How to Raise Money When You Have Only an Idea: Advice from MotherKnows CEO Hesky Kutscher (Page 1 of 2)
What makes this interesting -- for entrepreneurs, anyway -- is not the amount of money; there are certainly bigger deals out there. No, the interesting part is that Hesky Kutscher and Greg Goff, who co-founded MotherKnows in late 2010, got this very tangible vote of confidence on little more than an idea.
But, as Kutscher is quick to point out, it isn't your idea that counts; it's how well you sell that idea.
Tip #1: First, find the right problem.
"The most important thing is not the idea," Kutscher says. "It's finding an interesting problem in an interesting space."
The MotherKnows idea is powerful largely because it's so easy to understand: Give parents 24-hour access to their children's health records.
"We hope to give parents the ability to pull up their child’s entire medical history whenever they want," says Kutscher, "which is sure to make for added efficiency when it comes to doctor’s visits, emergency care, insurance conversations – and yes, those dreaded registrations.”
Tip #2: Next, find the right people to validate the opportunity.
"You need to find people who know the space," says Kutscher. "I'll do that, and ask them to tell me why I'm completely out of my mind.
"For business justification, I talked with people who worked in subscription businesses, and people in the parenting space. I was able to find people who understood the space, whether they worked at an e-commerce site, or a doctor's office, or maybe they were parents trying to cope.
"What they told me is, 'We don't know if it will work, but we don't think you're crazy.'"
Tip #3: Hustle, hustle, hustle.
"You need to speak to potential investors to find out what would be their objections," Kutscher says.
"Most of it is just hustle, hustle, hustle. Go to industry events where you think investors will be, talk to them, tell them your idea.
"If they won't talk to you, you should think twice about being an entrepreneur. Maybe you should find another line of work."
Tip #4: Then, find the right people to build the solution.
"My partner came from Baby Center," Kutscher says. "We were competitive in my last venture -- High Gear Media -- and I learned he was head of marketing at Baby Center. He clearly knew something that I didn't.
"You need the right team to go attack the problem you've identified. The best team is young and hungry, with a mix of the old and experienced. I'm now in the latter group. But you want to find a team that has a mix of hunger and expertise."
Tip #5: Nowadays, some things are much cheaper.
"$1.7 million is the smallest round I've ever raised in the last 12 years," says Kutscher.
"Well, I guess that's not completely true; when I started DailyShopper I was 26 years old. I went to friends and family, and started that with $100,000."
A little history here: DailyShopper.com became ShopLocal after a merger, and then was acquired by Tribune and Gannett in 2004. In 2007, Kutscher founded High Gear Media, a large network of automotive sites and blogs.
Today's environment is cheaper for startups, Kutscher says: "1999 was a lot more expensive than today, because back then you needed servers and other things that Amazon now provides. Amazon allows us to do things far cheaper than before. I'd say you'll be spending 30 to 40 percent less."