Wrapping your head around the startup journey
In the UK, approximately 76 startups are set up every hour according to a June 2021 report — more than one per minute. Thousands of ideas are turned into commercial ventures, but not all will succeed. Those of you already on this journey will know that starting a business is hard, and growing a business is even harder.
In a bid to securing the best possible outcomes for your new business venture, your life will be taken over by your startup — at least in the beginning. You’ve committed to pursuing your dream so you will invest the majority of your waking hours to it.
Having personally experienced this from the founder, angel investor and VC perspective, I’ll highlight what to look out for in the first three critical phases of the startup lifecycle.
Phase 1: Founding – be positive and keep moving forward
The decision to stand on your own two feet for the first time has real significance and is often the phase that is the most fun. It’s a time to turn your idea into a business, and it’s both exciting, motivating and a little bit terrifying. The founding phase is one of positivity. You believe you have a unique product or service to offer, that people want to pay for it, and that your brand can dominate the market.
However, be careful not to fall foul of assumptions or misguided enthusiasm at this early stage. You will need as much pushback as you do positive affirmation, and you will probably be wrong (quite a lot), which is fine as long as you learn from it. As your venture grows remember to not just gut-check but get real feedback and help from others.
Don’t underestimate the value of really getting to know your founding team during this early phase. Cohesion matters — a lot — so be open to different perspectives and motivations. At the same time, ultimately someone must be in charge, so don’t suppress leadership in the interests of harmony.
Phase 2: Fundraising – patience is a virtue
Not every fundraising meeting will go perfectly, and they won’t all be successful. In fact, most of them won’t. That’s ok. It takes time to find the right mutual fit.
Fundraising is about telling a story, so be sure you tell yours and get your message across to potential investors. Unfortunately, too many startups that I meet have faltered by not getting the basics right.
Tell the story of how you got here and refer to this throughout your pitch. Don’t deliver a monologue, though. Pause and ask for questions, and remember it’s ok not to have an immediate answer to everything.
Simple things matter too, like page numbers on slides, fonts that render on every computer, and pdf files that can be sent on email.
Then there are the things to avoid. Investors process soundbites, so your storytelling approach is great for the pitch. Don’t assume that you know an investor’s strategy or viewpoint. Don’t cherry-pick market estimates or other data and by all means avoid giving exit scenarios as most VCs won’t think you are serious about creating a long-term entity.
Phase 3: Operating – self-awareness is crucial
Fundraising is stressful, but the hard work really comes once you’ve found financing. Ultimately, the success of any great idea comes down to execution.
In this phase, you’ll likely have achieved some market traction, expanded your team, and introduced a management layer. To the outside world you’ll be smashing it, yet the reality is that pressure can be hitting from multiple angles: growth plans, new hires, board meetings — not to mention trying to find time for family, friends, and life.
How your business runs operationally will be make or break, and these five rules to operating will stand you in good stead for this phase:
- Find out how other companies are dealing with their issues
- Be smart about investing in technology to run your business, for example to automate financial reporting
- Hire the best talent
- Lean on your board, network, and connections. It’s what they are there for and the best advice you get is rarely from yourself
- Be self-aware. Decide what you can be right about and look for people who aren’t afraid to ask the hard questions
I’ve experienced first-hand the challenges — and rewards — of starting your own business. There is so much to learn, yet there are key things that are common.
You can and will need help, so find it early and use it often, whether that’s from advisors, mentors, other founders, or your team. Ask yourself the hard questions: are we doing the right things, the right way? Are we actually as good as we think we are?
Most importantly, remember that you are doing something amazing. Phil Black of Silicon Valley-based venture capital firm True Ventures once said: “If it were easy, everybody would do it.” Celebrate your passion and ambition — but keep your eye on the end goal.