Raising funding for startups in Silicon Valley is a low probability game. Fewer than 1% who try actually succeed.
Outside the Valley, the startup eco-systems are mostly immature, and the probability gets even lower.
The bar to raise seed funding is getting higher and higher. Seed investors are mostly operating as growth investors, expecting that the entrepreneur will somehow manage to bridge the gap and bring a concept to realization. In fact, what these investors really want is to invest in businesses that have traction, not just validation.
In short, they want to come to the rescue of victory.
As an entrepreneur, how do you go from concept to traction? How do you bridge the seed capital gap? What do you do if you are full of dreams, but stuck in the gap between concept and seed?
Offering a service is one of the best ways to bootstrap.
This remains a controversial point of view. Most industry observers take the position that companies get distracted if they try to bootstrap a product with a service. But from where I sit, bootstrapping products with services is a tried and true method.
In our incubation methodology, we actively encourage entrepreneurs to engage in services businesses. In particular, we encourage them to immerse themselves with customers, learn their problems, and do some services projects that not only generate cash, but also generate customer intimacy and trust. Through these kinds of dialogues, entrepreneurs diagnose real pain-points in customers, and end up building products that customers are willing to pay for.