If you ever decide to forego a “real” job in favor of starting your own company, you’re bound to make at least a few rookie mistakes. If you’re lucky, most are the kind that are easy to fix and learn from.
But most entrepreneurs, in hindsight, agree that there are some things you’re better off being prepared for. Hindsight is definitely 20/20—especially when you’re the boss. Consider these lessons you don’t have to learn the hard way.
Changing how we approach and build modern solutions to personal dilemmas and satisfying intrinsic human needs is everyone’s passion.
We’ve picked up many, many useful tips and wanted to pass some knowledge along. Below is a list of 10 things we wish everyone known before creating a startup.
Solve Your Own Problem
Many businesses and failed numerous times. When you finally find success, it is because you created a solution to your own problems and turned that into a business. Many launched many new companies and websites to foster their business and help people.
Do Your Market Research Early On
Like most entrepreneurs, you must be passionate about many ideas and opportunities. Many have also launched and funded many startups only to realize later on, as they learned more about the market, that they should have done more extensive market research early on. It is important to understand the industry you are playing in, your competitors, and the market forces at play. Even more so, it’s important to understand your customers–their behaviours, pain points and decision making processes.
Be Extremely Focused
There is a tendency for entrepreneurs to try to do too much at once. But the key to success in the beginning lies within having laser focus. If your product or service solves a big problem, try to focus on a niche instead. Facebook started out as a social network for college students. Only when they were successful with that niche did they open their service to the general public.
Keep It Simple
One may think that offering customers a large number of choices is the smart thing to do. Yet, more choices lead to decision making paralysis. It is usually the company that provides users with fewer choices that wins. Examples include: In & Out Burger’s simple and limited menu, as well as Apple’s limited number of choices for most of their products. As a startup, resources are limited. Focusing on providing a simple product or service with less choices, less steps, less features may be the way to go.
Bootstrap Whenever Possible
Raising money to launch a startup is very common among entrepreneurs. In doing so, you give up valuable control of your business. When entrepreneurs had to do it all over again with their company, many decided to bootstrap. Writing the software code yourself, hosting the service with a cheap ISP and using free marketing resources at your disposal, you would be able to launch the business with your own money.
Think Carefully Before Taking Money
Whenever possible, venture capital (VC) money should be considered unacceptable except in specific circumstances where VCs can add significant value to your business. Being a young founder in your mid-twenties, you may be asked to take on an experienced CEO. Times are now tough after the dot-com crash when online advertising went from $20 CPM down to under $2 CPM. Instead of sticking with your strategy to revamp the company’s business model. So it’s better to fund your own money and it’s advisable not to be dependent on any third source.
Focus on Intellectual Property Early On
Entrepreneurs may not focus too much on intellectual property in the beginning, but copyright and trademarks are important and will be increasingly crucial in protecting one’s product, service or brand once some success has been achieved. When you launch, one of the first things anyone does was to apply for a trademark. The trademarks which have since acquired secondary meaning, have come in handy as many competitors try to encroach upon our space.
Screen Your Hires Well
Some of the worst hires have been always experienced with first few employees. Back then, people lacked the resources to perform detailed background checks. They have too experienced many fraud degree holders whom we hire unconsciously and later they prove to be a setback for the company.
Leverage Free Marketing Opportunities
As an entrepreneur with a limited budget, spending money on marketing can be a very costly proposition. When launching, many looked into free marketing opportunities. First leveraging free online resources such as Craigslist, then moving onto PR opportunities to get free media coverage for their service. A controversial product or service may shun away investors but it was a gold mine when getting lots of free media coverage.
Have Strong Agreements Up Front
One of the most important lessons to have learned over the years as an entrepreneur, is that whenever there is the possibility for misunderstanding put expectations down clearly in writing. A strong agreement with partners, investors and employees are crucial.
Tell us about yourself
Katarina Strandberg – Swedish Business lawyer in love with investments and building companies. Love people with grit and passion, love to solve problems and team up with great persons for great results. Learning and training are always a core of my every day.
How many hours a day do you work on average?
“Smiles” it depends how you define work, but up to 14 hours
Can you describe/outline your typical day?
Very varied, from standing on stage, writing guest articles and doing workshops to sitting in complete isolation with focus on producing top quality legal documents such as shareholders agreements and finding legal and business solutions.
How has being an entrepreneur affected your family life?
i) made me a very happy and inspired mom and its clear that this positive energy that you can really create your own life as impacted my children in a positive way,
ii) it has given me great freedom, even if I work a lot I can most often choose where and when I preform.
What motivates you?
Solutions, building and scaling – seeing positive results – interactions and meeting great people, gaining their respect and confidence and getting to connect people.
How do you generate new ideas?
I train. Thai fighter. It´s 100 % focus mind and body.
What is your greatest fear, and how do you manage fear?
My greatest fear is to die without enough passion in my life.
How did you come up with the name for your company?
The Swedish Villa.
It was all to the credit of my amazing co-founder Leila Falkenberg. She did it as a reference to the Swedish childrens story about Pippi Longstocking and her creative and inclusive house Villa Villekulla.
How did you raise funding for your venture?
Through outreach and network with business angels, and through presenting us as founders in a very honest, passionate and transparent way.
How do you build a successful customer base?
First and foremost by word of mouth, networks and recommendations, and of course through digital communication about our experts, and showing the results the
Experts produce which has made international brands, big and small, turn to us trusting us to really deliver as a loyal creative partner.
How does someone get you excited and willing to commit?
Showing a great work ethics, doer mentality where you find solutions and act on them directly without “busy-work”.
As a entrepreneur, how do you see the market is growing in your country?
Very-very exciting and positive! Sweden as a great eco-system, great understanding for sustainability and a great stable and safe society why it is good for risk spreading for international investors to look to Sweden and that creates even more synergies.
How do you advertise your product/service?
Nr 1 is organically and transparent through our social media channels. Linkedin and instragam are what we focus on.
To what do you attribute your success?
My and Leilas dedication, hard work and non-stopping respect and admiration for each other as persons and professionals in our different fields. We focus and love competence and doing a great job on each and every project.
What was the reason to start an IT company ? Are you from the same background?
I would say we are a hybrid – IT and personal service in one. And that is one of our Unique Selling Points. We saw a need for that, where we function as digital nomads and can provide the top creative unique services to every corner of the world in a transparent, result oriented and cost efficient way.
What do you look for in an employee? The most important thing to us is that they fit into our corporate culture!
Hard worker, in love with responsibility and delivering great results – need to like accountability. Action, solution, and positive are features that are a must.
What made you choose your current location?
As digital nomands our key point is that we can sit from anywhere and to the best work ever – so the location should be less relevant for us. We do however love to travel and meet clients and organizations in person when Mr Covid so allows again.
What kind of Corporation is your business?
Service, B2B, within marketing and communication. We take the side of the brand and help them procure the right talent and projects for their specific needs. We are brand advisors and we have put together a unique community of top level creative experts is all areas of marketing and communication so that the client always gets the best without having to hire or pay a non-transparent hug project fee to an advertising agency.
Do you work locally or internationally?
What’s your company’s goals?
To peacefully disrupt the marketing industry by making creativity king again. And to show that sustainability and financial results go together.
What are your responsibilities as the business owner?
Oh where do I start. First and foremost, to show what we stand for. Secondly to be transparent and show us and what we do. We are part of many international NGO communities and contribute through also our professional experts work communicating for the brands their social responsibilities.
Does your company help the community where it is located?
Yes! We are dedicated to diversity and inclusion.
Have you ever turned down a client?
If you had one piece of advice to someone just starting out, what would it be?
Be ready for challenges and mentally focus on grit and focus. Hard work pays off. Never feel sorry for yourself always see the possibilities and work for them.
For Industry News chk https://www.entrepreneursface.com/ Resouce section
How do you find the right investor for your start-up?
If you’re an entrepreneur, you probably have asked yourself this question more than once-in-a-lifetime.
As the over-all tech industry is maturing, capital is more plentiful (but paradoxically competitive), the costs of technologies are constantly dropping, and code is being increasingly commoditized. This leads to more companies being built-up faster and for less. The culmination of all this? A lot less white space, and more serial entrepreneurs competing for seed funding.
With this in mind, what do you, as a founder, need to know to ace your increasingly competitive seed round raise? Here are 6 questions you should ask yourself to prepare:
1. Realistically, are you venture scale?
Even without venture capital, you can build a valuable business. You can bootstrap your way to success. But, if you want to raise money, you better be ready to meet the following criteria:
10x return: To build a venture fundable business, you need to create a value of this scale (or more.)
Velocity: How fast can you grow? There is a tremendous difference between getting to $1M annual revenue in 6 months or 6 years.
This matters for two reasons: 1) Investors will extrapolate your future growth rate from your past performance 2) When you’re raising venture money, you’re building with someone else’s money and there is an often unacknowledged cost to that — namely your ownership and ultimately the funders’ returns.
Product < Business < Asset: VCs are searching for high velocity, high return investments. Startups with clear long-term assets are more valuable, which could be a database of genetic information that’s 20X broader than any competitor, or market share in an industry where there is 15+ year lock-in. At the bare minimum, make sure you are building a business, not a product. (If your go-to-market plan is to leave this to the salespeople you plan to hire at some future point, this ultimately will not work — certainly not for venture scale.)
Bottom line is if you are not venture scale, but you’re raising money — or spending — like you are, you have a problem.
2. How competitive are you?
As a founder, you are laser-focused on solving the challenges directly in front of you. While it’s critical to “stay in your own lane” to some degree, you can’t afford to ignore these three absolutely critical competitive dynamics, if you want to be venture-funded:
Cohort effect: When you start raising money, whether you realize it or not, you automatically become part of a peer group, other companies that have raised as much as you have, or to a lesser extent have comparable metrics (revenue, traction/adoption.) If you are way behind in your peer group, you won’t stand out in a weekly VC partner meeting, all else being equal. You could still come out ahead, but your team, market, and defensibility will have to be that much more impressive.
That’s why I generally advise founders to determine what to call their round based on traction, and use the earliest label which can apply. Be within a cohort where you can compete effectively: it’s the adult version of red-shirting for sports teams.
Winners take all: Assuming that your startup is successful and that you’re tackling a valuable market opportunity, 2–4 direct, formidable competitors will likely arise in your space. Most founders don’t look this far ahead, but by then you’re either at the front of the pack, or not — and in the latter case you will lose out on investor money.
Because of the winner-takes-all effect of technology (where the bulk of value accrues to the market leader), few VCs will rationally put money into the #3 or #4 competitor in a space. And, that’s why we evaluate competitiveness from our first meeting, because who wants to put 4–6 years into a business to run into a brick wall down the road? Neither the founders nor us.
You simply don’t get to be the #1 or #2 in your space without planning and executing on that plan from day Amazon is a fierce competitor, one of the best of our era.
Sector bias: Don’t get discouraged just because you are in a less competitive funding sector. While many funds are generalists, the reality is that they will typically focus on the most profitable sectors, and sectors with structural risks, like health care or education, may be tougher to close investment.
This is also a good reason that sector-focused funds are becoming a lot more common. You should take advantage both of them and of strategic angels in your sector, who can crucially help you navigate hard-to-open sales doors with their industry connections.
3. Are you right-sizing your fundraising based on fund dynamics?
Want to know the truth about VC firms? Simply by looking at the size of the fund, you can tell if your company is the right fit or not. The secret rule of thumb that most VCs have: any single investment needs to be able to return the entire fund. For example, a friend at a $800M fund confesses to me that she won’t take a meeting unless she can see clear sightlines to a $300M business. Given the rule of thumb, she’s actually being permissive.
On the other end of the spectrum, angel investors can have a fantastic outcome with a $50M run rate company, and consequently may be willing to take risks much earlier. Don’t waste your early fundraising cycles if there isn’t a fit, especially not in pursuit of a brand name for your term sheet.
4. Where are you on the seed gradient?
While the metrics at each round change every year, we’ve observed internally that even seed companies fall out in distinct spots along the seed gradient. Know the stages, metrics, and amount of your round, so that you stand the best chance in your cohort — review my 2nd question for you again.
5. Do you have a startup Olympian mindset?
Those who are drawn to founding companies have grit, creativity, and determination. High growth companies require all this — and more. Sometimes liken the process of finding great entrepreneurs to seeking Olympians.
Many people (including me) run an occasional 5K or 10K for fun on the weekend. But envision the difference between the weekend warrior, and the Olympian, who has configured her life to support training, has a team assembled to handle the various aspects of growth, and is ruthless about trying what works and discarding what doesn’t.
If an investor does not move forward, please don’t take it personally, or see it as a fatal blow aimed at the business you’re building. Ask for feedback, learn from it, and look for investors who are excited about your business.
6. Are you willing to optimize for investor fit?
Nothing is more painful than watching startups being ill-served by investors who do not have the best read on their strengths or market dynamics or simply have different values. You may be thinking. Yes, but when you’re spending years of your life on your startup, having the right partners at the table is worth getting right. The worst case scenario is that you build an 8-figure business, only to have one of your investors vetoing a profitable exit that doesn’t align with her/his economic interests.
How do you prevent this? Make sure that you and your investors match up on:
Product principles and prioritization
How involved you want them to be
How they handle it when things don’t go well
Also, speak with other entrepreneurs in their portfolio, which will help you answer the key criteria mentioned. Reference checking is a two-way street! Finally, remember not to ignore your gut. With team members and investors, ask yourself this one question, “Who am I most excited about collaborating with?”
Winning as a startup founder is about building something amazing, but it’s also about building relationships, supporting your team, and having fun on the journey. As you gear up for your seed round, make time to reflect and refocus.
Angel investors put money in early-stage startup companies in exchange for a stake in the company. Investors hopefully to duplicate the high-profile successful investments made in companies like Airbnb, Facebook, Instagram, WhatsApp, Uber, and more. Investors mostly make small bets ($25,000 to $100,000) with the hopes of getting “home run” returns.
Angel investors understand that startups have a high risk of failure. So ultimately and angel investor needs to feel confident that the potential upside/rewards from investing are worth the downside risks.
They put a variety of key issues and undertake due diligence before they invest in a startup.
Many investors consider the team behind a startup more important than the idea or the product. They would want to know that the team has the right set of skills, drive, experience, and temperament to grow the business. Anticipate these questions:
So, the investor will need to make a judgment about whether the founder and team will be enjoyable to work with. Does the investor believe in the team? Is the CEO experienced and willing to listen? Is the CEO trustworthy? Also, witnessing experienced advisors can be very helpful in the early stages to help bridge an early-stage team that is still growing.
Many put are looking for businesses that can scale and become meaningful, so make sure you address up front why your business has the potential to become really big. Don’t present any small ideas. So the first product or service is small, then perhaps you need to position the company as a “platform” business allowing the creation of multiple products or apps. They will want to know the actual addressable market and what percentage of the market you plan to capture over time.
So of the most important things for investors will be signs of any early traction or customers. The company that has obtained early traction will be more likely to obtain investor financing and with better terms. Examples of early traction can include the following:
They will want to know how the early traction be accelerated? Whatever has been the principal’s reason for the traction? How can the company scale this early traction?
Not forget to show early buzz or press you have received, especially from prominent websites or publications. Do the headlines in a slide on your investor pitch deck. Put the number of articles and publications mentioning the company.
More venture capitalists look for passionate and determined founders. They’re individual’s who will be dedicated to growing the business and facing the inevitable challenges? Start-ups are hard, and investors want to know that the founders have the inner drive to get through the highs and lows of the business. Such want to see genuine commitment to the business.
They looked for founder’s who truly understand the financials and key metrics of their business. Should needed to showcase that you have a handle on all of those and that you are able to articulate them coherently.
Down are some key metrics that angel investors will care about:
Whether the investor already knows and likes the entrepreneur, that is a big advantage. So the entrepreneur doesn’t know the investor, the best way to capture their attention is to get a warm introduction from a trusted colleague: The entrepreneur, a lawyer, an investments banker’s, other angel investor, or a venture capitalist. Investors get inundated with unsolicited executive summaries and pitch decks. Much if the times, the solicitations are ignored unless they are referred from a trustworthy source.
So first thing the investor will expect is to see a 15-20-page investor pitch deck before taking a meeting. Till he pitch-deck, the investor hopes to see an interesting business model with committed entrepreneurs and big opportunity. Such make sure you have prepared and vetted a great pitch deck. So other pitch decks and executive summaries can help you improve your own.
They want to understand what risks there might be to the business. They’ve want to understand your thought process and the mitigating precautions you are taking to reduce those risks. Therefore, inevitably are risks in any business plan, however, so be prepared to answer these questions thoughtfully:
Start-ups that can show they have reduced or eliminated product, technology, sales, or market risks will have an advantage in fundraising.
Therefore, Entrepreneurship must clearly articulate what the company’s product or service consists of and why it is unique, do entrepreneurs should expect to get the following questions:
Investor’s will absolutely want to know how their capital will be invested and your proposed burn rate (so that they can understand when you may need the next round of financing). It’s willing too allowed the investors to test whether your fundraising plans are reasonable given the capital requirements you will have. So it will allow the investors to see whether your estimate of costs (e.g., for engineering talent, for marketing costs, or office space) is reasonableness given their experiences with other companies. Investors want to make sure at minimums that you have capital to meet your next milestone so you can raise more financing.
Doesn’t the company have differentiated technology?
As much angel investors invest in softwares, internet, mobile, or other technology companies, an analysis of the start-up’s technology or proposed technology is critical. The questions the investors will pursue include:
Akin to that, the angel investors will do due diligence on the key intellectual property owned or being developed by the company, such as copyright, patents, trademarks, domain names, etc. Is the intellectually property properly owned by the company, and have all employees and consultants assigned the intellectual property over to the company?
If you’re start-ups presented investors with projections showing the company will achieve $1 million in revenue in five years, the investors will have little interest. Investors want to invest in a company that can grow significantly and become an exciting business. So, if you show projections in which the company predicts to be at $500 million in three years, the investors will just think you are unrealistic, especially if you are at zero in revenues today.
Avoid presumably in your projections that will be difficult to justify, such as how you will get to a 400% growth in revenue with only a 20% growth in operating and marketing costs.
So ordering to believer yourself financial projections, Investors willing wanted you to articulate the key assumptions you have and convince them those assumptions are reasonable. your can do that’s, then the investors won’t feel that you have a real handle on the business. Expecting that investors will push back on the assumptions and they will want you to have a reasonable, thoughtful response.
Investor’s knowledge that buildings a great product or service is not enough. The companies just haven’t the beginnings of a well thought out marketing plan. The marketing questions will include:
Investors maybe ask them followings questions about the financing round:
Validation will be an important issue for the investors. If you’re tell an investor you want a $100 million valuation even though you started the business three weeks ago, or don’t have much traction yet, the conversational will likely end very quickly. Often, it’s best not to discuss validation in a first call/meeting other than to say you expect to be reasonable on valuation. Busy the investors too does want to waste a lot of time on a deal if the valuations expectations are unreasonable or not attractive.
Validation at an early stage of a company is more of an art than a science. To help bridges the valuation gap for early-stage startups, you often see investors looking for a convertible instrument with customary conversion discounts and valuation caps. These instruments, such as convertibles notes and “SAFEs,” have become quite common.
Final Tips for Entrepreneurship Seeking Angel Investors
Here’s see somewhat concluding tips for entrepreneurs seeking to obtain angel financing for their startup: