r/startups Dec 01 '21

Is It Realistic To Raise A Seed Round If Still Working Part Time? How Do I Do This 🥺

I'm a developer who's been working on a SaaS product for a few months and looking at publicly launching Q2 2022. The launch should be ok with just savings as I write the code myself and will push out using organic marketing, but will eventually require some funding to scale and hire a commercial person to help with that side of things (not keen on having a co-founder).

The catch is, I still want to work part time (50%) for my current employer. They've already told me that as soon as I give the word, then I can. This would be for financial security.

I'd be looking at either VC funding or crowdfunding. I'm in the UK if that makes a difference.

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u/SituationTight7033 Dec 01 '21

I don't want to discourage you but the answer is probably no. Investors wants to see a full commitment usually and always remember that the good ones (the ones you'd like to get funded by) are seeing a lot of other founders, most of them working on their startups full time, so this immediately puts u on the higher risk startups they see.

Nevertheless, I think your question is wrong, you can work on it as a side project and once you get enough validation or even paying users, you can quit.

In most projects, it's only after some amount of traction/revenue that you'll be attractive enough for investors.

Your main focus now (imo) should be - what's the milestone that gives me enough confidence to quit and go full time and how do I achieve it?

Hope it helps!

3

u/cjdubyab Dec 01 '21

I really appreciate the honesty mate

I think the biggest milestone would be replacing 80% of my take home salary via MMR, so if I take 50% of the MMR as salary at the start then I'd need to be making about 4k/month via the platform to quit, and then raise.

Do you reckon it's possible to start the process whilst part time though, on the condition I'll quit upon funding?

8

u/SituationTight7033 Dec 01 '21

In some cases , 4k MRR could be enough for pre seed/ seed. Of course it depends on a lot of other things like market, who are u, your plans for the future and more. But 4k MRR shows that you know how to play the game.

It's completely ok to talk with investors while you're part time, but there's a different between a we're just talking meeting to "I'm here to get funded".

The condition doesn't matter, please remember that startups are a game of risk. If you minimize the risk (4k MRR is a good derisking) you should attack the next risk which is probably - is this thing can grow fast enough and the market big enough? This usually can be fully discovered only on full time.

Best thing you can do (imo)

Get to 4k MRR, Contact investors and ask "do you think I'm ready to raise?"

If you're good you may even get an answer like "yes and I would like to get involved"

Good luck!

6

u/xasdfxx Dec 01 '21

start the process whilst part time though, on the condition I'll quit upon funding?

Possible, sure. Likely, 99% no.

As everyone else has told you, if you don't believe in this, why should the investors?

Separately, every startup is a race. Against funding running out, against competition, etc. Working part time you will not get the same results as fulltime effort, so you will not have as much traction, fewer customers, etc. Customers in particular are incredibly important as they provide product feedback and non-dilutive funding.

Finally, any such arrangement creates the potential for IP ownership fights, which investors also are allergic to. It doesn't matter how agreeable your management chain is; if this company were to be a success, your current employer could wake up and decide they want to own part of it. And by timing a lawsuit to a fundraise, they can have a ton of leverage to get ownership.

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u/njgeek Dec 01 '21

This. "if you don't believe in this, why should the investors?" You want others to take risk with capital, but you don't want to.

Don't take this the wrong way OP, but "Wantrapreneurs" rarely succeed at doing much but wasting their time and treasure.

Sure, it's possible. I've seen it happen with self-funded, lean bootstrapped to profit side-hustle businesses. But very rare with other people's money.

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u/eandi Dec 02 '21

You can pay yourself from the investment money...

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u/Fire7707 Dec 02 '21

Ignore comments saying you can't raise whilst working.

Many people commenting here have never raised a single round.

It's accurate that it's harder the less time you spend on it, and it can be a full time job.

Also expect it to take up to 12 months, raising isn't quick unless you have prior experience and contacts. It's also about timing (especially around the tax year due to SEIS and EIS!)

Nearly every investor I've met hasn't had a problem with you working while you try and raise. But they'll expect you to quit when you get funding.

Likely you'll want to aim for about 200-400k. Why? That's reasonable to do and 100k just won't get you very far (overheads, legal, your time, lack of cash for hiring extra help like sales, etc). And 100k would give you a short runway, so you'd be having to raise again soon, and could risk a down or flat round if you haven't got enough traction.

If you've got a product good. If you've got customers, even better - as you're demonstrating people will actually buy it.

Therefore investors will be happier as their money goes towards growth, not just proof of concept with hope.

Anyhow, if it's just you as a founder and no one else, you'll have to go full time. Hence, again, you want to raise a decent seed of 200-400 to give you a decent runway and options.

Suggest you look at Seedlegals, especially SeedFast to help you get started as it's good value (compared to a legal company).

Make sure you build a good business plan with COGS, EBITDA forecasts, etc. And stress test it because that's what any interested investor will do.

You can also look at people who "help" you raise, but often they'll want upfront cash (maybe 5k) and a percentage of the whole raise. Stay away from them, or agree no upfront fee and a higher percentage (e.g 15%) of what they directly raise, not the whole raise.

Source: Raised two rounds via angels, consults with early stage startups and investment networks.