As startups, you need assistance with everything. However, there are the 3 C’s which are the most critical and encompass many areas of support that you will need.
Customers Are King
The traditional sense of this phrase is that if we treat our customers as kings or queens, then they will be loyal, long-term supportive customers – the goal of every business. However for startups, the customer or even ONE customer can make the difference in your business succeeding or failing. We must have product validation – will someone buy our product, do they perceive value, what is that value? All of these questions need to be answered and proven in the market place to move your business to the next stage. Startups do this through product trials, feedback, testing, changing the product, more testing, more feedback –it’s a continuous cycle and we need supportive, interested customers to work with us through this and to then buy our products – the ultimate validation. In the end, the customer receives a great product that will help their business and the startup has validated their product in the marketplace.
Connections – It’s Who You Know
This saying could not be more true in the startup world.
- You need connections to Capital. You need your Capital Connections to be connected to other Capital.
- You need connections to Customers, who will then be a reference and provide you with connections and references to other customers.
- You need connections to Partners that may help distribute your product.
- You need connections to advisors, board members, business development contacts, services companies (legal, accounting, audit, patent, HR, etc). To find and verify all these services is a daunting task for a startup. Having trusted connections that can filter and refer the right connections is invaluable.
- You need connections to build your C-Suite. At every stage your management team will be evaluated. It’s not likely your college roommates will be the right c-level management team for you. You want the right experience in the right positions that enable you to build the business and bring credibility to your venture. You will need to find these people through many different connections and again, you want to evaluate your c-suite based on their connections and ability to help the business.
Even if you have been in your industry for many years, you will not have a network that includes all these connections. Build out your network in every conversation. Ask for connections to customers, capital, advisors or other contacts that will be beneficial to your business. Evaluate your investors, advisors and board members in part with their level of connections that they can bring to the business. You can send a lot of emails and make a lot of calls which will not open a door, but a warm referral from a trusted connection will general open the door every time.
Capital – The Need is Constant
Even before you start your company, you require capital. Once you start down the investment road, the need for fund raising will be constant. Of course this ebbs and flows with customers and revenue. However, at each stage you will have to evaluate organic growth vs raising capital. It is a constant process, you will do this every day. In WI, there are many supportive Angel groups and more popping up all the time. Unfortunately, we only have four VC’s in Wisconsin. In 2013, there were only 26 deals for a total of $67M in investment. This pales in comparison to national numbers.
It makes it difficult for our WI companies to compete when there is insufficient capital available in the state. This requires our companies to seek capital outside the state which is costly and the effort is hampered by the lack of connections within our current ecosystem. Our established companies can help tremendously in this area. We have companies such as American Family and MG&E who are investing back in to our WI companies. A strategic investment by an established company is tremendous validation for a startup company and provides needed capital to continue to develop the product set. An established company then has access to this technology to create strategic advantage. It’s a win-win if we can create more strategic investment within the state.