Questions

For example, as noted by Andrew Chen in his post "Why investors don't fund dating"(http://andrewchen.co/why-investors-dont-fund-dating/), dating startups, in general, seem to have trouble getting funding because of high churn, among other factors. Also, by and large, markets exploiting newer technologies, and those with a high growth rate seem to be favored (by investors, and by success). So, generally speaking, which other market factors, or even markets as a whole, might make fundraising/success more difficult (or, conversely, play to my advantage)?

I am currently running my second startup and we have just received our first round of seed funding from an external investor. Though I'm based in the SF Bay Area, I found the hard way that most investors invest in what they know -- which is great because you can target your investment pitch to a much narrower and more informed audience.

I would focus less on "getting funded" and focus more on building and operating a successful business. The question you should be answering is "What do I have a core competency in and what is the market opportunity in that core competency?" That could be anything from an internet social media startup to a fast food franchise location. Plenty of businesses exist in the world, and a very good number of them have had some kind of external funding. Once you've found your core competency, put a business plan together, determine how much (if any) external funding you will need to get the business off the ground and start searching from there. Your first round of funding is overwhelmingly likely to come from a) you b)friends and family c) a business partner or d) someone who is from the industry of the business that you are trying to start. Even firms that are funded by VCs are typically funded by VCs who have operating experience in the subject area of their own business.

As for the Andrew Chen article above, I suspect that dating sites don't get a lot of funding because they are commoditized, members have a lot of customer churn, don't have a sticky brand, and are extremely price sensitive businesses. That said, I would not let that deter you if you want to start a dating app ***IF*** you have particular expertise or experience in the field and understand the opportunities and challenges in the space.

For example, Thomas Petterfy started Interactive Brokers, an online stock broker, much later than Schwab and Etrade and took zero external funding. By executing on his business plan, he was able to build it into a $25 Billion company. He still owns 80% of the company because he never took external funding.

I'd be happy to discuss further or see hat is needed in order to get you going. Please feel free to contact me for a call to ask further questions. Thanks!


Answered 6 years ago

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