Should I take the investment?

I have an investor willing to invest 1.5M in my startup. My cofounder and I already started to shut the company down and then this offer came through, and I don’t know if I should take it. There’s some considerable background I need to provide.

We started this company fresh out of college and were naive. We had a crazy idea that we thought was cool, but we weren’t solving a particular problem. We had no experience in the industry we were trying to get into but were naive/young and thought that as long as we could raise a seed, it wouldn’t matter.

We raised a modest angel round and spent 2 years building a product that just flat out did not work. I was mostly the public face and fundraiser, and over and over in meetings it became obvious to me that everyone could see right through us. They knew that we were working on a moonshot, we didn’t have the necessary experience, and that we were a “hammer looking for a nail” and didn’t have a solid business plan.

For some perspective, it wasn’t until the last few months of the company’s slow death that we even bothered to speak with players in the industry and who we percevied to be potential customers. And even then, it became clear that their actual problems varied, and had nothing to do with the product we were building.

As we start comitting to shutting down, an investor reached out to us and has been trying to inspire us to keep going with 1.5M because he thinks we have an incredible vision. He thinks that this vision alone is worth investing in, because it is “disruptive” and not just a business trying to capitalize on some hype cycle.

My cofounder wants to take the deal. I’m struggling to justify it. When I ask my cofounder “what problem are you solving” he actually says “I don’t know, but I’m sure we can find one.” Moreover, when I ask him what he would do on day 1, he says I would start building X, where X is essentially a continuation of the work we already did that was not working. I asked him why he would commit to building X when he doesn’t even have a problem he is working on solving, and he said “because I think X is interesting.”

My problem is that it seems insane to take money when you don’t know what the fundamental business is, what problem you are solving, or if X is even capable of solving the problem. My cofounders honest answer as to why he wants to build X is because “if we build X, it will solve some set of problems, but I don’t know what those problems are.”

Part of me thinks the deal is appealing because I can take the money and go back and try to build a company having learned from a lot of mistakes. But taking money without a solid understanding of what the hell I’m trying to even build or solve seems like a mistake in the first place.

Part of me finds myself thinking, “Why don’t I go get a job at another startup or established company, learn some skills and have mentors, and come back in a few years to either this problem or something new being far better equipped to solve problems?”

Am I crazy? Should I take the deal? Does it make sense to take investment without a solid understanding of what product to build?

  • Take the money and pivot.

    Talk to your customers, get feedback from the market. Conceptualize a product that they would pay for. Have a target industry in mind that you want to sell to. Take decisions based on data, facts. Build it and sell it.

    Make sure you create value for your customers. Talk to your investor frankly and tell him this is what you want to do and why you took this decision to pivot. Getting your investor amd co-founder on board with the pivot first before taking the money seems like the right thing to do.

  • I don’t think you’re invested in the future of whatever this is. Maybe you shouldn’t be a part of team moving forward and maybe have different goals moving forward. Maybe they need to find someone else to come in. If the captain isn’t on board it’s doomed from the start. You need to be there for whatever if can be but if you’re not, and that’s ok, you shouldn’t be a part of it. Let someone else have a go at seeing what it can become.

  • Seriously consider taking the money, but be very frugal once you do since you won’t be able to raise any more until you have figured out what to build and how to sell it.

    If you’re fresh out of college you’re not expected to have industry experience. You’re not even expected to know what you’re doing. If you work hard and really learn from your mistakes you can have an absolutely terrific business a year or two from now, and in that case the investor is going to get a great return.

    You’ll be kicking yourself if you don’t pursue this opportunity with all you’ve got.

  • I would take the money, but talk to your possible customers.

    All products need some shaping and that comes from customers.

    After talking with possible customers, then take it back to your investor. Explain your changes to the product is customer driven. The investor should understand. If the product fails then take yhe experience and mob onto your next product. Nobody will fault you for trying. If they do, you don’t want to work for or with them.

  • Understand that part of the reason you are being offered this money is that you have already failed and have an understanding of what not to do.. The fresh out of college you would have never been offered this deal.

    Whether you want to continue is ultimately a personal choice, but i have a feeling you will regret not taking the chance…after all that’s why we pitch.. we want someone to share our vision and give us the chance..

  • There’s nothing worse than having a job you hate. If you don’t love what you’re doing, no amount of investment will inspire passion.

  • Take the money and then go looking for someone to hire that inspires you or you feel has vision! You now have enough money to bring on someone with more expertise than you, give them equity even or make them a partner.

    Getting 1.5 is hard for most starups, and right now you might be taking that for granted.

    The investor must know this is risky, as you said they are giving you money to keep going… That is a dream scenario.

    My suggestion is close the deal with the caveat that you are taking a month off to refresh. Go on a great vacation somewhere cheap, like trek through India or Bali.

    Clear your mind so that when you come back to this you can get excited again. It sounds to me like you are burnt out.

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