the story of a year and a half marathon for money for a dream

the story of a year and a half marathon for money for a dream

The birth of an idea

After spending several months in total home quarantine during the first wave of COVID-19, I, like many others, faced the challenge of buying groceries. Ordering online is great, but where? Which store to choose? After all, when ordering online, as a rule, you get a lot of products at once, and it would be great to know where it is most profitable to place an order today. Manually checking the prices of all products in the basket is a rather time-consuming task, even if you check on 3-4 networks.

After returning to the office after quarantine, I discussed these thoughts with a colleague. The idea came to create a mobile application that will allow you to choose the right products and find the most favorable offer for the entire basket in one click. This is how the idea of ​​creating a price monitoring service arose.

First money and our first investor

Having experience in software development, my partner and I understood that it would take at least 6 months to create the first working version of a mobile application. For a successful start, we needed 1 million rubles, which includes salaries for two people, the cost of renting a room and equipment for work. After the release of the program, money was needed for advertising, support, bug fixes, functional expansion and the sales department. We didn’t have our own funds for the entire cycle of the program’s release to the market, but we didn’t want to give up on the idea either, because it seemed extremely promising, because it was possible to place ads from product manufacturers and retail chains in the free application for buyers.

Among our acquaintances, there were no people who wanted to invest such an amount in a startup. We decided to contact the management of the company where we worked at that time.

Having told our idea and prospects for its development to the general director, we announced that we would be working on a new project and therefore decided to resign. We also offered to invest in the project and get a 30% share in it (yes, there was some risk in this, because we could have lost our jobs and no money for the project, but we decided to take the risk). Waiting for an answer, two tense days passed. As a result, the management decided to give us the requested money, and also offered to finance the project for 1 year instead of 6 months, with the condition of going on sale in a year. In addition to finances, we got the opportunity to access the office and work on the company’s equipment. But the share that went to the management increased to 50%. And we also had to go for a 30% reduction in our salary, but we were quite satisfied with it, as we received support for a longer period and chances for the successful development of the project!

The wrong turn or how we expanded the service concept

After 5 months of development, the first version of the mobile application was uploaded to Google Play. In it, users could find out information about the prices of only 12,000 products in 5 cities and 300 stores, but our price monitoring service “Cenosaurus” began to be downloaded, and from different regions of the country!

In just a few days, a lot of feedback was received with the following content: “The application is interesting, but my city is not there.” At this point, the approach to the project was revised for the first time. It was decided that it needed to be developed on a national level, because people in different cities were facing problems compared to the prices that we ourselves faced.

Work has begun on expanding the geography of the cities presented in the application. Another 3 months later, when there were already 83 cities in the application, and more than 30,000 products, we were contacted through the application by our first b2b client, who was looking for a tool for monitoring retail prices in retail chains. It turned out that our service is of great interest to companies.

After discussing the new circumstances, it was decided to expand the development towards the business service, which meant that we needed new developers, marketers and sales people, and most importantly – money for all this. And they were needed here and now!

A frantic search for funding sources

In the process of going through all the familiar and not so familiar people, we learned about the Innovation Promotion Fund (FIF), which issues grants for innovative companies. Having understood the aspects of working with the fund and having prepared all the necessary documents in a month, we sent an application for a grant in the amount of 3 million rubles under the Start program. The following month, they participated in a regional exhibition to attract the attention of investors. Unfortunately, we never found them.

Having highlighted our contacts when applying to the FSM, we received an invitation to be selected for the Archipelago 2121 accelerator program, where we could improve our business skills, and in addition, if we made it to the finals, we would have the opportunity to “pitch” in front of investors . So, the whole next month was devoted to participation in this accelerator, during which we had the opportunity to submit another application for the competition from FSI “Start” in parallel, which we did.

At the beginning of the next month, we finally got a response to the first application from the FSI… there was a rejection. But our second application was considered within a day. And this time we received a positive answer – our project was supported by a grant! I will say right away: we saw the money in the account for the fifth month after a positive decision, after all organizational and legal aspects were completed. But it was impossible to sit and just wait for the money to reach us. Our team applied for participation in accelerators from the Internet Initiatives Development Fund (IFID), VTB Bank, Magnit Corporation, and also made it to the finals of the InnoWeek 2.0 innovation forum. In all these platforms, in addition to new experience in building a business, there was an opportunity to “feed” in front of representatives of corporations, venture capital funds, as well as private investors gathered on the final demo day. Unfortunately, we received rejections from VTB and Magnit because our project is not a profile for their corporations. As for FRII, we were able to pass the selection and, among the few teams, successfully completed the accelerator by performing at the demo day.

In parallel with the passage of the accelerator from FIRI, we met with our old acquaintances who moved to live in the USA. During the years of living there, our comrades managed to acquire acquaintances with people for whom the investments we needed were simply nonsense. But we received a refusal from them: “We do not invest in companies operating in Russia.” And this, despite the fact that our company’s plans go beyond the Russian market.

Therefore, the passage of the accelerator from FIRI took another 3 months. We didn’t get an investment there, but we got the first sales and experience of developing a sales and advertising department, as well as information that we would not be interesting to large venture capital funds until we reached a turnover of 1 million dollars. But private investors will already have something to talk about with us, since we have confirmed the success of our business model with the first customers.

What happened next?

During the year and a half of its existence, the project attracted 6 million rubles, 3 from the first investor and 3 from the FSM. In the future, we were faced with the task of finding another 27 million rubles, because our development goals greatly expanded from a simple mobile application to an online price monitoring service for the business community. To solve the task of attracting money, our team applied for the status of a resident of Skolkovo. We also submitted an application for the second stage of the competition from FSI “Start-2”, where the amount of the grant was 7 million rubles. Based on the knowledge gained at the accelerators and the first sales of the service, it was decided to intensify the search for private investors. At that time, due to the increase in prices, the number of downloads of the free application “Cenosaurus” increased by 4 times!

Few summaries

As we were able to find out on our example, there are enough people with money in our country, as well as many different funds, including state ones, that want to invest money as much as startups want to receive it. Most of the funds and clubs of private investors are not listed here, because we ourselves have not yet checked whether it is possible to get money there, because these funds work with grants/investments from 50 million rubles. The most important thing in finding money for a startup is to “dig the ground” in search of opportunities and to be 100% sure of the success of your idea and to prove it to those with whom you communicate, whether it is a scientific commission from an innovation fund, a private investor, an investment manager of a venture fund or even your current employer!

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