Diversifying your startup portfolio..
..or, in other words, don’t put all your tiny eggs into one basket expecting an ostrich to pop out!
A few weeks ago I wrote up an article on my LinkedIn profile — “monetise ANY startup in the digital, online & tech space — split 3 ways.”
The ‘split 3 ways’ aspect was a major clue into HOW you should consider diversifying your startup portfolio. In this article, I’m going to explain WHY. NOTE: My focus here is on ideation and early stage startups.. this one is for all the crazy ideators and dreamers out there.
- First and foremost, the most obvious reason. Considering 90%+ startups fail on their face, it really doesn’t make any sense to focus on just one startup, unless you enjoy failing.
- If you know how to go about executing your startup, it shouldn’t take up all your time. Automation, online marketplaces and outsourcing can really save a lot of your time too. In fact, in my experience, juggling multiple ideas simultaneously has kept me more engaged and continued to increase my overall productivity. Depending on your role and the types of startup ideas you generate, its possible that your effort with each idea works out to be the same. But, instead of 100% of the effort being executed across one startup idea, the same effort is executed multiple times across multiple startups. Make sense? I call this approach “startup cloning.”
- Consider splitting your portfolio both wide and deep. When I say wide, I mean across various industry segments. When I say deep I mean leveraging various monetisation and income earning strategies.
- Know when and how to pivot. Preplan your pivots as potential contingency strategies. Whether you choose to pivot or not will depend on whether you’re achieving your desired goals and meeting or exceeding your growth hacking expectations by way of ROI. ROI shouldn’t just be measured by money invested but by your time as well. The pivot is godsend for a startup, without it, each road block would simply lead to a brick wall.
I’m sure many in the startup scene will disagree with my approach above. The reasons being that it can lead to various challenges such as time management, inability to focus on scaling up, fast burn out, confusion, mistakes, instability, or perhaps even a higher risk of failure.. the list goes on. To a certain extent, I’d have to agree.
Diversifying your portfolio of ideas is not everyone’s cup of tea. For starters, being under resourced financially and then trying to adapt this approach can be extremely challenging. Getting the help of other like minded people and industry experts is a good idea.
Think about your capability and capacity..
The reality is, bootstrapped startups barely struggle to survive with one idea, let alone several. Although this approach has its merits, you should consider your abilities, skills and personal situation to diversify, manage and grow multiple ideas all at the same time. Generally speaking, investors don’t like the idea of a founder having his fingers in multiple pies. That’s because an investor wants ROI and his/her chances are much higher if YOU as a founder are focused like a hawk on making that one startup a success. The irony is that investors diversify ALL the time, so why not allow for the same treatment for founders?
I’d recommend this approach as a catalyst to help improve your chances of success as a startup entrepreneur, or, as an attempt to offset and hedge against your risk of failure. However, I’m not saying you should diversify your portfolio forever. When you start to see some serious traction and potential in any ONE of your ideas, start adding more water to that soil, hone in and focus on getting that plant to seriously grow.