The joys of the startup world! I’ve been in and out of it for over 20 years. In that time I’ve witnessed overnight unicorns, stupendous disasters, high value exits and countless other stories of great success and crushing failure. Imagine building a company and developing a product for over a year, employing over 70 people only to find days before launch funds dry up and the product never saw the light of day. Or turning over £5000 a month with your business on the verge of collapse only 6 months later to be valued over £200M?
The world of startups is often a violent pendulum of highs and lows. But there are ways that you can start strong, some of which I go into here.
Attracting investors is crucial for securing funding and taking your business to the next level. While investors are always on the lookout for innovative ideas and disruptive technologies, they are equally interested in entrepreneurs who demonstrate clever strategies to propel their startups to success. I’ll explore proven tactics that can help you wow investors, backed by real-world examples of small startups that have hit the big time with their ingenious approaches. The landscape has become harder over the past year or two – by implementing strong foundational strategies you will be able to hopefully make your own luck!
A compelling and well-defined value proposition is key to capturing investors’ attention. By clearly articulating how your startup solves a pressing problem or offers a unique solution, you can make a strong case for its potential success. For instance, Airbnb differentiated itself from traditional accommodation providers by leveraging the sharing economy, allowing homeowners to rent out their spaces to travelers. This innovative approach disrupted the hospitality industry and led to their massive growth and investor interest. Want help building out your value proposition? Get in touch and I’ll run a workshop.
Investors want to see that your startup has a viable and scalable business model. Demonstrate how your company plans to generate revenue, acquire and retain customers, and achieve profitability. Stripe, a payments technology company, wowed investors with its simple and developer-friendly approach. By providing a seamless integration process for online businesses, Stripe rapidly gained traction and secured funding from top investors, propelling its valuation to over $95 billion in 2021. Make sure you’re in your data – know the LTV (Lifetime value) of your customers and be prepared to talk about it.
Investors recognise the importance of a capable and motivated team in driving startup success. This has become an integral part of their due diligence nowadays and I’ve often seen investors bring in seasoned product and engineering consultants to gauge the expert level of the initial hires and team. Highlight the expertise and experience of your team members, emphasising their ability to execute your business plan. WhatsApp caught the attention of investors due to its founders’ deep technical knowledge and entrepreneurial track record. This led to its acquisition by Meta for a staggering $19 billion.
A strong user base and early traction can be compelling evidence of your startup’s potential. Show investors that your product or service has gained significant interest and adoption from customers. Snapchat, a multimedia messaging app, attracted investors with its rapid growth in user engagement and popularity among younger demographics. This traction convinced investors of its potential to disrupt the social media landscape, resulting in substantial funding rounds.
Investors are looking for startups that have a well-defined plan for scaling their operations and achieving long-term success. Present a clear growth strategy that includes actionable steps, such as expanding into new markets, forging strategic partnerships, or introducing innovative features. Spotify, the music streaming service, captivated investors by its strategic approach of using freemium pricing to attract users and then converting them to premium subscribers. This approach played a pivotal role in Spotify’s global expansion and successful IPO.
I’ll produce a series of posts that go deeper into trying to minimise risk when embarking with your startup idea but thought I’d share some common themes that have come up over the years.
Your MVP won’t cut it. Customer expectations with products are incredibly high nowadays. Couple that with an attention span of seconds and you’re already dead in the water with your clunky ‘MVP’. Instead, go out guns blazing with something that impresses from the get go.
Cut corners early and you’ll pay dearly. The amount of times I’ve seen founders try to bootstrap their projects with cheap as chips hires that cannot execute or deliver. This isn’t running lean it is being stupid. Find rockstars that believe in your journey and can deliver sublime product, engineering or strategies.
Trust the process. Product practitioners understand things like market sizing, user testing and usability sessions. They also often have far more business acumen than the founders who’ve dreamt up the brilliant idea. Listen to your product strategists. Look at the data. And decide if this is really going to work.
Pivot. Don’t spend a year ignoring your data. If signs are there that a different or surprising direction may lead to growth or traction then make that decision quickly and validate it. Spend too long and you’ll be chasing money and simulatenously unable to iterate your product.
Empower, be kind, be smart. The people you hire will make or break your startup. Those that believe in it and can execute should be afforded every grace you can. Those that have little interest can be let go. Go out of your way to ensure your rockstars are well looked after.
