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Right-sizing Startup Funding

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Right-sizing Startup Funding

In 2013, Fred Wilson (AVC) of Union Square (US) Ventures asserted, based on their portfolio’s data, that “the amount of money a startup raised in seed and Series A funding was inversely correlated with success. “ That is, the more money a startup raises, the more likely it is to fail. Or the less money it raises, the more likely it is to succeed. At least, that’s the pattern supported by US Ventures’ data at the time. 

CBInsights tested this assertion with their own data in 2013. They found “no relationship between the amount of money raised and success.” In other words, funding levels were not related to venture success or failure.

Many people assume that raising more money is better and that more success will follow raising more money. These studies suggest that it’s not about the total amount of money raised. It’s interesting that neither dataset supports the idea that more money = more success. It will take more time and data to know which is correct. 

We would argue that the strategic question is not how much you can raise - it’s about raising the right money at the right time. Start with the questions: “Do you raise money at all?  If so, how much and when?” Here are 3 tips for right-sizing your funding:

The 3 Most Important Ways a Startup Should Audit its Marketing at Year’s End

The 3 Most Important Ways a Startup Should Audit its Marketing at Year’s End

We frequently say that many decisions at startups should be viewed as experiments. This is especially true for startup marketing. You have ideas about what might work. You implement those ideas and you make more plans. The end of the year is a good time to step back and assess what worked and what didn’t. Here are 3 ways to look at your marketing before making next year’s plans.

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Is the Startup Life a Sprint? A Marathon? Nope, it’s an Ironman

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Is the Startup Life a Sprint? A Marathon? Nope, it’s an Ironman

“It’s not a sprint—it’s a marathon!” We hear entrepreneurs with some experience use this phrase to caution new founders about going too fast too soon and burning out. We absolutely agree with part of this expression—starting a company is certainly not a sprint. But as endurance athletes ourselves, we would put a twist on this. Getting a startup going is a lot more like a multisport endurance event such as an Ironman than it is like a marathon. Why? Because it takes several different skillsets to launch a successful venture, not just one. Like a triathlon, there are at least three major categories of uncertainties founders must navigate—working with people, understanding the market, both competition and customers, and developing the product. We call these the human, marketing, and technical oceans.

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Startup Sales: Up and To the Right?

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Startup Sales: Up and To the Right?

Every startup pitch has a slide that shows a future revenue or sales forecast. Can you guess what the overall shape of that revenue growth looks like? If you thought “hockey stick,” then ding, ding, ding – you are right! For those that don’t know what a hockey stick sales growth chart looks like, check out the figure below. But, is that shape of the sales growth curve realistic for startups? It could be.

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The Power of Getting Customer Input for Startups

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The Power of Getting Customer Input for Startups

One of the toughest questions startups have to answer is how they create value for customers. We’ve already shared how to avoid the customer value void. But recently, we were reminded about just how powerful getting customer input can be. So, we wanted to share three examples to inspire you to get your own feedback.

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A Principle and Two Numbers for Startups

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A Principle and Two Numbers for Startups

In honor of the Thanksgiving holiday, we saved this blogpost until Monday…

In the “little known facts” category about the Titanic, we thought we would share some seemingly random factoids that had an interactive effect to help sink the Titanic. It involves a principle and two numbers—I know, it sounds like an episode of the high school musical show “Glee” (but that would be PrinciPAL…).

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Startups Need to Master the NOW and the NEXT

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Startups Need to Master the NOW and the NEXT

We’ve recorded a number of podcasts lately. Somewhere in the conversation we get asked this question, “What do you say to the entrepreneur who feels overwhelmed and can’t figure out where to start?” We tend to see two different approaches. First, there are those entrepreneurs who just start doing things. Sometimes doing creates momentum and that’s a good thing. But, their activity is kind of scattered because they don’t really have a plan. On the other hand, we also see entrepreneurs who plan, plan, plan but never really take any action. So, we thought we would share the NOW and the NEXT as a way to help you figure out what to do tomorrow.

 

Building a Good Brand Name for your Startup

Building a Good Brand Name for your Startup

After more than 30 years of working with startups and new products, it still shocks us at how difficult finding a good brand name is. Just last week, we were talking with a founder who shared her startup’s name and then asked what we associated with that name. I can assure you our immediate associations were quite different from what the startup does. Her response, “Yes, we hear that all of the time. So, here’s our tagline – We’re not an X. Instead, we’re an Y.” So we thought it was time for Brand Naming 101.

Smart Startups Plan for Product Improvement and Evolution

Smart Startups Plan for Product Improvement and Evolution

It’s so exciting! You have a few customers or users and your product is off the ground! A startup finally gets momentum. Customers are increasing in number. It’s hard not to relax, have a beer, and bask in the glory of a newly released product. However, this is only the beginning. 

So many startups that make it through the early, treacherous waters of launch end up foundering at the discipline required to operate continuously. More and more of the venture’s activity migrates out of the direct sight lines of the founding team. During this stage of a company, it’s important to keep the hunger and enthusiasm that was there at the beginning. Easing up now could diminish all of the hard work put in. 

What does Minimally Viable Marketing look like for a Startup?

What does Minimally Viable Marketing look like for a Startup?

By now you’ve heard us use the term MVP (Minimally Viable Product) many times. A few weeks ago, we did a talk about avoiding startup failure with SCORE, the small business mentoring group of retired executives. One question we were asked at the end – “Would you agree that it’s better to just have a Facebook page than a bad website?” We gave a most emphatic – No! So let’s talk about what is the Minimally Viable Marketing you need.