Having worked in the start-up world for almost a decade, I have been lucky enough to have been an external advisor, mentor, angel investor and a co-founder. Through my experience I have gained insight and formed a few opinions as to why start-ups succeed, and rather how best to set yourself up for success.
I’d like to heavily caveat that these are purely my opinions based on my experience, with an element of common sense applied. However, I have reached these not by thinking through the successes I have seen, but rather where I have made mistakes or learnt from others that have.
So let’s look at the facts to begin with. A scary one that sticks in my mind is that at Series A - over 1000 seeded start-ups will be orphaned and more than $1billion of investment will evaporate. So how can you avoid this happening to you?
- Be focussed: Too many start-ups try to boil the ocean with idea after idea. There is a time and place for innovation and toys - that comes after developing a revenue profile and proving a product that works.
- Stay lean: It’s tempting to build large teams quickly, but your burn rate can trip you up. If you are a funded model, always start raising earlier than you think you need to and keep your burn as low as possible. Don’t let cash-flow trip you up.
- Collaborate: Contra deals and partnerships can help you survive the early days. Understand what you have that is valuable and be open to sharing. I’m not talking about IP, but a mutual skill-set swap or office space for product can help you scale far quicker and keep costs down.
- Be the best: Simple to say and what I mean is - be known for something (linked to the first point) and be the best at it. Then start to diversify, if required.
- If it isn’t broke, don’t fix it: Similar to the above point, if you are good at one thing stick at it. Countless companies have iterated and failed or lost millions in the process.
This direction and determined ability to execute leads me on to the topic I’ll be talking about next month, leadership.
By Seb Haire, director and co-founder of ProFinda