Investments · Launch

Launch Strategy and Investment Guidance

Parminder Singh Software Architect

November 19th, 2018

We've built a working app that's solves a real problem in the market. We've tested the app in a very small group and it works how we'd want it to work for the users. We've also spoken to investors and market players and they have verified the idea.

We've 2 options:

  1. Launch all out in the whole of NYC - This requires quite a bit of funding for digital marketing, server costs, etc. We estimate around $2 million. We've approached a couple of investors and they've shown interest and given positive feedback (but haven't moved forward yet).
  2. Launch in a limited geographical area through invites - This requires $50k for about 3 months. We're hesitant because we think there's a risk here that the idea will be replicated by others.

Anyone has been in that dilemma before? Any guidance on how we should approach this?

Dimitry Rotstein Founder at Miranor

November 19th, 2018

The dilemma is pretty simple - go with the second option.

Several reasons:

1. The only "positive feedback" from investors that makes any difference is when they give you a term sheet. If they don't, then they probably just messing with you and have no real intention to proceed.

2. Asking $2M for an app that hasn't been launched yet is all but ludicrous. I know a few startups that managed to do that, but only because their founders were highly experienced founders with large exits under their belts and close personal relations with investors. Since you are not such a founder (such founders would never ask for advice on this forum), I don't think you have a chance of raising anything, let alone millions, at this stage.

3. In any case, I can't imagine why you would need $2M for servers and marketing just to cover one city. Servers cost like dirt these days and one top-tier server should be able to serve 100,000 daily users (and it's highly unlikely that you get so many users in the foreseeable future). Digital marketing shouldn't cost that much too. Besides, at this stage it would be a mistake to use advertising anyway.

4. Based on your description, you don't have any substantial validation. Opinions from a couple of investors or experts means very little, and it sounds like the initial users only tested functionality, not actual value.

Start small and narrow, build initial user base, validate properly (i.e. make sure the real users really want to use your product), validate you business model (i.e. make sure you can make money and be profitable), and start growing. Only then you can go to investors.

One important thing though - $50K is way too much as well, unless you need it for living expenses of your entire crew. There is no reason why you can't market a product for free, whatever your target audience is. If you describe the product and the target audience, I could be more specific in this subject.

Pascal Heitz Software Engineer from France, looking for a cool project to join and grow

Last updated on November 28th, 2018

If your business requires a critical mass of users to start with (e.g. multi-sided markets), then option 1 seems the one to go, although 2 millions is hard to get from just an idea.

If it can also work fine on a smaller scale, I would go for option 2, while being able and ready to scale up quickly if things go well. Have your investors in the starting blocks.

I would try to involve the investors in that important decision. Explain the risks and make them feel you are all making that decision together. In this way they shouldn't resent you too much personally if it goes south, since they had their saying in the first place.

You seem afraid that others might replicate your idea. If you're fast enough, they will not have the time, because you already have quite a big head-start on them. If despite your head-start they still catch up with you, then you are either doing something wrong (=> solve that problem), or you may have less cash/resources than them, which restricts your growth speed (=> bring new investments/people).

David M

November 19th, 2018

Happy to take a look at it and see if I can do anything. Feel free to send me a message!