In a recent webinar hosted by Angel Investment Network, fundraising expert Alex Arnott shared invaluable insights on how startups can navigate these challenges, particularly focusing on the crucial role of founders and the senior leadership team. In the latest in our Investment ready series we break down the insights and tips for founders.
The startup world is certainly not for the fainthearted. While many founders are driven by passion and innovative ideas, the statistics reveal a harsh reality: the vast majority of startups fail to achieve lasting success. This isn’t always due to a lack of talent or promising products. Often, the pitfalls lie in the execution, the management, and the strategic decisions made along the way.
Here are some of the top tips distilled from the recent session.
1. Embrace the Power of Early Advice
Many founders believe that hard work is the sole key to success, often underestimating the value of expert guidance. However, Arnott argues that seeking advice from experienced individuals is a critical shortcut, not a sign of weakness. “If you go and speak to people who’ve done what you’ve done before… and they’ve been through that journey multiple times, guess what? They’ve learned how to do it successfully. They’ve made all the mistakes that you’re just about to make.”
This isn’t just about avoiding missteps; it’s about calling on the distilled wisdom of those who have navigated similar terrains. Experienced advisors can offer strategic insights, anticipate potential roadblocks, and provide invaluable context that founders might otherwise overlook. They can help shape your business model, refine your go-to-market strategy, and even arrange crucial introductions to investors or partners.
- Actionable Tip: Don’t hesitate to seek out mentors, advisors, or consultants who have navigated similar journeys. Their experience can help you avoid costly mistakes, save time, and ultimately increase your chances of success.
- Key Takeaway: Find individuals who have experience in your specific industry and stage of growth. The right advice at the right time can be transformative, potentially saving you “hundreds of thousands of pounds, millions of pounds, stress, anxiety, [and] your company failing.”
2. Build a Strong and Balanced Early Board
The composition of your early board is crucial for steering your startup in the right direction. Founders often wear multiple hats, but it’s essential to recognise the need for diverse skill sets and perspectives to prevent blind spots. As Arnott points out, “It’s impossible, isn’t it? You know, if you are a someone from a technical background, you’re not going to be a marketing expert. If someone from marketing background. You’re not going to be a technical expert.”
A well-rounded Board brings in expertise across critical areas like finance, sales, and operations, ensuring that decisions are made with a comprehensive understanding of the business. Moreover, an independent advisor can serve as a neutral voice, bridging potential gaps between founders and investors and ensuring that the company’s best interests remain the priority.
- Actionable Tip: Consider bringing in individuals with expertise in areas where you lack experience, such as finance, sales, or marketing. Don’t underestimate the value of an independent advisor who can provide objective guidance and help balance the interests of founders and investors.
- Key Takeaway: An effective board should complement the founders’ skills, provide accountability, and offer strategic guidance to help the company grow. It’s about building a team that can challenge assumptions and offer diverse viewpoints, leading to more robust decision-making.
3. Prioritise Revenue Generation Early On
Many tech startups focus heavily on product development, which is understandable given the innovative nature of their offerings. However, a great product is meaningless if you can’t generate revenue to sustain and scale the business. As Arnott emphasises, “The problem is is that it becomes a vanity project unless you get someone who’s able to turn that into revenue.”
Bringing in revenue-focused expertise early can make a significant difference. If a full-time Chief Revenue Officer (CRO) is not feasible, consider hiring a CRO on a fractional or day-rate basis. This allows you to leverage high-level expertise without incurring the full-time salary expense. The same approach can be applied to marketing, ensuring that your product reaches its target audience effectively. This proactive approach ensures that your startup focuses on both innovation and profitability.
- Actionable Tip: Bring in revenue-focused expertise early. If a full-time Chief Revenue Officer (CRO) is not feasible, consider hiring a CRO on a fractional or day-rate basis. This can provide invaluable guidance on developing a go-to-market strategy and driving sales. The same goes for bringing in a Chief Marketing Officer (CMO) on a fractional basis to help with the marketing strategy.
- Key Takeaway: Don’t wait to prioritise revenue generation. A strong revenue strategy is essential for attracting investment and ensuring long-term sustainability. “It’s a really good way to make sure it happens,” to get early traction in the market.
4. Run Effective and Focused Board Meetings
Board meetings should be productive and focused on key strategic issues, rather than getting bogged down in minute details that can derail progress. As Arnott states, “The Board’s job is not to discuss things like whether it’s got a button or not. It’s the bigger issues.”
Structuring your board meetings around key performance indicators (KPIs) and milestones ensures that discussions remain focused on the company’s overall progress. This approach helps to maintain accountability, track progress against the master plan, and address any challenges that may arise. By focusing on strategic issues, board members can provide valuable insights and guidance that contribute to the company’s long-term success.
- Actionable Tip: Structure your board meetings around key performance indicators (KPIs) and milestones. Focus on progress against the master plan, market changes, and accountability.
- Key Takeaway: Board meetings should provide a high-level overview of the company’s performance, address critical challenges, and drive strategic decision-making. This ensures that the board remains a valuable asset, rather than a time-consuming formality.
5. Plan for Future Change
As your company grows, its needs will evolve, and the skills required of your team will change. As Arnott notes, “The people who start the business aren’t always necessarily going to be the right people as you grow, and as you get to to the latest stages.”
Having open and honest conversations with early team members about how their roles may evolve helps manage expectations and avoid potential conflicts down the road. Proactive communication ensures that everyone understands the company’s growth trajectory and the evolving skill sets required. This approach fosters a culture of transparency and collaboration, ensuring a smooth transition as the company scales.
- Actionable Tip: Have open and honest conversations with early team members about how their roles may evolve. This helps manage expectations and avoid potential conflicts down the road.
- Key Takeaway: Proactive communication about future changes can help maintain team morale and ensure a smooth transition as the company scales. It’s about building a culture where adaptability and continuous learning are valued.
The overall message? By embracing strategic advice and building a resilient team, startups are in the best position to be one of the 25% and build sustainable growth. Ultimately, proactive planning and adaptable leadership are the best foundation for transforming innovative ideas into lasting success.
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