Revenue Model – When early monetization is not your objective
Ben Nunez – Revenue Model – How to raise money when early monetization is not your objective.
Given that this is a consumer photo app, and very early on we’re not focused on monetization.
We don’t have a revenue model very early. We’re focused on building a product that millions of people will want to use and building that user base and doing so without any resistance with a pricing model.
Given that’s the case, we knew that we were going to have to raise the money. Because we modeled out the number of engineers we thought we were going to need based on the feature set that we wanted, how fast we wanted to move, and just giving the dynamic and makeup of the team that we were forming. We knew that we were going to need to raise some money. So my co-founder and I, this is each of our fifth startup, so we’ve built and sold companies in the past. And for us, it was probably a bit easier than maybe a first time entrepreneur going out and raising money.
We did so by preparing an investment deck, presenting that deck to a number of different investors. We tried to reach out as many as we possibly could, because you always want to kind of foster competition amongst your investors so that you can get the best terms out of them. Just as any negotiation. So we talked to a bunch of different investors, pitched the idea, and solicited term sheets from each of them. And then evaluated those term sheets based on the terms, the money we were raising, the evaluations we were given, and other terms on the contract, and the agreement.
We pulled the trigger, we raised 1.2 million dollars late last year and have used that money to fuel our development and build our product.