In case you haven’t notice, the lockdowns have led to an uptick in entrepreneurship and as many newly-minted founders are discovering, starting a business is easy. Building one, not so much. Instead of ‘startups,’ we prefer to call them ‘newcos,’ as you’re building a new company, and a company is about doing business. Startup? You start up a car, you’re off to the races. Or to the grocery store or wherever, provided that you’ve maintained the car, it’s charged or filled with gas, etc. Eventually you will have to get it serviced, and if something goes wrong, you call in a specialist. In tech, they’re called mentors/advisors/consultants. Like the mechanic, they do expect to be compensated for their time and expertise. Like a mechanic, they may do a free assessment. But if you need some work done, well, you have to pay them. Otherwise your vehicle won’t…startup.

 

A few points that you also need to know:

1. If you need funding, you’ll need an investor deck. Problem, Your Solution, Market Size (not simply total market – obtainable market as well); Differentiators, Competition, Business Model, Financial Projections, Team – and not necessarily in that order. Traction? Sales? If you’ve got them, add them.

2. Do the numbers work? Do you have a go to market strategy? You may well need a marketing person – and a salesperson and they’re not necessarily the same person. Many founders plead hardship/poverty, as their focus is on the tech and paying the developers. That’s important, but who and what’s going to get you into the market? You can have the best tech in the world, but if no one knows about it… Did you hear that tree that just fell in the rainforest? The sound was deafening, but no one was there to put it on the public’s radar.  Hope you at least heard that…

3. No investor is going to write a check on the spot, of after just one meeting, so no need to have your bank’s routing number with you at the meeting. They’re going to do their diligence. (You need to do yours, too, by the way.) The process usually takes months. Three to six, minimum.

Do You Really Understand What a Pitch Deck Is?

Having worked with founders for quite some time, and having looked at/reviewed decks ad nauseam, we will tell you the biggest mistake many a founder makes, (and why we always start with a deck review, despite the fact that many founders believe that their pitch deck is very close to perfect and may need a few tweaks and why pay for a deck review) is that they don’t know the difference between an investor pitch deck, and a product/marketing deck. So let’s just spell it out:

Say you’re introducing a Barbie doll competitor. Good luck with that one, but you absolutely believe that Barbie needs to be disrupted, and you’ve got the doll to do it. You take it to a buyer for a major retail chain and tell him/her (excitedly) about how your doll is going to knock Barbie right off her pedestal – and the shelves. Note to self: Barbie is still a big seller, and no matter how many adjectives you add to extol the virtues of your doll, good luck getting any shelf space.

You developed the doll for your three-year-old, who just can’t put it down. The buyer asked, “does your child own a Barbie doll as well?” Answer: no. So the buyer has no idea how your doll stacks up against the competition. (Which is known as the competitive slide, btw.) It doesn’t matter how beautifully constructed your product deck is, next.

Suppose you went to that same corporate buyer with the doll and told him/her that you started selling your doll online – and sold over $1M+ in inventory in three hours. You also have an even larger back order – and growing. You have found a manufacturer who can produce them quickly – and you will not only give the chain an exclusive (initially), if they’re interested: you will promote the store on your site. Houston, we’ve (very possible) got liftoff!

You’ve demonstrated proof of concept, traction, sales. You’ve checked the boxes that buyers – and investors – look for. It’s not about the doll: it’s about the bottom line/ROI. And keep in mind that there are a ton of products competing for that shelf space/investor’s time and money.

This is tech, and as is often the case in tech, when it comes to investors, if they’re investing in you, you are the product. That’s why you will always hear that the team is important.

Why Most ‘Startup’ Fail

Starting up is easy, and most startups fail for various reasons, some of which are here in the Harvard Business Review. Startups outlines The 13 Top Reasons Why Startups Fail. But we believe that we all might have missed something and part of it is that word ‘startup,’ as it may be puting the idea in founders’ heads that they’re somehow part of some entrepreneurial experiment, rather than building an actual company from the onset.

 

Which may well explain why many of them never get out of first gear. Onward and forward.