Story #6. Common Mistakes New Founders Make in Silicon Valley
Silicon Valley is a dream destination of choice for establishing technology businesses. Many world famous companies such as Meta, Cisco, Google, Adobe, Apple, and other major tech giants have their HQs in Silicon Valley, and they continue to show great results and revenues operating from the region.
But what if you are new to Silicon Valley? It’s ok not to know everything — trust us, Vibranium.VC knows exactly how it is.
We decided to chat with one of our Softlanding Program experts’ investment banker Shawn Flynn about common mistakes new founders make in Silicon Valley.
Shawn Flynn is a Principal at a premier middle-market investment bank with a global presence. Shawn has expertise in mergers and acquisitions, capital markets, financial restructuring, and secondaries. He is the host of the award-winning The Silicon Valley Podcast.
#1 Going to wrong events
Going to the wrong events might be a waste of time. Sometimes founders don’t check who are the attendees, or the topics, they just go “It’s an event — I’m going”. Don’t get me wrong, it’s always great for expanding your network and meeting new people, but what happens is you attend an event, spend an entire day there collecting as many business cards as you can, but none of those business cards result in new partnerships, new customers or potential investors for your company. That entire, precious day and all that energy could be considered almost a waste.
The first thing founders need to know when arriving in Silicon Valley is to be careful with their time. Everything should be strategically planned out: the events you go to, the people you talk to etc. You have a company that you’re here to grow. You are here to fulfill your dream. Make sure that you plan everything out accordingly.
# 2 Not knowing who to connect with
While Silicon Valley is home to many great people wanting to help startups succeed, there are also lots of scammers who take advantage of entrepreneurs. They may promise introductions to investors and other services in exchange for money; however, they often don’t know anyone or provide referrals to shady service providers that won’t be helpful. It’s important for entrepreneurs to do their due diligence and carefully vet any person or provider before making a commitment.
# 3 Coming only to fundraise, forgetting about sales
It’s not uncommon for startups to come to Silicon Valley solely to raise capital. However, this type of approach isn’t always the most effective; if they used those six months to increase their sales and revenue, they’d be in a much better position. Investors are likely to only invest once certain milestones have been reached or a certain amount of money has been made — so it’s important that entrepreneurs track the number of hours spent fundraising vs building the company and generating income. This helps maximize efficiency and ensure productivity with time management.
#4 Not tracking the right metrics
Investors are interested in certain metrics — lifetime value of a customer, cost of acquiring customers etc. But often founders go from one investor to another still not clearly knowing the metrics they need to show and that are crucial for THAT investor. Often entrepreneurs don’t track their monthly metrics to see how things change over time. But this is the KEY. You need to show investors where your company was yesterday, where it is today and where it going to be in foresee future by presenting numbers proving you are heading the right direction and getting more efficient.
Often investors are investing in what they believe is going to happen. And numbers make it more believable by giving support and validation. You might have all the numbers in the world but half of them are not representing any interest to investors. Find out in your sector what are the numbers investors want to see and start tracking them. Even if you are not currently fundraising, or even plan to take outside capital, it’s still good to do your homework and reach out to potential investors and industry leaders and ask them what metrics they want to see, now and let’s say a goal to hit in six months. Your goal is to get better than industry average to impress investors and to run just a better company overall.
#5 Not being adaptable
What works in one country may not be successful when brought to Silicon Valley. It’s essential to tailor materials, such as taglines, to the US market. Translating word for word without making any localization adjustments is likely to leave companies with substantially less success than they had back home.
#6 What got you here won’t get you there
The roles and responsibilities of the CEO and founders are constantly evolving as a company grows and especially if the growth is accelerated by rounds of funding from outside capital. Only a few people can quickly and effectively adapt to these changes, otherwise they become an obstacle for the company’s growth. Investors may bring in other personnel who can help take the company from one point to another; this requires entrepreneurs to be agile learners and adjust their mindset with every development that occurs.
Good luck in Silicon Valley! Everything is possible — always remember that!