One of the events that we attended last week was hosted by one of the largest and most famous startup accelerators / seed stage investment funds in Europe.
Having had time to reflect and think about what we saw and heard, we decided to share our observations. If you are thinking about taking investment, raising a seed round or joining an accelerator program, this advice is for you.
1- Articulate Your Idea.
We were utterly blown away by the number of attendees that we spoke to (or that spoke publicly) that couldn’t even explain what they were trying to do, in plain English.
If you want to get ahead of a significant percentage of the UK startup community (assuming our sample was representative), spend some time working on how you verbalise your idea. Think in terms of opportunity and solution, and make it really, really short. Don’t try to answer potential questions in your initial explanation — just summarise what you want to do and why!
2- Do Some Validation.
Rather than just focussing on building a business around an assumption or a perceived need, go out and talk to some potential customers. Do they need or want what you’re going to build? If not, stop.
If you can demonstrate some traction or potential market interest, you’ll be far ahead of many of the “wantrepreneurs”that are pitching for funding.
3- Look Through The Investment.
Raising capital is not the be-all and end-all of your startup journey, and you certainly don’t want to give the impression that it’s your end goal.
We saw so many young people who were focussed only on raising capital, and much more interested trying to understand how to best fill out the application form than…building a network or a relationship with the investment team.
Focus on the overall goal, and remember that financing is just an enabler along the way.
4- Be Careful.
Taking investors into your business is a marriage of sorts, and certainly a relationship that deserves some serious scrutiny before you dive in.
We would advise that it is just as important for you to determine if the investors are right for you as it is for them to determine if your business is right for them. While a cash injection sounds great at first, think long and hard about who the investors are, whether they have your best interests at heart, how they will help you (over and above finances), how you will deal with issues when you’ve handed over an element of control and ownership and also how you’ll manage valuation expectations in the future.
In summary, do your homework on both your business idea and the investors business, and you’ll be miles ahead of nearly everyone else.
Dunwiley offers business advice, coaching and strategy consulting to startups and small businesses. If you want to know how to grow your business, how to be more profitable or need another perspective, get in touch. We're based in Salisbury, Wiltshire but work in London, Hampshire and surrounding counties.
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