Years ago Steve Blank visited Finland and explained his theory on the 6 types of startup.
Lifestyle Startups Work to Live their Passion
Small Business Startups Work to Feed the Family
Scalable Startups Born to Be Big
Buyable Startups Born to Flip
Large Company Startups Innovate or Evaporate
Social Startups Driven to Make a Difference
As you are here reading a blog post on an accelerators website, we can safely assume that you want to build a world changing company, or as it could also be called a “Scalable startup”.
As you work on your startup you begin to discover things, the idea of building a world altering startup might change during this process. However, once you have taken professional investor money, it is glory or death. There is no middle ground and the statistics show death is the more likely outcome.
As one of our coaches, Perttu from Entocube says “After our amazing experience at the Startup Sauna accelerator we were very focused on finding investors. The first round is often difficult to raise and as we poured more and more hours into refining our investor materials, our focus drifted from building our business into finding investors. What makes the first round difficult is the lack of business evidence, in other words: customers. Not having customers sheds doubt on the validity of the business. Doing that again I think we would focus more on getting our first deals. Not only does this bring in revenue, but it also addresses the biggest concern investors have about early stage startups.”
When a company is at this early stage (near product launch, or in lean startup terms has an MVP), there are similar problems & questions, for all of 6 types of startup, such as;
Does anyone need this?
What is the problem they are solving?
How much value does it currently deliver?
What changes would make it deliver more?
What changes would make it appeal to more people?
These questions can truly be answered by the customers. Customers, meaning the people who give you money in return for a product or service.
As Mark points out in this post he wants to see you making progress overtime. Understanding why your business has grown since the last meeting (the startup industry call this traction)
We have an opportunity to be more efficient around this matchmaking. Instead of chasing investors and burning lots of time on decks & preparing for meetings, go to startup events to meet these same people. Be open and honest about where you are for product and customer development and what your aim or timeline is. This is a matchmaking process, and you would potentially be working with these people for many years to come. Oh, and don’t worry, investors will take the meeting at the event because it is their job to take these meetings, and they also want to be efficient.
So, let’s stop worrying about what investors like and start trying to figure out who your real customers are and what they truly want.