Chapter 23

Tips for founders

First and foremost, let me say that the most important ingredient for a successful startup is the founder.

VC companies invariably back the jockey, not just the idea. Remember, nobody knows a business and its potential as well as the founder. If you can’t deliver with confidence and passion, nobody will be able to sell your idea.

• Leave the advisor at the door

If you can’t pitch your business yourself, how will you attract staff, customers and business partners to your company? After all, VCs are investing in the founder.

• Clearly articulate the problem that you are solving and how your product solves that problem

Keep the message simple – don’t be tempted to overcomplicate it. Keeping your points simple and clear is always best. Remember, simplicity is the ultimate sophistication.

• How big is the opportunity?

What is the total addressable market?

• What traction have you achieved to date?

If you already have customers, it’s important that these customers would be more than happy to act as a reference for both the product and the manner in which your company has conducted itself. There is no better salesperson than a happy customer. A great customer reference is the best validation that your product does indeed solve a problem.

• What is your business model and, importantly, what are the unit economics?

At some stage every company needs to make a profit. It’s really important to demonstrate that your unit economics for the sale of a product can generate a profit; i.e., your revenue is greater than the cost of whatever you are selling.

• How much do you need?

How will the funds that you are raising be used to help you take your business to the next stage?

• Leave the valuation to the experts

If you don’t like the valuation that you are offered, go elsewhere. If all VCs’ valuations are within the same ballpark, don’t just take the highest offer. Choose the partner with whom you feel most culturally aligned and who genuinely wants to add value to your business. Make sure that you call as many of the founders in their portfolio as possible to ensure that their words match their actions.

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