How to Succeed at the Earliest Stages of a Business Idea

Lessons learned from five weeks spent with Forward Partners, one of Europe’s top Pre-seed/Seed Venture Capital funds

Julianne Sloane
Nov 7, 2019 · 8 min read

If you are an idea stage founder, you have a lot of tough tasks ahead. At this stage, you, and maybe a co-founder, are in a race trying to figure out what will work.

I am currently at a very early stage of building Nossa Capital, a technology platform serving responsible investors. Last month, I was selected to take Nossa Capital through the Forward Partners “Founders Programme.” The Founders Programme works with idea-stage founders to share lessons learned / best practices as a venture capital fund that will invest as early as day one. Each week, we would discuss key areas for [idea stage] founders. The goal of the program:

Teach us how to turn our early stage ideas into a VC ready business concept with a proven need and a compelling pitch.

I found the sessions very educational as we covered the best-practice framework to start a [VC-backable] business. This post will summarize some of my key learnings from the program to support other idea-stage founders to make their businesses a reality.

Session #1: Customer Discovery

The first session was on customer discovery led by Forward Partner’s Lead UX Designer: Fiona MacDougall.

She started the session by sharing with us a very relevant metric by CB Insights. The number one reason start-ups fail, no market need. Don’t start a business if no-one wants your product. Start with the customers.

Therefore, during week one we learned about the four stages of customer development.

  • Customer Discovery
  • Customer Validation
  • Customer Creation
  • Company Building

As early-stage businesses, we need to stay focused on the first two aspects of that cycle. Founders need to become experts in our customers’ pain points. Once we are experts, we can test if our proposed solution actually solves a problem.

Founders need to become experts in our customers’ pain points.

Fiona emphasized that in order to start this process, first, we needed to outline our objectives. What is the goal of conducting research and what are the main questions we want to be answered.

Thinking through these objectives, Fiona provided us with an example of a bad / better objective.

Bad: Understand why families hire a nanny

Better: Understand the end-to-end journey of how and why families hire a nanny

From there, we discussed how to go out and get our key questions answered. Some ways to do this include:

  • Review previous research/market research
  • Send out a survey
  • Speak with potential customers [Pro-tip: Record your interviews]
  • List and test your assumptions.

After we collect the data, synthesize it! We need to start understanding our results. With those results, we can begin to develop customer personas. Those personas can be assigned goals, motivations, pains, and frustrations.

The final step in customer discovery: Explore and refine. Fiona introduced the ‘How Might We…’ format. The idea is to take your pain-points and the customer personas identified and run through ‘How Might We’ scenarios to begin testing solutions.

How Might We…. Solve X Problem for X target customer.

The task for fellow early-stage founders:

  • Write down your research objectives
  • List your assumptions
  • Identify who you want to speak to
  • Speak to at least 10 people
  • Synthesize your results
  • Run a “How Might We…” discussion

Session #2: Lean Canvas

For the next session, we all took our business ideas through the Lean Canvas model. This session was led by Dharmesh Raithatha, the Product Partner at Forward Partners.

Before moving into the Lean Canvas method, Dharmesh asked us all: “Is your business venture capital backable?”

He explained that before investing, a venture capital fund must ask themselves:

“Is the market big enough that the VC stake in the company will return the fund on exit?”

As entrepreneurs, we need to know our TAM: Total Addressable Market before we approach a VC. As an example, for a $60 million fund like Forward Partners, if they took a 10% stake, our business would need to have a market that has the potential of capturing $600 million in value.

Assuming we all had business ideas with a TAM that is big/interesting enough for a venture capital investment, we moved back to completing the Lean Canvas worksheet. The framework is useful as it acts as a mini business plan. It forces you to think about all key areas of your business.

During the session, first, we filled out this framework together imagining ourselves as the founders of a famous UK unicorn. Then, we paired up to fill-out the model for each of our respective business ideas.

After this, considering our Lean Canvas model and the question “How Might We…” from the previous session — we discussed how to go out and test our MVP. The key consideration here: What was the easiest way we could validate demand?

Dharmesh shared some specific examples of how Forward Partners portfolio companies built their early-stage MVPs. Essentially, it tended to come down to creative uses of:

  • Product simplification across design + code
  • Clickable Prototypes (Marvel App)
  • Typeform / Surveys
  • Excel
  • Emails
  • Plug into existing systems (ie: Place an order with you fulfill with a third party)
  • API integration
  • Lean branding

After discussing building our MVP, we discussed the process of achieving product-market-fit.

TL:DR: Listen to your customers!

The task for fellow early-stage founders:

  • Calculate your business total addressable market.
  • Take your business through the Lean Canvas framework.
  • Define an MVP
  • Simplify it
  • Simplify it again
  • Ship!
  • Talk to customers
  • Prioritize (Don’t build everything!)
  • Keep talking to customers
  • Keep prioritizing

Session #3: Growth 101

The next session was all about growth. It was led by Matthew Dean, Forward Partners Head of Growth.

He started the session with a definition:

What is Growth Marketing: Data-driven revenue maximization, not a series of “hacks”.

Growth is a continuous optimization of the product journey from:

  1. Customer acquisition: Get people on your website
  2. Product development: Offer something people want
  3. Retention: Keep customers coming back
  4. Experimentation: Iterate on all three

While in the session we focused across all aspects of the growth funnel (Acquisition -> Conversion -> Engagement -> Revenue -> Referral), for this article I want to focus on step one for idea state founders: Acquisition.

An acquisition can both be paid, or unpaid. Choosing the right channel depends on your business proposition and budget.

Looking at these two channels very broadly, Matthew defined them as:

  • Paid channels: Advertising, sponsorships and affiliate marketing.
  • Unpaid channels: Content marketing, offline networking, sales, virality and PR.

For me, one of the biggest pieces of insight for idea stage customer acquisition was:

“From day one, write content for SEO.”

High-quality content / SEO traffic is a free way to continuously acquire users. As we become experts in our customers’ pain points, we are learning a lot! Dedicating part of the week to writing is a simple way to begin becoming a leader in our respective industries. Considering this insight, I launched a newsletter + blog for my business idea. In the first month of writing, this process has already helped me build numerous new relationships in my industry.

The task for fellow early-stage founders:

  • Write at least one time a week, you’re learning a lot… talk about it!
  • Test at least one additional unpaid marketing channel.
  • Speak to all of your early customers, understand why they signed up / what they are looking for.

Session #4: The Pitch

The final (educational) session was about building our pitch. Forward Partners Investment Partner, Matthew Bradley led this session.

In a similar way to the Lean Canvas session where we first discussed Total Addressable Market:

Before the pitch comes the… INTRO.

While best practice is to get an intro to a VC from one of their portfolio founders- depending on your geography + personal situation, this may not be possible. In a fight to get a more and more diverse set of people starting businesses, my impression as a female founder, a number of VCs are willing to reply to good cold outreach to fight existing portfolio bias.

However, as Matthew emphasized in the session, VCs get a LOT of emails. If you are going to reach out cold — make it good! The basic formula is to follow the elevator pitch format:

For [Target Customers]

Who are dissatisfied with [The current offerings in the market]

My idea/product is a [New idea or product category]

That provides [Key problem-solution features]

Unlike [The competitors/competing product]

My idea/ product is [Describe key features]

If you already have credible traction or important customers, mention that too!

Once you have the intro, we moved into the pitch deck format. For an idea stage company, it essentially breaks down to:

  • Problem
  • Solution (Problem-solution feature)
  • Market (Note: Remember your total addressable market…)
  • Bring in the relevant statistics on your market size.
  • The market either needs to be big enough for VC already or needs to be rapidly growing.
  • Competition (Competition matrix!)
  • Key Features: **Team** If you are VERY early, the team is an important part of your selling point, put it early in your deck. You don’t have product metrics yet so you need to sell yourself / your background. If you are a later stage product, the team can be towards the end.

As an additional piece of reference, if you are trying to determine if your business is right for pre-seed venture funding, Forward Partners wrote a great article sharing insight of why a VC might pass on a specific company. Aim to build a pitch that can address these concerns.

The task for fellow early-stage founders:

  • If you are ready to fundraise, use the format above to write 3 cold emails to venture capital funds
  • Compare your pitch deck format to the format listed above

Session #5: Pitch Day!

The final session of the Founders Programme was pitch day. We each had an opportunity to pitch our business idea. We had 4 minutes to pitch and 4 minutes of Q&A with the Forward Partners investment team. For myself and some of the other founders, this was our first time ever pitching our ideas to a venture capital fund. I found the process of pitching useful in helping me explain my business. After the pitches, we all got written feedback on how we can improve.

For now, my start-up journey continues. If anyone is interested in responsible investment, subscribe to my newsletter or add me on LinkedIn, I would love to chat! If you are an idea stage founder based in the UK, I would highly recommend applying to the next Founders Programme.

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Julianne Sloane

Written by

Founder Nossa.Capital Interested in reponsible investment, alternative finance, early stage startups and women in tech.

The Startup

Medium's largest active publication, followed by +586K people. Follow to join our community.

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