Raising money for your SaaS product is a minefield. Regardless of whether you are crowdsourcing, at the seed stage or beyond, it is imperative that you have a defined strategy for your product. Who is your target audience? What is your USP? Why should they fund your product? How are you going to present your product to potential investors and to customers? What is your price point and what are your projections in terms of sales and ROI?
The chances are if you are at the stage of raising money you have built a plan around these strategic considerations. However, as your product, and business, evolves so should your strategy. So, what are the 5 things you need to consider?
1. Who are you looking to raise money from?
The size of your business will often dictate who you target for your fundraising. If you are still in the pre-seed phase, are you able to do some bootstrapping? Can you ask family members to invest? Would crowdsourcing work as a quick win?
If you are at the seed stage, you are likely looking for some outside funding either through Angel investment or a Venture Capital fund. Beyond this, in your third, fourth and any additional rounds of funding it is important to consider what kind of investment fund you think might find your product of interest.
2. What is your competitive advantage?
Investors will want to know what the growth potential is and what their potential ROI will be. Why should they invest in you over the other SaaS products out there? Where do you fit within your market segment? If your market segment is already crowded, what makes you stand out above the rest. Or if you have managed to land on a relatively empty section of the market, are there potential barriers to new competitors entering the same segment and ‘stealing’ your funding? If you’ve spotted a gap in the market, the likelihood is that someone else has too, especially if it has fast growth potential. Your potential investors will want to know what you have to offer that others don’t.
3. Where do you plan to take the product with this investment?
So, you’ve beaten off the competition. No matter who the investor is, and at what stage of development you are, raising moneys is contingent upon a clear strategy. Knowing your product and how you plan to grow it through identifiable opportunities are key to attracting investment.
4. When is the right time to bid for investments?
If you’re in your very early stages, many SaaS products wait until they have a prototype ready to demo. For other, larger, investments, timing can be even more critical. Making sure you have the enterprise structure, including management, and a sound product marketing strategy in place could be the difference between securing funding and not. Of course, different stages of development will heed different levels of funding, but knowing when to begin your next round of bidding is indispensable to securing funding for your great product.
5 . How? How much do you want?
What kind of investment do you want? Is it simply cash? If you’re further down the development process, do you want board members or advisory personnel as well? If you have an existing management team and board members, they will play an important role in deciding how much you want to raise. You will also need to consider how much you value your autonomy. The additional capital may come with a requirement from the investor to install their own advisors. Are you happy with that? If you are the type to benefit from a collaborative relationship then this kind of investment could be just what your business needs.
There are many things to consider when you are trying to raise money for your SaaS product. Above all, articulate a clear strategy for your product - the product features, your USP, the route(s) to market, the competitive landscape, growth prospects and the potential return on investment. with timescales. Then, if you structure your thinking around “W4H1”; who, what, where, when and how, you will find it easier to generate questions which will eventually lead to the answers you need to answer. And those answers will be the key to a successful funding exercise. Go to it!
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