- Suppose you are starting a SaaS business,
let's just say you and I are starting a SaaS business.
And now we're wondering, "Okay, how do we fund this thing?
"Do we go raise money, do we bootstrap it,
"do we do friends and family, do we do a pre-seed to seed?
Do we try to go for a series A
because we're experienced founders."
There's a plethora of options for fundraising today,
but there's a specific set of steps to follow
if you are starting a SaaS business today
and you wanna fundraise the right way.
So in this video, I'm gonna walk you through my principles.
Intro.
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What's up everybody?
Welcome to Unstoppable, on this channel,
I help SaaS are founders like you,
navigate the path to product market fit,
navigate the path to the next stage of growth.
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it's really awesome to have you here.
Okay, so in this video, I'm gonna walk you through
the three principles that I would follow
if I were to start a SaaS business today
and how would you go about fundraising.
Now, as a startup founder, there's more options available
to you than ever before, when it comes to fundraising,
to help fund the start of your SaaS business.
However, there's actually still
a specific set of steps to follow.
And raising money as the first step is never a good idea.
So let's dig into the three steps that I would follow
knowing everything that I know about building and scaling
SaaS businesses, both from the ToutApp journey,
and the Marketo journey, very different SaaS businesses.
So we wanna go to number one, smash that like button,
and let's dig in.
Number one is, before you even think about fundraising,
before you talk to an investor.
Number one, needless to say, is define your idea.
And by the way, notice that I said define your idea,
don't start coding.
This is one of the core principles that I teach
inside of my SaaS School, where I help founders validate
their idea and actually get their first ten customers.
Now you wanna actually define your idea
in a very specific way.
You wanna figure out what your ideal customer is?
And also, what your total addressable market is.
If you wanna figure out your total addressable market,
I did an entire video on this.
It's one of my most popular videos,
you can check it out here.
I'll link to it below.
But you wanna watch this first.
And number one is, how do you actually define your idea?
Alright, go in and actually flesh out
what is your ideal customer?
What is your TAM?
What is the core idea?
What does it mean?
And most importantly,
is it actually a real problem to be solved?
Now, how do you answer that part?
That brings me to step number two.
Step number two is once you've defined your idea,
you need to actually validate your idea.
You need to actually go in and figure out
these two important things, you really need to validate,
about your idea.
And that is whether it's urgent, and whether it's important.
Urgent and important for this group of people,
this ICP that you are going after.
If you got an idea that is important, but not urgent,
people won't pay.
If it's important, but it's not urgent,
people won't pay attention.
So you wanna target ideas and problems
that are urgent and important,
and you'll be able to validate.
Now, those are the first two steps, okay?
Let's pause here for a second before I go to the third step,
which is really about fundraising,
and how to approach this the right way.
Now two things, one, if you really wanna dig
into how do you actually define your idea?
How do you validate your idea?
I have a 10-point SaaS checklist, completely free,
you can check out the link below.
I'll tell you more about it at the end of this video.
More importantly, the reason I'm having you spend
so much time in really defining it and validating it,
is because of one thing.
When you really wanna understand is do you have a problem
that you're solving that is important and urgent
for a very large group of people?
Cause the biggest thing you wanna figure out
before you get in front of an investor,
before you pitch them on anything is understanding,
do you have a venture scale idea?
And here's the thing, there is an immense amount
of opportunities that exist in SaaS today.
You can check out this video
where I talk about SaaS opportunities and ideas
for the next five years.
You can check it out, I'll link to it below as well,
you don't have to switch right now.
The real thing you wanna figure out
is there's so many great ideas for SaaS businesses,
not all of them are venture scale.
And while it's true that there's more venture capital money
available today than ever before, even for SaaS,
the truth is, the bar for venture scale idea,
the bar for getting funded is higher than ever.
Which is why you really wanna do the work
to identify if you have a important and urgent idea.
And you wanna do the work to validate your idea.
You wanna do the work to understand whether
you have a venture scale idea or not.
Are you starting to get this?
If you are starting to get this,
let me just get a yes in the comments below.
Also smash that like button.
Both of them are fine, it'd be awesome.
It means the world to us and tells YouTube
that we're creating valuable content
and that's how our channel grows.
And that's what we want.
We wanna help as many SaaS founders like you as possible.
Now let's move on to number three.
Once you've done those two steps,
and let's just say you've defined your idea,
you've actually validated it.
And you have a venture scale idea.
This is the next thing that I would figure out
when it comes to fundraising.
What I would figure out is, do I wanna go raise on promise?
Or do I wanna go raise on numbers?
This is one of the most important decisions
you as a startup founder will have to make
when it comes to fundraising.
Now, what does this mean?
Raising on promise, that pitch is very different
than raising on numbers.
Now, if you're raising on promise, basically,
you get in front of an investor and you say,
"Hey, we have this incredible idea.
"Here's my track record on ideas."
If you have a track record.
"Here's how I've thought about the idea.
Here's how I've validated idea.
"Now, there's a lot more work to do.
"We gotta build it.
"We gotta go build our go-to-market machine.
"We gotta get revenues going, but it's gonna be awesome.
"We wanna raise some money."
That's what you call raising on promise.
And raising on promise when done at the right time
with the right scale idea is the best way to fundraise.
Because you might be in for a long haul
to actually get to your proof point.
So raising before that, raising on promise
is a very powerful way to cash in on the money
and use that money to really, really take your time
to vet out the idea.
Now, it used to be that raising on promise
used to just only be available for founders
with prior experience, prior wins.
But these days, there are actual pre-seed funds.
So you have seed rounds, you have series A,
you have Series B,
but now there's pre-seed and because you've got pre-seed,
these funds are all about getting in super early.
When you've got barely a product, barely any revenues,
usually no revenues, and they wanna bet
on really interesting entrepreneurs.
So you actually have an opportunity to pitch these funds
and raise money on promise.
This principle on raising on promise versus numbers
will exist in different inflection points in your business,
but it's particularly true when you're just starting out.
Now you might be asking,
"Okay, TK, well, why wouldn't you always raise on promise?
That's a great question.
The reason is, it can be very dilutive.
You can give away a big chunk of your company
because you're raising on so much promise,
there's barely anything there.
The price of the stock that you sell to the investors
could be really high
and you'll lose a good chunk of your company.
The alternative is to raise on numbers.
What does that mean?
Raising numbers means, not only do you validate the idea,
you go in and define your idea,
then you actually write code, then you validate it
with an unstoppable sales funnel,
we teach that in the program.
And then you start to generate some revenues.
Once you start generating some revenues,
and let's just say you've got a really humming machine,
you went through your friends and family,
you started to getting a lot of customers signing up
and saying, "Oh, my God, I need this."
Then you can go in and say,
"Hey, I wanna raise on numbers."
And what that means is like, "Look, we're barely anything.
"We've been able to validate the idea,
"get a product together with our team,
"and we're starting to sell it.
"Can you just imagine what's gonna happen with these numbers
"say six months from now or a year from now?
"This is why we're raising,
we're raising so we can hire some more engineers,
"we're raising so we can hire more salespeople."
That's when you're raising on numbers.
And the thing is, because you're raising on existing numbers
and proof points, your valuation can be better,
you can raise at a better term.
Maybe you don't need to go the pre-seed route,
you can actually go raise a seed round.
I've seen entrepreneurs that just go out
and raise a series A, cause they're just,
have so much of a track record
and they've validated certain things.
So then you're going in and saying,
"Look, this is not as risky as some of these other things.
"We're starting to see the numbers."
And you go and raise that.
This is one of those things
that you have to kind of navigate as a startup founder.
Do you do this now and raise on promise?
Or do you have enough conviction around your ideas
or enough proof points, you have enough of a framework
to follow and start generating some revenues.
And based on that you say,
"I wanna raise an even bigger round,
"I wanna raise at a better valuation."
And that's one of the calls that you can make.
So if I were to start a SaaS business today,
what I would do is, I would really define the idea,
get super specific about the ICP and the TAM.
I'll include the TAM video down below.
I also have an ICP video,
I'll include that down below as well.
You can check that out.
Then I would validate the idea.
This is a very specific process that I teach
inside of my SaaS School.
Then I would figure out if this is a venture scale idea.
And then I would figure out okay,
based on everything that I have, do I just wanna go generate
some revenues first?
Or do I wanna go raise on promise right now?
Now, you might be wondering,
"Well, how do I go raise on promise?
"Or how do I go raise on numbers?"
I've an entire playlist on how to actually raise capital,
whether it's through angel investors or through a fund,
you can check that out here, it tells you how to create
a pitch deck, how to actually find
the right angel investors.
I'll link to it below as well.
So those are a bunch of resources,
you can watch some more videos, as you dig into
each of these parts that I mentioned.
Now, if you are building out a SaaS business,
you're in those early stages.
One thing I would encourage you to do
is download my 10-point SaaS checklist.
My 10-point SaaS checklist actually has specific questions
that you need to answer to do some of these parts,
to actually validate your ICP, to actually define your ICP,
to figure out if this is urgent and important.
So I encourage you to actually download that.
You can go to TKKADER.COM/SAAS-CHECKLIST,
and you can download that checklist.
It's super easy, and you can start to answer some questions.
I also run a training every week
to help you go through that checklist.
So you can check that out as well.
And you can check out all the videos below.
So now you know how to actually
go about funding your initial SaaS idea.
How to figure out whether you have a venture skill idea
or not and a bunch of more resources.
You can go check all of those things out
by following the links below.
You might be thinking, "Wow, that's a lot.
"Where do I start?"
If there's one thing to start, go download my SaaS checklist
because once you do that, it really helps you understand
the full breadth of it and all the other resources
are linked from there, all right?
Awesome, so if you got value from this video,
please smash that like button if you are new to our channel,
I drop a video like this every Sunday, Wednesday and Friday.
So be sure to hit that subscribe button and that bell icon.
If you've got a friend who's also building a SaaS business
or team member who's in it with you,
be sure to share this video, it'd mean the world to us.
And lastly remember, everyone needs a strategy
for their life and their business, but when you are with us,
yours is gonna be unstoppable.
I'm TK and I'll see you in the next video.
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