Today I’m going to answer a question from Ahmed, the cofounder of an e-commerce startup. His question is…
How do I convince investors and raise funds without a CTO?
Before answering this question, let’s add a bit of context.
Ahmed is working with a freelancer to develop his e-commerce solution. He wants to raise funds to help the business grow. But investors don’t consider his project because he doesn’t have a technical cofounder.
Building a tech startup indeed requires a lot of technical development. And if you don’t have the technical skills yourself, it’s difficult to rely on providers to control what is being developed and above all, to really understand if it’s relevant for your startup or not.
To help Ahmed move forward, let’s analyze the situation.
An investor is someone who wants to avoid risks. So, let’s talk about the 10 risks investors have when it comes to investing in a tech startup without CTO.
10 Risks investors have
- Underestimating tech challenges
- Prioritizing without considering the technical complexities
- Not being used to manage developers
- Mismanaging providers
- Not choosing the right technologies
- Being mislead by a provider
- Not being able to recruit new developers rapidly for the growth
- Having a non-scalable solution and not knowing how to improve it
- Dependence on only one developer
- Not being able to identify technological opportunities
The first one is to give money to someone who is not aware of the tech challenges. Then, the founder might not correctly consider the technical complexities in the prioritization. He might also not be used to managing developers, or might be mismanaging providers as well as not choosing the right technologies. Or he might even be mislead by a provider.
He might not also be able to rapidly recruit new developers as the startup grows. Another pitfall to avoid is to having a non-scalable solution and not knowing how to improve it. Or simply being dependent on only one developer. And finally, not being able to identify technological opportunities.
That’s a lot, right?
And that’s why investors, incubators, startup accelerators or grant organizations are much harder to crack (to convince) without a CTO.
They just make their decision out of real startup experience.
So, seriously take these risks into consideration. And more than just being able to raise funds, what’s important is to be an efficient tech manager for the well-being of the business.
And here is what investors are looking for to prove just that.
What investors are looking for
1. Finding full-stack developer willing to join the venture
The first option that I see time and time again is when founders convince developers to work for equity. In fact, in this case, the risks are still very high since the founder and the developer often end up misunderstanding each other which unfortunately, leads to a conflict.
So with this option, you have to be 100% transparent with your developer and excel at tech management. It’s an option worth looking into because you might get a first draft in just a few months. This can definitely help you raise funds. These days, investors are much more impressed by the team than by a first product. But still, having some achievements can help.
2. Having one or two CTO advisors
The second option which I highly recommend if you do not have a technical cofounder, is to have someone able to provide you an expert and objective guidance for your startup. Someone who has worked with lots of startups. Someone that will just be paid for his guidance and not out of the decisions to be made.
Avoid CTOs that have developers to feed or that are willing to redirect you to one technology over another, just because they are better at it.
Then once you have the right person, the next step for you will be to shape your roadmap. That will be the backbone of your project, showing what technologies you will use from the prototyping phase to the growth stage.
To help you to get to there, you have, of course, my Technical Plan Template that helps you present the roadmap and convince incubators or investors.
In a few words, the goal of this template is to gather:
Technical plan template
- The project’s secret sauce
- The project’s vision & ecosystem
- The customer experience
- The roadmap
- The budget & required resources
- The innovative technologies to be used
So to conclude, if you do not have a technical cofounder or a CTO, the best option to establish your tech company the safe way is to find someone you can count on—whether a provider or a consultant—to guide you towards the right technologies, developers and providers, and help you build your roadmap to show investors.
And if like Ahmed, you have a specific question for your project, just go ahead and ask on myctofriend.co/ask. I will do my best to answer your question in a video or redirect you to any existing content that will answer it.
Also, be sure to go through our other content here at myctofriend.co to learn more from real startup growth experiences and better manage your startup development.
I’ll be waiting for your questions, and I look forward to seeing you in other videos.