Over the last decade I've launched, advised, worked for and invested in nearly 100 early-stage technology businesses. Here are 15 lessons I've learned during that time. If I'd known these things sooner I'd be significantly better off than I am now!
Whether you're a startup founder or a budding angel investor, hopefully this list can save you some heartache...
- LOIs, credible investors, partners, advisors, press coverage, and awards are all forms of momentum that can help you raise capital, but the only true form of validation is a paying user.
- Don’t ever try to create an options pool immediately after raising capital, do it before or as part of the raise.
- If you get an acquisition offer, only agree to an exclusivity period in exchange for a non-refundable deposit. If the deal goes through, it comes off the price. If it falls through, you'll have runway to explore alternatives.
- At least 50% of founders don’t understand the difference between pre-money and post-money. If that’s you, look it up.
- As early as possible, startups need someone who can build and someone who can sell. if you’re missing one of these, know how to explain why.
- The key to success is failure. Even the most successful startups continuously test new assumptions and use failure to find better ways of doing things
- Don’t expect crowdfunding to bring you investors. Crowdfunding organisations provide the mechanism through which you can collect and manage investments from people who are already willing to back you, like your customers.
- The first product you launch to customers should not be an app.
- Some friends will tell you your idea is amazing; others will tell you it’s doomed. Listen hardest to those who disagree with you… then decide for yourself.
- The best pitches don’t involve a slide deck. The meeting starts with a founder story, then becomes a conversation.
- Most pitch decks, email intro’s and founder presentations are poor quality. Do these well and you’ll stand out.
- If you’re not the obvious person to solve the problem you’re working on, someone else is. The smart money is on them, not you.
- Most decks have way too much detail. Decks have one purpose - to get you meetings. They need to create intrigue and FOMO.
- Raising money at a high valuation is both a success and a curse.
- 90% of startups are unsuitable for VC funding. If your business is growing at less than 10% per month, avoid VC completely and figure out another path.
15 tips for new early stage investors.
– Featured image by StockSnap.