Early stage SAAS funding platform
Looking for feedback on a potential idea:
A platform for generating very early stage funding for SAAS products. This would also create investment opportunities.
Makers can list their products/ideas along with any relevant metrics. Investors can search/filter for products that they feel will do well.
The idea would be to ask for small investments - say $100 - $1000. In return there would be very concrete payback schedules based on # of subscriptions, revenues, additional funding, etc. To offset the high risk of this stage of investment, there would be significant % based payouts on those early subscribers.
Think a mix of Kickstarter and angel funding. There are certainly technical and legal challenges to this, but besides those, does anyone think this would be an idea worth pursuing?
It's nice in theory, but in that small of an amount I'd imagine someone who's capable of creating a SaaS could scrap that money together pretty easily/quickly whether at a job, selling some household items, or doing a freelance project. You can also host for free on AWS for a year anyway, so there's not really cost other than personal expenses.
If anything, I think the resource an early SaaS founder may benefit from is just basic guidance (business and tech). Perhaps creating a small/concentrated group of people who are just starting out and a few generous people who are later stage could be interesting.
In terms of investment opportunity, I feel like it's probably only worth investing in those once they show fit with at least a few thousand in MRR.
I wouldn't think that the investments would stop at one investor. I am thinking 10, 100, 1000s of investors of small amounts. This would add up to enough capital to run serious marketing campaigns, redesigns, etc.
We can also show metrics such as MRR, CAC, churn, etc, to help identify projects that people may want to invest in.
AWS free tier is very low, will struggle to handle a SaaS with any level of users...
But do agree that the investment opportunity will only exist in the top few % (not necessarily dependent on high MRR).
Key to this idea is a successful and working (ideally proven) validation process to recognise the worthwhile talent in among the noise of applications.
Agreed.
I am looking at how we can gather automated metrics for various SaaS businesses and validate them. One of the many challenges.
If can find the common tech stack among the target audience then can easily gather and validate certain metrics.
eg. Stripe revenue can be collected automatically and securely with a simple webhook, just as IH does.
Google analytics and/or adwords are a little more complex but viable too.
Just a matter of what figures matter most and what source has that data across the widest subset of the audience.
That's a great idea indeed! @hspain
I'm leading the growth of platforms like this https://angelhub.io - would you be interested in exploring possibilities together? I'm a SaaS nerd, expecting more SaaS products on the platform as well. Let me know :)
Yes would interest me as future SAAS funder.
I'm a SaaS startup founder and I think something like this could be interesting. It could possibly be combined with an affiliate marketing setup and even a two-level affiliate setup where the platform itself has a SaaS directory and the investors also double as affiliates.
One thing to watch out for regarding SaaS is that a platform should be aligned with findings from the "2020 state of independent SaaS" https://microconf.com/saas-this-year
Particularly how big customers and higher price correlates with higher growth. Doing large deals also probably makes pricing information less transparent.
This is great feedback. I have some experience with affiliate marketing, having built an affiliate marketing platform in the past.
Something to think about.
https://www.crowdcube.com/ already exists.
But it proves there is demand, a focus on SaaS sounds great. I don't want to invest in beer companies.
It looks like Crowd Cube is UK based, which has very different investing laws and regulations.
I want to launch in the US and currently navigating SEC regulations around securities and the JOBS act which add other regulations. It may be a bit too much for a solo founder to do, but I am looking into it.
Regulation is a key part here I guess.
Crowdfunding regulations are being adopted in certain places and would be key to ensure this fell within those requirements.
Otherwise you need to ensure that investors are "accredited" which involves a minimum salary or net worth.
And there are rules on private companies soliciting for investments too....
Given this is SaaS, I wonder if this could possibly be twisted into a more kickstarter idea instead? (Just re-read you post and seen this is part of your thoughts too)
Stage 1
Pre-sell to early adopters who get a massive discount, maybe 1 month payment gets 1 year.
This gives some low but easy revenue, active users, feedback, plus gives the platform true validation of which products users will put their money behind.
This avoids any investor regulation.
Stage 2
Hit a certain pre-sales threshold and you unlock some platform benefits.
Eg. featured on homepage, newsletter, get some free perks like hosting etc (I can help with this if needed)
Stage 3
Can set a funding target which opens up to the platforms list of accredited investors.
They can pick and choose any projects they like, backed up by validated revenue, pre-sales and public reviews (very valuable)
First stage has already filtered the potential from the noise, provided trusted metrics and should be of value to the investors (though expect fewer and larger ticket sizes than you mentioned, I see this as good dealflow for angels putting in $1k to 10k each.)
I'm interested, looking for a partner?