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?