I have a killer Facebook app that is being built right now (will be finished by the end of May) and I’m looking for investors to come in after I have proved my numbers and dump gas on my fire, to capitalize on my first mover advantage. And I’m coming before you all today to ask you how something like this is ‘done’ (what is the financial instrument of choice?)
Here is my issue: the app uses many bleeding edge API's, which makes it very hot from a tech standpoint, since it is at the center of social, mobile, local and payment. These API's not only made the idea possible, but it made the idea extremely cheap to build... and unfortunately, by the same token, there is no way to protect the idea. And within 6 months there will be others in this space, plus the usual copy-catters.
But I believe, however, we have a killer app. And the way I intertwined it with Facebook, it will be very viral, especially initially. And it will make a pile of money for a least a year, maybe longer. The key, though, is disseminating it quickly to take advantage of being the first mover in this space. And I think I have a low cost 'CPA' strategy to make ALL our money back in a cycle, which may last only a week, with an upper limit that ramps up, and tops out, at around $500k per DAY in terms of an investment opportunity.
So what I'm looking for is an investor that is marketing/tech savvy enough to really see the brilliance, but one ethical enough not to flat out steal the idea from us. Right now I have $10k in it and a fair amount of time. Then I have another $5k set aside to launch it to show my numbers. Prior to launching at the end of May (hopefully at TechCrunch) I'll spend ~$500 to$1k on beta marketing... basically testing my new CPA model, as well as the technology.
Which means, once I prove this out in beta, and get hard numbers to back up what looks to be the case, I'm looking for investors to throw down some big money. In return they will get most of the profit, but I’ll end up with a free user who touches several more for free. I’m looking to storm the market in less than 6 weeks, which is faster than just about any competitor could reasonably respond, even if they were hyper-agile.
The key to this type of strategy is just bum rushing the market before anyone even knew there was one, and by the time they know what’s going on, you already picked all the low hanging fruit and they are forced to exert effort to get what’s left …or buy you out.
One idea is just do it as a quick cycle, recurring cash loan, which yields cash back…. you give me $X, I give you $X+$Y back in a week, then you decide if you want to roll all (or a portion) back over, etc. Another option we are set up for is selling Preferred Stock of our NV C corp. Another option is that Ron Conway Convertible note thing that is all the rage these days.
Honestly, since this thing is so scalable, and I’m looking for complete domination of this market, I was thinking about tying returns directly to PayPal, so that if you wanted to invest, you could transfer money to your PayPal account and then we would just use money out of that account as needed, so instead of sending me a wire, etc. everything is just done automatically, so I could collect money from essentially an unlimited amount of accounts to spend on the CPA efforts, and it would all end back up in the investors micropayments account, in real-time, without me ever actually managing anything.
Unfortunately, that last paragraph won’t really make too much sense unless you know what we are really doing, but hopefully you get the point. I honestly haven't looked to hard at the financial instruments.... what I need, in a few months, is access to a lot cash and some folks that can watch the whole thing unfold, so they are confident everything is in order, so when the day comes to really push, there will be no hesitation, and they will throw down big cash.
Personally, I see this as almost no risk on the investors' part, as I don't see any scenario where they can lose money. They only put money in after everything is tested, JUST on CPA... and get it back, with big interest, within a week, to do again if they want, if we go the loan route. And they throttle the amount and shut off at any time. By the same token, the very biggest impact will be at the beginning of the launch, the same way Adsense made a lot of money at first because people weren't desensitized yet. And like I said, within a month after we launch there is a potential to invest several hundred thousand a day, if we wanted to.
So, given we are in a unique situation... in that what was not possible to do 6 months ago, for a bunch of reasons, is now possible thanks to combining several APIs, which did an enormous amount of heavy listing… and that as a Web Strategist/SEO/Social Marketer, with 15 years of self funded entrepreneurial experience, I’ve put myself in a position to capitalize on everything… how do I actually go about pitching this to investors?
My idea was a cash loan with basically no collateral. If I could pitch that concept to a few players: they can wait until the last second to decide, then sample what happens for real, then pour money into it as soon as they were convinced… in return for up to 100% of the cash back plus 100% of the profit…I thought they might actually bite, if they came in now, and had full transparency all along the way, so they were really comfortable.
And if I got a few signed on like that, then I would think there would be a few more that might be interested in the Preferred Stock, or the convertible note, to invest in a few more of my related and symbiotic ideas that will add even more revenue streams into the mix. The big idea marketing-wise is to: pull SE traffic from the web, FB traffic from the app, and then iPhone and Android store traffic, using SEO to ensure traction for the two most obvious verticals in the space. And I think I might need another $75k there, so we are realistically still in the Angel realm at this point.
Then, once we got traction, users, we go for a proper round of funding and I go for my V2 push, which ties everything together.
What do you think? Asking at the last second wont work, and if I ask now, I’m still not sure what I want, or what is ‘common’ in the industry. My ideas usually just work, so I fund myself. This one, though, deserves something more than a bootstrapper can offer…