Startup Success in Every Stage of Growth – Seed Stage
First of a three-part series from Luke Burns, offering observations on what makes a successful startup at every stage of growth.
There might not be a better time to be an entrepreneur on the East Coast. Massachusetts companies raised over $1 billion (over 100 deals) in venture capital in Q2 of 2014, the state’s highest in three years, according to CB Insights’ Venture Capital Activity and Exit Report.
But regardless of where an entrepreneur is looking toset up shop, there are a few key things to keep in mind when starting and growing a company. Drawing from our own experiences as entrepreneurs and VCs, we want to outline how a startup can find success at every stage of growth, starting today with the Seed Stage.
1) Solve a real problem
It might sound too obvious, but the goal of a startup should be to solve a pressing, real-world problem. Too often have I seen entrepreneurs with very elegant technologies or slick applications that are in search of a real market need. So make sure to start with the problem and not the solution. The inspiration for the startup can come from deep, targeted research into the failings of current business processes, or it may come from personal experience in the workplace or at home. But having a sharp focus on a particular problem helps to guide the early efforts of a startup and make sure that the solution being developed actually has an eager market awaiting it.
2) Keep your product close to potential customers
Now that the company is focused on solving a pressing, real-world problem, the challenge becomes making sure that the solution is a good one. There’s a temptation for engineers to spend long hours with their team dreaming up the most elegant and complete solution possible. But one of the keys to successful product development is to stay close to the customers who will eventually buy it. Rather than waiting to unveil a feature-complete and robust product, seed stage companies should embrace frequent feedback with potential customers. Be willing to present the minimally viable product with all its warts and get as many perspectives as possible. This frequent (and frequently brutal) feedback will help the team zero in on the most important features and functionality (and potentially could lead to a full pivot of the company towards a new product idea). Staying close to customers helps speed a products launch in the market and certainly helps to minimize wasted effort and dollars chasing functionality that is not wanted by the customer.
3) Recruit a strong team of advisors
Seed stage companies lack something important – money. One implication is that there are not enough resources to hire a full complement of team members and there might be some critical holes in the team’s capabilities. The remedy is to have a strong team of advisors. This is especially true for young or first-time entrepreneurs. If young entrepreneurs want to maximize their chances and speed of success, it cannot be a 100 percent “learn as you go” process. You may have the million dollar idea, but there are many smart people out there who have had success in growing startups and taking those million dollar ideas to the next level. A strong team of advisors can supplement the full-time team and help guide the company through the persistent challenges that arise.
So for the entrepreneur, this means networking is of paramount importance when forming a startup. Work the extended network and reach the people who could be high impact coaches and advisors. The good news is that many successful entrepreneurs like to give back to the community and are willing to invest their time in helping others to succeed.
In the next part of this series, Luke will outline how startups can successfully navigate the early-stage growth phase.