First of all, if you’re a real startup CEO, these hard times aren’t so hard if you look at the right indicators. I’m interacting with startup money people all the time — angels, VCs, superangels, family offices, even some PE these days. There is still a lot of money out there, lots of deals happening. VC is still roaring, with the exception of about 2 months of fear over the NASDAQ and Crypto Crash.
The only thing that ‘s changed is valuations, and those aren’t much different than they were 2019-2021, which is pretty high.
Early stage angel investors like to find little gems before anyone else, they look for the $10 million valuation seed or pre-seed opportunities. That hasn’t change, money hasn’t “dried up”. I get angels asking me still every week for leads one early-early deals. If seed funding is good, follow on from these same investors later should be good also, unless the world falls apart over the next couple of years.
As they always have, investors do want a few things — a very strong level of belief in the founder(s), something new and not just a clone of existing businesses, and high energy from the startup.
I saw a very strong Silicon Valley angel say the other day that, for certain founders, he would give them $1 million without knowing the product or valuation, just betting on the founders he knows will win again and again. That’s the confidence and trust that prevails in the valley — today.
It’s also a testament to the power of the momentum of the current retooling of modern business. This recession can’t stop that.
So, the valuations are lower. Is that fair? Is that VC greed taking advantage of the stock market?? A little bit, but valuations, especially for mis and late stage were they too high and needed a reset. That couldn’t have gone on forever. And they’ll come back. Depending on where your company is, it shouldn’t matter anyway.
There are angels who look for early early deals, try to find $5M to 20M valuations. Those valuations aren’t going down.
But still, you should reassess, check your priorities, tighten things up.
1. What are people doing now because your product doesn’t exist, what is the pain you will solve?
2. What is it that you know about your specific niche that other companies do not?
3. How and when does this make revenue and profits? What is the growth graph?
From all the topics I just listed, I hope to ingrain one thought in particular into your head: Software is a Metaphor. This will be covered more in book 2 but is also all over this book.
Most product innovations now come from software, which is a bunch of letters and symbols arranged in very specific ways. Manipulation of software, code, and scripts has become one of the most important parts of innovation of most things in this world. Everything runs on software.
Almost any product we use today is driven by software, from our car to our phone to our TV to the local coffee shop, and of course the web is layers and net- works of software packages. Many things you interact with are visual software ele- ments on a screen: animation, art, medical diagrams, and 3D models.
Therefore, this book will often draw from the world of software and software architectures, the web, and general computing to draw parallels about business, in- novation, and logical thinking. Don’t worry, I’ll make these ideas easily accessible.
I’ve found that -Openness- to options and possibilities that you haven’t thought of often lead you to a superior answer.
When I think of open, I think of standing somewhere way up in the mountains in Colorado or New Mexico or California. You can see so far and so wide out into the world, from above.
I try to remember those views, the feeling they gave, and use them when I’m not on top of a mountain.
Im my book HACKING THE CORE, I write about using Creativity and Innovation to help startup founders achieve that elusive goal – sustainable business growth, along with a few other things like profitability, a fun place to work, personal fulfillment.
That’s an oversimplification, but the idea is to expand your horizons, “think different” to enhance your chances for success as well as personal fulfillment along the way.
Innovate. Be creative. Discover something no one else has. Go where they’re not.
The book also talks about Wantrepreneurs and Cantrepreneurs. In my consulting work I can identify these types of people. They’re usually struggling, losing their company, walking backward towards the edge of a cliff, failing daily. Yet they’re unwilling to change their thinking.
Creativity and innovation don’t actually make sense to them in a practical application because it threatens their status quo. Deep down, change is bad to them.
Their brains are wired to do things their way – no matter what. Usually their way is to mimic someone else’s or their own successful tactics from the past. Crazy, right?
Every entrepreneur wants to innovate but some just can’t. Even in the face of doom and bankruptcy they can’t change. Another type of cantrepreneur.
They ask for help but only to help them do things their old way, and not to bring new innovation to the problem.
Why? Because that’s a threat to their self image, their power, their reputation as being the authority. Their position as the boss.
There are other people who are totally open to change, reinvention, pivoting, innovating, threatening their own beliefs, listening to others. These are the real entrepreneurs. They’re happy to be wrong. They have much better odds for success.
