All you need is one yes!

The basic of a new startup is to do something disruptive that very few people can see as viable or even feasible. You are here to disrupt the status quo, so what seems an obvious opportunity for you, won’t be for the rest of us.

That’s why fundraising at early stages is so hard. You have no metrics to backup your vision, barely a viable product and a nascent team.

So getting rejected is normal, all you need is to find someone who understands and believes in your vision, not only that but also believes your team is the one who can execute it.
Your job as founder is to get that yes, the one that will make the others follow.

One yes from a respected / credible Angel investor or VC, will make the rest of the pack raise an eyebrow, and start believing as well. It’s always the same pattern.

You will be rejected a lot, but eventually if you have a great project/team and you make good progress while bootstrapping, you will find that yes.

One example of startups with a bold vision and great success that didn’t have an easy start: Robinhood (summarized here). They kept pushing, developing their company, finally they had their first Yes, and now their multi-billion dollars’ companies.

Keep them in mind, work hard, be ambitious and eventually you will get your Yes.

Does valuation matter at early stages?

We always tend to say valuation is a vanity metric.

While the right metric is in fact an equation: Amount of cash + Valuation + Investor smartness + Terms

When fundraising entrepreneurs tend to forget two things:

1) Roughly 90% of startups fail

2) As an individual, there is little difference in your life, if your net worth is $20m or $40 or $100m.

But there is a massive difference between having $0 or $20m+

So your only objective as a founder is to ensure your startup sustainability. The best way to achieve this is to surround yourself with talented people as committed as you to your startup success and it also includes your investors.

Never forget that to make it personally your startup needs to make it first.

It seems trivial but we see too many entrepreneurs completely discounting the potential added value of investors, considering all money equal and therefore focusing only on valuation.

You are building a company and a team. Investors are part of that team. If you have brilliant and well connected angel investors your chance of success dramatically increases.

So, as you have to recruit amazing team members, it’s part of the founders’ duties to also assemble game changing angel investors.

Identify them and hunt them. All startups we have seen with great business angels and seed investors have dramatically increased their success rate.

Once again a great round is the right balance between amount of cash, valuation, investor smartness and terms.

One example, Aaron Levie, Box’s founder and CEO.

I quote him “don’t be too anxious about valuations before Demo Day, our angel round was $80K on $240K pre”.

Box is now IPO’d and valued $2.7bn

Building a startup is a fantastic journey but also a long and risky road. Early rounds are here to help you build solid foundations for your business. It is way too early to pull out your calculator to estimate your future net worth.

Should your startup aim for profitable growth?

Startup’s profitability is a growing discussion these days. It’s a recurring topic that gets more discussed when financial people feel we are at the end of a bullish cycle, and that feeling is here.

Profitable startups have inevitably a higher survival rate during downturns, check 2000–1 or 2008–9.

Now, should your startup aim for profitability? which often means growing slower.

I think there are 2 key criteria to take into account

1) Am I on a “winner takes all” market? or can 2–3–4 competitors coexist in this market. If you are a “winner takes all” market, land grab strategy is key so you have to go fast.

To go fast you need to raise money and focus on market adoption rather than bottom line.

If you are on a market that can sustain several competitors, it’s really worth looking at a slower growth strategy, where you have to raise little money or no money at all (see examples below).

2) Do you need a lot of tech to be developed before being able to get your product live.

If yes then you need VC money.

Profitability discussion is well alive today because a lot of new startups today are more, what we like to call, digital SMBs. They take advantage of the market depth which was not the case 10 years ago. Today, there is 3.5b+ internet users worldwide, e-commerce is $2.5tn+, so finding a $1bn niche with little competition becomes easier.


Keep also Bezos quote in mind “Constraints breed resourcefulness”.

We like to finance digital SMBs aiming to take their market with a very efficient cash burn rate and reaching profitability soon. This is becoming an interesting field for family offices and Angel investors. Even some new VCs are looking at this new type of startups. Check below

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