This week I head to London for a very exciting meeting, Aquaculture Innovation Europe. I am privileged to participate on a panel session that covers The Start-Up Journey’s Do’s and Don’ts”. While KnipBio is still very much on the journey and hardly “there” yet, I do have a few thoughts I am looking forward to sharing.
Team: Arguably this is the most important element. When you are an early stage company, it's all you have. It’s what early-stage investors are really basing their investment on anyway. When there are tough decisions and frustrating setbacks, your team will keep you sane. Team includes co-founders, employees, mentors, board members and of course your family.
Passion, patience & persistence: Every entrepreneur will be coached that everything takes 2x long and costs 2x as much. Then that estimate probably needs to double again. Your budget is always shrinking with each day that goes by, racing towards zero ... Oh-so-many things are out of your control but it is truly a Zen moment when you find the balance between relentless persistence and calm patience. At the end of the day, you better really like what you are doing, because you may be doing it for a while!
Celebrate the small wins: I love baseball. One of its greatest lessons is to get really comfortable with failure. After all, if a slugger gets on base just 3 out of 10 times, he likely is going to the hall of fame! 30% success rate actually feels heroic for a start-up founder & scientist where the odds of success for a given pitch, or an experiment will be orders of magnitude lower! So, when you do land something – no matter how small, take the time to note it. Grab a bite to eat with the team, tell grandma or maybe blog about it.
Capital formation strategy: The common perception is to grab as much money as you can, at the highest valuation you can. Makes sense – limit dilution while maximizing your runway. Sounds right. But… is this always right? It might not be actually. If you price yourself out of the next round by making the deal “too rich” for investors to get excited, and/or you fall short of the lofty expectations you will have set in order to command that big raise, you may be in store for some hurt down the road if you are not careful. Always approach this never-ending activity by trying to think 1-2 rounds ahead.
Best time to approach investors? When you are not raising. Totally counter-intuitive. But, if you are seemingly always raising, how does that even work? Clearly there are different classes of investors – angels, institutional (including VC and family offices) and strategics… do all 3 make sense at the same time? Probably not. You can certainly build up your network of prospects for later rounds in parallel while securing funding during the earlier phases.
Also, who you decide to link up with for financial backing is really important. Odds are that they will be in the trenches with you, you will bring them in for important meetings, you will strategize together, and they will represent you and the brand you are building. Make sure there is strong chemistry.
Strategic partnerships: Not unrelated to the above thought – timing matters. Its really tempting to try to acquire “bumper stickers” on your cap table as a sign of validation to the rest of the world... I know the feeling! Like everything, there is a time and a place. Besides a sense of validation, what else does a strategic give you? If there is a specific opportunity to unlock a new functionality for your organization, then maybe it is indeed the right time.
Build alliances: The world is small and shrinking every day. The problems entrepreneurs try to solve are typically really hard. Why not find collaborators to help with the burden? Chances are, together, you will achieve more. Plus, these early relationships can become long-lasting and multiply in value received over time.
Even when it comes to competitors – what are the bridges that can be built? The common denominators that can advance the collective causes? Perhaps, its shared regulatory concerns. Or, specific language chosen to describe valuable messaging. Don’t waste time talking smack about the other companies. If you are better, prove it. Besides, it could backfire and make the whole sector just look weak.
It’s the journey AND the destination: In your mind, there may be a clear trajectory towards achieving your strategy. Maybe it’s an IPO, or someone on your M&A target list who is going to acquire your company. Or, shutter to think, the company doesn’t make it. It is impossible to predict with certainty the ultimate outcome and its timing. Regardless of the result, in all cases, enjoy the journey. It is every bit as important as the destination.