Five Lessons for Early-Stage Startups
How to approach building a company and reaching out to investors.
Hi, I’m Divya — I love creating something from nothing — whether in writing, art, or entrepreneurship.
I had my first startup idea in high school — which came from my frustration of not going on college tours as they were time-consuming and expensive. In college, I went through an accelerator program to build virtual tours for college campuses. Being a founder has enabled me to delve into the startup ecosystem — pitching to investors and watching other early stage startups on their journey.
I will admit that I have made a lot of mistakes in my journey; yet this has enabled me to learn a few key lessons and create a mental model for approaching building, and investing in a company.
I have had the opportunity to see both sides of the table as former founder to now working in Venture Capital supporting entrepreneurs.
Listed below is my chronological guide and ideas on how to approach building a company and reaching out to investors.
Before Building a Startup →
1. Market size — It takes the same effort to build a billion dollar company as to build a million dollar company — Go after big markets. Start by doing Market Research.
2. Problem / Pain point — How many people have this problem? Who is that person? The best startups typically stem from your personal experience with that problem.
3. Market mapping — Understand your competitors and where you fit in. E.g — the “coffee market size” is $104 Billion, within that there’s Keurig cups, drive thru coffee, and luxury $10 latte’s. Where do you fit? How big is that market?
4. Are there challenges/barriers to entry? Government/Technical/ Medical/Time to R&D. It is helpful to be aware of these barriers before getting started.
5. Product Vision — Is your goal to scale quickly and disrupt a market, or be a side-hustle that scales at your own pace? There is no right answer here, but be aware that building a single product is different from building a venture backed company.
Building your Startup—>
1. Don’t build product first — You don’t need to have a perfect product with many features. Building product may “feel” like you’re making progress, but you might actually be running in circles. Start small with an MVP, and be wary of too many features.
2. Do talk to people, lots of them — (50+ is a start. 100+ is great) — Conduct effective customer discovery.
3. Start with an MVP— Ask people to pre-order or “join the waitlist”. Test for authentic demand and figure out if somebody would pay for your product.
4. First few customers — Your first 10 paying customers set the stage for the next hundred or thousand. Narrow your target customer, and refine your approach.
5. Understand Product/ Market Fit — PMF is a great milestone for any startup, but an ever-evolving process. Understanding what it is will help refine your value proposition and reach investors.
How to reach out to VC’s →
1. Do you need to raise Venture? — There are many paths to startup growth, and deciding how much to raise.
2. When to talk to to Investors —Think of it as a marriage, and start building connections. Keep in mind the best time to raise is when you don’t need money.
3. Not all Venture is the same — Every VC has a thesis and focus either on geography, industry sector, or a combination. Reach out to investors who's thesis best fits your startup.
4. Nail your pitch — Your story is everything; crafting your ‘why’ and ‘how’ is critical to differentiating your company and inspiring investors.
5. Talking to investors — Attending conferences, getting warm intro's, or being a part of an accelerator program can help you meet VC's. You can also reach out by writing an effective cold email.
Key Lessons →
1. Pick your cofounder wisely — The #1 reason startups fail is due to team and cofounder issues. Don’t pick a random co-founder; assess your relationship with this person and how you complement personalities and skillsets.
2. Sell your story — Early stage investors will invest in the founder 99% of the time — thoughtfully craft your why and share why you are the best person to be building your idea.
3. Don’t get caught up on valuations — Most financial projections at the early stage are wrong. Being aware of the current market can guide you but being too caught up on it will hurt you.
4. Build in public — Ideas are meaningless; execution is everything. You should be pitching your idea to as many people as possible and gaining rapid feedback for iteration.
5. Avoid paying for accelerators / incubators — The best support for your company is through kind people willing to help and established networks of name-brand accelerators and venture studios with standardized equity funding (i.e Techstars, YC)
Atlanta Tech Village has plenty of events, mentors, and resources to help you gain traction.
If you are interested in becoming a part of the ecosystem, attending weekly events such as Startup Chowdown or Pitch Practice are great for finding a community of entrepreneurs and investors.
Excited to take the next step?!
Build with Atlanta Ventures or Reach out for capital.