You can ask most entrepreneurs (well, at least those who start with no financial means): looking for financing is not an easy job, even when you have a great idea!

How did we manage to gather the initial investment for HouseTrip? First of all I think it is a question of speaking about the project and your need of financing to as many people around you as you can: the fear that an idea might be « stolen » if you do so is largely overrated and, in our humble view, should not restrain you. There is simply no coherent reason for it to happen: it would make the « thief » compete 100% with you on an idea you have ruminating in your mind for much longer than him/her… The only risk would be that the idea reaches another start-up or a company in the same field as yours but they would still have to decide to run with your idea (or part of it) and therefore eventually change theirs… Unlikely.

When a project is at the idea level, the amount of available options for financing is almost only limited to the « FFF » (friends, family and fools) and a few business angels: no established investor (venture capitalists, etc.) would take the risk to invest in a concept still not somehow tested by the market, or they would do so at a valuation that is simply not worth enough for you.

The most useful tool to gather investors is the business plan (BP): it might not seem very original to say so but BPs are a must for many reasons. In addition to describing your venture to potential investors (and any other person interested in the project), a BP also helps clarify the idea to yourself: never the HouseTrip idea got challenged as much as during the BP’s redaction, and it got greatly strengthened that way. A well-structured BP is a really powerful tool: indeed, we would argue that all the good things that happened to HouseTrip (gathering the investment, Stephan joining the team, our prizes, etc.) did so thanks to our well-done BP. To complement it, we would also add that you need to do a great PPT presentation that you can pull out whenever you need to present your project (which is more or less all the time when you look for financing!).

Another very important question the BP helps you answer is: how much do you need? A lot of entrepreneurs are tempted to raise too much: they often fail to realize that since a – successful – company’s valuation always goes upward (at least at the seed level), the later you raise money (when you really can’t do without anymore), the better. For HouseTrip, we decided to firstly raise the amount necessary for building the first release of the website (and covering other necessary early costs): only when that release will be built and the market will have confirmed the viability of the concept (hopefully ) will we raise more, because the valuation will be much more attractive for us at that stage.

Another fantastic “instrument” to attract investment is to secure an influential investor in your own particular field/industry: one who other potential investors would know and be impressed by. We were lucky to do so at an early stage: even before winning our prizes we had convinced our first investor, a great milestone in HouseTrip’s short history and one which ultimately lead to our ability to convince further investors!

To conclude on this post, an entrepreneur needs to be very convinced about his concept (for it, the BP is a great tool) and its future success: then he can have the necessary confidence to speak about it (as much as he can) and to recruit investors.