How We Ditched Venture Capital and Let a Competitor Fund Our Startup
They paid $70.000 to join our beta test — and we discovered our market along the way
Could you talk about the process of converting new users into paying customers?
Because I'm at the stage now where I'm going to be pitching new customers to my web app and trying to get them to pay for the premium access.
We actually don't rely on a freemium model right now. We do have a free version of the app, but since our focus is on selling directly to healthcare clinics (their patients get our app as part of their treatment, included in the total cost, then we invoice the clinic directly) we don't rely on that too much.
To actually have an attractive offer and make the sale, for us I would say it's mostly about feature strategy. We have already built the foundational functionality of the app which is included in the free version and is still useful to most relevant people. But everything we've built recently and everything we are working on currently will go straight into the paid version. On top of this, we are working on functionality that is specific to the clinicians, so we're not only creating value for the end-user, but also for the clinicians and for the relationship between them. In this context, the free version of the app is kind of out of the question.
So basically the free version is a useful tool – the paid version is a powerful tool for people who are really serious about their results – and that's what the clinics are interested in.
Hope this helps!
Cool thanks for the answer!
It would be cool to hear more specifics of how you landed the client (i.e. how you pitched them, what aspect of the business they were interested in, what kind of terms the 70k came with, etc.) That would really help in understanding the storyline and motivating us to do something similar!
Hey, thanks a ton for the feedback!
I kept it slightly vague for confidentiality reasons. But, in short, the 70k so far is just revenue, plain and simple. No strings attached. The value that they saw was having all the information they used to give out manually/repeatedly, on paper, to each patient in one digital platform (in the beginning, our app wasn't much more sophisticated than a structured content bank). There were talks of them getting equity in our company and of us becoming the digital portion of their business. We entertained this idea but it ended up being just a transaction – and the jury is still out which was the better alternative. But at least it gave us revenue and proof-of-concept we could later use in our sales process.
I think the overall concept is simply that since you are trying to "disrupt" how things are done in an industry, your already established competitors in that industry could turn out to be your potential customers, at least in the begining of your journey.
Best of luck!