As part of my job I meet a lot of startup founders. These Founders, despite numerous job options, have chosen entrepreneurship as the way forward. They are dead serious about their startups; highly passionate; and very hardworking.
What bothers me the most is that many of the Founders don’t critically think through what makes teams and companies fundable.
All founders must critically assess their team, as well as their idea, and bucket their startup into one of these two categories:
- a) our startup is fundable or
- b) our startup is not fundable today. Therefore, I need to get to profitability with minimal angel money.
A majority of startups that I meet, unfortunately haven’t done their homework to understand what type of companies get funded and whether their startup belongs to the category of fundable companies. Most of the Founders, for some reason, postpone understanding the rules of the funding world and spend way too much time trying to raise money, when the idea or team itself is not fundable.
Please note – not all teams and their ideas are fundable.
It doesn’t mean these startups have no future. A significant number of high-quality profitable companies are built with no money from VCs. These companies focus on revenues from day one and continuously iterate in making their products for revenue generation. By generating revenues and getting to profitability, these companies become self sufficient and they are not at the mercy of anyone. Many times, these companies raise growth capital when they want to scale as well, or for liquidity.
The worst thing for Founders is getting stuck in between the two options: they can’t raise money and they don’t have enough runway to get to profitability. Once they are stuck, it is not an easy escape, and this impact can be detrimental to the startup ecosystem.
Founders, before time runs out, critically assess your team, idea, strategy and pick your path accordingly.
The purpose of this article is to get all entrepreneurs to take action of discovering their path. There is enough content on the web on what makes companies fundable or how one can build bootstrapped companies. The other way is to talk to those who have done it, but, get on this work sooner than later
