Less Not More: The Case for Maintaining Agility in Seed-Stage Startups
In startups, agility is everything. For seed-stage startups hunting for product/market fit, having the ability to turn on a dime and adapt to changes is critical as you compete against larger companies. Some founders may find that maximizing the agility of their startup requires only a few tweaks. Others may need to entirely transform the way they think about and even define startups.
I particularly like Steve Blank’s definition, which refers to startups as a “temporary organization designed to search for a repeatable and scalable business model.” Blank’s use of the words “temporary” and “search” in this context highlights an incredible way for founders to think about their own startups.
Consider two different scenarios: In the first, a founder has an idea and decides to embark on a six-month project to see if anything is there. In the second, a founder decides they want to create a company to do X.
The first founder — though slower in their approach — is able to make mistakes, iterate, and change course completely at any time. The second founder — though steadfast in their vision — is handcuffed to a single trajectory. Their priority becomes procuring all of the necessities of building a company, including office space, payroll, and HR. If at any point they decide to reorient, it would prove a much more difficult or even impossible task.
As a seed-stage startup, your agility is your lifeblood. The best founders are careful to optimize their team and capital structure for maximum agility.
When recruiting a team, it’s important (even ethical) for founders to be upfront about the risks. In the startup world, agility and uncertainty go hand-in-hand, and potential hires need to understand exactly what they are getting themselves into. Not everyone can or wants to deal with the rollercoaster of seed-stage startup life; your best bet as a founder is to assemble a small team of those who can.
To help you maximize the agility of your startup’s capital structure, I offer you advice as someone who’s been both a startup founder and an investor. There is something magical about raising only a small amount of money! It keeps your team, early product, and business model nimble and adaptable while you hunt for product/market fit during the seed runway. In contrast, raising an outsized round, while impressive to some, can tie a founder’s hands with the rigidity of an oversized team and inflexible product plan ill-suited to the inevitable zigs and zags of the seed phase. Founders who choose to raise less seed capital prior to product/market fit enjoy more options, such as experimenting and failing without breaking too much glass, pivoting as necessary, or raising another round at an increased valuation.
I encourage you to tackle the search for product/market fit with the right set of nimble resources, both capital structure and teammates. If your search brings you into the realms of smart hardware and machine learning, I want to hear about it. Leave a comment or get in touch with Ubiquity Ventures.
Ubiquity Ventures — led by Sunil Nagaraj — is a seed-stage venture capital firm focusing on early-stage investments in software beyond the screen, primarily smart hardware and machine intelligence applications.