'm not an expert, but I don't think you're going to raise 6 figures on the premise of 6 figures ARR in 3 years.

If your core skill is coding, the extra money to hire will just slow you down. If you have the drive to work full-time, figure out how to quit your job so you can build this by yourself plus a little freelance help. The easiest way would be to move to a low CoL area and live off your savings or agree your spouse will support you while you build.

Otherwise, I think you would be very likely to waste the $400-500k you'd spend on salaries and overhead and would end up a solo entrepreneur anyway, and dealing with tech debt and an unsustainable number of customers to support.

- A lot of startups are already writing boring business software, you need a more specific vision. Whenever I meet startup people, they’re always super hardcore about their extremely niche market. Like, they’ll be super passionate about the problem of “tracking leads in life insurance sales” or their service that will “help custom denture companies ensure HIPAA compliance”. To get a vision like that, you need to research a market. Lots of other people are also researching markets, so it will help if you start researching a market area where you have some expertise already.

- At the end of the day, you have 2 options for funding (VC is not an option since you don’t want to build a unicorn). Option 1: Take out a loan. This will only work if you have enough collateral, and you should only do it if you feel very confident betting your literal house on your business idea. Option 2: Save up some money you can live off of, convince a designer and another dev to do the same. Quit your jobs, and form a company that you all own a part of. Work without paying yourselves until either customers start paying you or you run out of rent money and have to go back to working for someone else again. Option 2 feels more in line with what you seem to want here. Oh also talk to an actual accountant before doing any of this.

- Last thing I’ll say is that going the “boring” route is neither a guarantee of success or necessary for success. It is, however, a guarantee that the work will be boring. This is fine, and we do need a lot of people doing boring work to make the world go ‘round. But don’t fall into the trap of thinking that trading away “interestingness” will get you money or success.

Try and assess if you really need all the full-time employees you mention. You can get very far with part-time employees, freelancers and outsourced development till the point where you have an MVP built for which investors can put up money. If you really need FTEs, you can (partially)pay them in ESOPs of the company against future revenue.

Especially in this market, I think there are plenty of players in the VC ecosystem who would be ok with you not being a growth rocket and just planning an exit via secondary or acquisition. The one issue is, you will need to be growthy enough in years 3-7 of the business for them to justify it.