I’m very lucky to have the opportunity to talk with entrepreneurs all the time. There
are tons of brand new startups here in Hong Kong and around the world. Entrepreneurs
take me out for coffee all the time to pick my brain and seek advice.
Many founders mock up a few screen shots, cobble together a proof of concept, go to
town in PowerPoint, then have lots of meetings with people like me asking: “do you
like my idea?” and “how do I get money?”
As I said last week on this blog, the
economics of a startup have changed, yet again. Since it takes less and less money
these days to get a venture off the ground, my advice has been consistent to new entrepreneurs:
don’t spend any time in the early stages looking for money.
Startup founders who spend most of their time meeting people and looking for money
before they write a single line of code are wasting their time. This is precious time
that could be used building a prototype and then going out and validating that prototype
with potential customers. What Steve Blank famously
calls “Get the hell out of the building” and doing Customer
Validation. We all know that almost all startups go through the proverbial “pivot”
and the faster we get there, the better.
Alternatively, if the startup got money right away, we all know what would happen,
they would be nose down building their product and trying to sell it. The problem
of course is that the idea would not be properly vetted and validated. It would take
longer to “get out of the building” and eventually pivot, wasting your investors money
in the process.
My advice is to scrimp, save, work nights and weekends, give away sweat equity and
don’t go for any seed funding until well after your second or third prototype was
validated by potential customers. Once you’ve done that, you’ll find that funding
is much easier to obtain anyway.
Stephen Forte sits on the board of several start-ups including Triton Works. Stephen is also the Microsoft Regional Director for the NY Metro region and speaks regularly at industry conferences around the world. He has written several books on application and database development including Programming SQL Server 2008 (MS Press).