Microcosm - 2nd Seedrs crowd-funding round

So, David, do you think that microcosm is in a position now, that it wasn't in at the start, that justifies further investment?

Yeah, in a big way.

The biggest difference is that Matt and I have now worked under the pressures of start-up life together, and can feel the trust and work ethic between us.

Most start-ups fail because the founders make it self-destruct. Co-founder issues make up the largest % of cited reasons for failure from almost every tech incubator and accelerator. We felt confident anyway, but we were untested in these conditions. That we now have no issues or cause for concern between us, that I trust Matt 100% and he trusts me in return, means that we are able to work in the interest of the company and set aside the damaging effect of acting in selfish short-term interest. It's probably the biggest factor. We've obliterated the biggest risk we have, which is ourselves.

Beyond that, when we raised last time we had a vision, an idea, and some notion of how it could be done. We also had LFGSS, and that was about the sum of it.

Today we have proven the concept can be built, we've laid a solid foundation of the technical platform, we've built a good network around us of other founders and advisors, we've got a customer pipeline and are doing CRM for almost our communications.

We've taken just over half of the original funding and done all that... to have launched the prototype, to have customers on-board or lined up, to have people actively providing feedback, to be hiring.

That is a hell of a lot on a very small amount of seed investment.

What we have not achieved on the original investment, and what we are looking to achieve on this round of investment, is the product to market fit.

One of the VCs we spoke to, Rob Kniaz of Hoxton Ventures, gave some great advice to us. He wanted us to focus on getting that product to market proof by showing that we can attract and migrate users of a given forum software to us. His view is that you need to be 10x cheaper and 10x better, and that whilst cheaper was easy to prove, better is harder... that an indicator of that is when a forum using something like vBulletin or Vanilla, and that isn't already known to us, chooses to migrate to us, then we can have an increased certainty that we are hitting the 10x better thing.

We had this choice to go for VC funding with what we have, and attempt to start selling a prototype and iterate to a better product whilst trying to grow... to grab at, but potentially screw up, some of the opportunities that opened to us... or to go for further seed funding and attempt to conclusively prove the product to market fit whilst spending very little, and then push for VC money once we have traction. We are basically doing the latter.

If we are brutal with ourselves (and we are, vanity metrics and ego aren't things that help us succeed), then we know that the opportunities we have are not as strong as we could hope them to be, because even though we've done so well so far we've not yet conclusively proven the market. If we had proven the market, then the opportunities we have would have converted to customers already. But seriously... the product is nice, but it's under-featured, the product looks beautiful, but it's clunky to use, the product works great on mobile, but site admins cannot manage permissions or fight spam.

We've done a hell of a lot with very little money and very little time, and we have increased the value of the company greatly in the process and built a solid start to things. But we're not kidding ourselves, we've got a lot more to do before we can say we've got a sure thing, a hell of a lot more to do. We have dramatically improved our position, and we're in a really great place that many other founders are envious of... our goal for this next year is to get that product to market fit nailed.

To answer the question, are we in a position now that we weren't at that start, that justifies further investment?

Yes, I believe we are.

When you invested before, the risk associated to your investment was very high that we were going to fuck it up. The default state of any startup remains death, and it takes a lot to bring a company into the world that has a good chance of living and making a return. Now, with the progress we've made the risk to your investment has moved away from very high and is now just high... when we've nailed the product to market fit we hope for the risk to be so-so, and after that comes the maniacal laughing and nervous giggling.

We are in a great place, but we need to get this market proof done, the product more fully fleshed out, and for that we need to go a bit longer without revenue, and need the extra hands helping us with the development. That's ultimately what the investment is for, to improve the odds even further, to create higher value sooner.