Why is raising pre-launch often easier?
Investors love traction. Even at the early seed stage, almost every investor has “traction” near the top of their list for what they look for in an investment. And for good reason! Even with a great founder, a plausible idea in a big market, and a team to execute on the vision, there is a lot risk that nobody actually wants what the founders are building. A “launched” product with some early growth is considerably less risky than a pre-launch product. Entrepreneurs have heard the call for “traction” many times and naturally assume it is always better to launch before trying to raise VC or angel money.
There are two problems with this assumption. First, launching isn’t the only way to get traction. Second, and more importantly, there are real risks involved in waiting to raise money until after your product is fully launched. In reality, there are two types of companies
- Companies that
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