Running a start-up is like sitting on a chair with three legs and no back. You have to strike a delicate, at times gravity-defying balance between the singularly important pivot points of your product, your customers and your company’s financing. Perhaps needless to say, if any of these legs measures even a little shorter than the rest, you’ll likely be finding a new seat on the floor. While it’s fair to say that most start-up failures are born of shortcomings on the financing side, that’s only part of the picture. Here are a couple of things I’ve learned so far.
When I embarked upon my start-up career five years ago, one of my mentors said to me that finding financing is very much akin to selling your product. Back in 2012 I did not understand what he meant. But now, all of these years later, I understand his point and I fully agree. Pitching your idea is not about waving your hands in the air or wearing a colorful t-shirt. It’s about telling people your story, and most importantly, it’s about telling it in a way that they’ll understand what you are doing, who are your targets and what you need to make it a reality. It doesn’t really matter if your audience is potential customers, employees, ORES, partners or financiers.
It’s safe to assume that you are the SME of your space and your product. But that’s only the beginning. In the world of start-ups an idea has no value in and of itself if you can’t execute on it, or at least show that you know how to and have what it takes to make that happen. And that starts with getting yourself out of the office, into the field and working with your customers or prospects and learning with them. And somehow, especially if you are pre-revenue, you have to find the resources to finance that learning.
While there are many paths to find investment, one thing is certain; every financier needs to see your vision and understand the logic of your plan. The simpler the logic, the easier it will be to understand. One good test is if can you tell your story the same way twice. It is very easy to create a complicated story. But it’s quite a different matter to make it a painfully simple one.
One of the big realizations along your start-up journey is that while you may start out with a very complex story, with time, and pitch-by pitch it should, ideally become simpler. Something akin to beginning with a novel and ending up with a Haiku. I like to think of this process as the general theory of the nail. Your product has to be like a nail and your story is not about the variety of nails you might deliver, but rather about what can you build with it.
If you are interested in learning more about the Cloudstreet story and you are in Helsinki March 29th, come and visit us at Hub13. http://www.hub13.fi/project/venture-day/
Founder & CTO at CloudStreet Oy