Got initial traction, how do I know that it's “enough” to pursue investors?

The first question is easy:

1. Do you have actual paying customers?
2. Do you have an actual revenue stream?
3. Do you have a plan on how to grow it?

Those aren't really "quantity" questions. A simple "yes/no" works. If Yes, then it sounds like your ready.

That said, one thing an investor is going to want to see is your proforma. Basically, take the next 12 to 36 months (I know, some of this is BS) and try to accurately describe what your growth curve will be. Be completely honest here; it's too your advantage. If you've already been putting money in it, then include the past as well.

In particular, if you suddenly acquire $X dollars, what do you do with it? How does that money grow the business? At the end of say 3 years, how much would that money be worth? What kind of exit strategy do you have for them? In other words, how soon could they expect to make their money back plus extra?

Regarding the second one, I'd say your first order of business is to acquire "friends and family" funding. It doesn't matter if it's $5,000 each or whatever. Just try and get others that you may know to hand you cash. Include this on your proforma along with how it was/is used.

Basically, people don't like being the first in because there's a tremendous amount of risk involved. Not just with the idea, but rather with you personally. So going straight to Angels might be a hard one to get going. However, if you can show that others have invested and that you've used their money properly then Angels are more likely to trust you with even larger sums.

Once you have your friends and family, along with the press, make the site look sexy. Then ask those friends and family if they know anyone with deeper pockets. Go talk to them, be prepared for hard questions though.

Recently, we went after some Angel money. It was a small amount: $500k. However, during the process I ran into a lot of sharks with crazy ideas that would ultimately kill my business. Finally, I approached some friends (people I've done business with before) and after a real look at what I needed, they put $75k together (on a convertible note with very good terms for my company). That amount was actually just exactly what I needed, and no more, as it helped me to close another $400k in sales.

Regarding your "studying". At some point you're going to have to make a decision. I'm not sure how far out you are from your degree but you really need to decide if you are going to hit this fulltime or if you want to get a degree first. Starting a business leaves zero room for much else. Investors are going to see this as additional risk. For example, if something is going wrong are you willing to skip a final exam (thereby tanking your grades) in order to fix it or are you going to potentially kill the business by ignoring the problem for a few hours?

Look at it from their point of view.

Good luck!

The first thing investors will want to see if you working full time of your idea, if you can't commit fully to it, nor will they.

Your next problem is that you are providing a free service. Investors will say "show us some revenue generation". They will want to see you converting some % of free users to paid users and your total number of users increasing sharply.

Your particular field is an extremely competitive and fairly well established now. The likes of box.net and dropbox have massive growth and investments that put them in the order of a billion USD valuations. You need to explain to investors how you are unique over them and how you'll achieve a growth rate higher than them (investors don't like cheap clones that don't perform).

You're also up against the likes of Google, who can happily give storage away for free, since it is part of their long term strategy to move all of your applications and storage to the web. The investors would question what your strategy is against companies who can give away for free what you would need to charge for.

Another issue will be barrier to market. You seem to have written a front-end to a cloud providers storage facilities. I could do the technical basics of dragging and dropping files into a modern browser and storage them in S3, using Amazon's user auth in probably 3-4 hours, though I have considerable experience with Amazon Web Services. I could hire a web designer to create the site and hire some marketing people to spread the word. That to me, is a low barrier to entry, which the investors don't like.

You would need to persuade them that there are some unique elements to your offering that are hard to re-create, thus increasing the barrier to entry.

You seem to have terms of services that effectively say "we might lose all of your data, if we do, tough luck". Obviously, you cannot say this to any serious users or have investors say this. You need to have researched the liability of your cloud storage provider, obtained legal advice as to how you can limit your liability across different geographical regions.

There's a number of details like this investors will expect you to have looked at. For example, Dropbox is a front-end to Amazon's S3. Dropbox will have negotiated some deal with Amazon to get their storage cheaper because of the quantity they use. If your base cost per GB is double theirs, investors will want to see you having a plan to reduce that cost. You would need to have, at least, gotten to a storage volume where you're able to be big enough to talk to your storage provider and gained some discount, regardless of how trivial it is.

I could probably list 30+ more issues to address. The point is, you need to have thought about this in great detail as to exactly what their concerns will be and describe your plans to mitigate these issues in a detailed business plan.

It's a tough market, but I wish you luck in your venture.

Short answer: if you are growing at leats 20% per month, then investors will listen. This number was given by AngelList and I think it's a pretty good metric.