In reviewing business plans for competitions and networking with budding entrepreneurs, I’ve helped startup founders make some honest, and hard, calls about their ventures.
Everybody has a great idea they are passionate about. Many have a PhD and/or MD degree. Everyone is incredibly brilliant and innovative.
Working together, towards common goals, we can indeed make the world a better, safer and healthier place.
Your founders’ goals, typically, are to be:
1) courted by investors and
2) receive a big wad of pre-seed or Series A funding so you can
3) launch a successful company and enjoy a lucrative CEO salary or, alternatively,
4) be acquired with a big payday while being retained as CEO after exit.
That’s an idealistic perspective of what’s required to create a successful startup.
Investor interest in your startup focuses on the strengths and capabilities of your founding team to move the idea for your venture forward.
What does your founding team look like?
Your team is not a collection of people who happen to work together or a few of your close friends. Your founding team is nothing less than a special forces unit working strategically, tactically, collectively and collaboratively. You are all on the same page for the same purpose.
Here’s what funders look for – for starters – when investing. This is also what I look for when reviewing or consulting:
1) Do you have the right composition in your founding team, offering a balanced perspective of science / engineering and business?
2) Do you have Founders’ Agreement?
3) Do you have IP?
4) Is your team coachable?
5) Is your venture scalable?
6) Does your team buy into your exit strategy?
7) Would I, myself, invest in your startup?
When, and if, your venture is funded by angel or venture capital investors, the funding isn’t “free” money. Funding is not the equivalent of receiving another grant to continue doing elegant research and extrapolating new hypotheses from your findings.
When your venture becomes part of an investor’s portfolio, you work for the investors. Their goal is to make money. Your goal becomes achieving the Milestones that the investors, and you, have identified for your startup. If you don’t achieve these Milestones, you don’t receive your next infusion of cash.
This realistic scenario makes you, as a startup founder, vulnerable.
There have been so many articles, white papers and blog posts written about this topic in the past five years, as the startup and entrepreneurial culture becomes a global phenomenon.
A recent SPIE Professional article mentioned a survey of 22,000 VC-backed startup firms where 75% of the founders made nothing more than their salaries upon exit. That’s a sobering thought, especially if you had that 1-2-3-4 goal when you started your venture.
Will you become the first person investors replace as they embed a member of their own team into your venture, to compensate for weaknesses in your founding startup team?
That’s the short form of what’s involved in moving your venture from lab bench to translational research to commercialization.
Do you have the insight and foresight to bring in folks with marketing, sales, financial and legal acumen to round out your perspective of what it takes to move your idea into development and onward into the marketplace?
My recommendation: understand what you know and acknowledge what you don’t know. Then ask for help expanding your founding team. Your decision may make the difference between startup failure and successful commercialization.
Babette N. Ten Haken, President of Sales Aerobics for Engineers®, LLC, catalyzes business transition, startup growth, and professional development. She was named one of the 2014 Top 50 Sales & Marketing Influencers by Top Sales World. Read about revenue-producing, collaborative team strategies in my book, Do YOU Mean Business.This post is republished with this author’s permission, from the original article appearing on LinkedIn.