You think you need investors, but you really need a sidekick.
“Hey look- we have 5 clients and one of them pays well. Let’s raise $8M!”
Well yes, technically you can raise that much, and the revenue will indeed look impressive for a startup. But what do you need $8M for? I understand- the founders are excited at this stage and adrenaline is running high, so why not? You have achieved something that most people will never achieve in their lifetime. BUT, sit on my side of the table. What do you see? An entrepreneur with a product that has the potential to be a unicorn. Now that you are on my side, ask yourself: “have I ever managed $8M and 10, 20, maybe 50+ people?”
“Interesting, okay, so let’s just raise $5M!”
Well yes, you technically can raise that much, and the revenue looks impressive for a startup. But what do you need $5M for?
“To hire a marketing firm and run a campaign. I need a bigger development team and my dream sales team.”
Sit on my side of the table again. Have you identified who your clients are?
Are you sure you have unlocked the true potential of your platform and you are not missing overlooked sectors?
“Well, that’s why I need capital.”
That can be achieved with a smaller capital and you would be surprised to know that you won’t be as diluted as you think next round. Instead of hiring 5 engineers, let’s find one that thinks like you, works like you, and doesn’t need to be managed as 5 engineers would.
You know salesmanship but do you know sales? Let’s go ask a couple of people that know sales. Do you speak the same language?
Well, let’s find one salesman that will develop your sales pipeline and mentor you. You’ll go from “why can’t people understand our technology,” to “we identified our go-to-market. Our platform has a short learning curve and we have shifted from a service to a product-based company.”
“But we need a lot of capital because we have to pay salaries.”
Is your current team in-line with your vision? Working in a startup is not for everyone and sacrifices are made. If you want a six-figure salary, then you are looking in the wrong place. Of course, you have to reward your team for their work: why not give them equity and options? If they believe in you and the vision, they will accept a salary that will pay their bills while still having some leftover cash to buy Christmas gifts.
“So what do I do?”
If you asked this question to another fund, they would likely smile and say, “we will get back to you.” I have the first-hand experience, and I learned from these mistakes. Reading a book is no match for the lessons I’ve learned from the feedback.
That’s why I started Founders Committee. To ask questions, to understand the founder(s), to go that extra mile that most funds won’t. It’s difficult to dismiss someone when you know first-hand that no one can be knowledgeable in every subject. My team and I are here with one common goal: to help those who need our help with their venture. Those who listen, those who are patient, and most importantly those who learn from each other: we want to be the missing link.
That’s what makes (in our opinion) a successful startup.