Ideas are free. Execution is priceless.
Every fundraising founder needs to preoccupy themself with solving a problem faced by customers and/or businesses; ideally, one in which they have first-hand experience.
You are – or aspire to be – a high-growth technology business targeting a scalable market. Wherever you are on the journey, you will most likely need to raise capital along the way.
Although the temptation is to delve into your vision for the company and start making your idea a reality, it’s important for founders to first cover their legal bases. Failure to establish a strong legal structure from the outset is among the most common mistakes founders make during their early growth, and the lack of clarity can worsen disagreements that could come up later in the company’s life.
Once incorporated, you need to develop a very good answer for the question every investor will ask: how are you uniquely positioned to solve a big problem in a way that incumbents will struggle to compete with?
- Will the current size or future growth of an underserved target market justify your efforts?
- Does your team have a deeper knowledge of the market than anyone else?
- Will this service or product address the needs of the market for a multitude of customers?
In considering these questions, let us track back to the first: “where to start?” and these three guiding principles…
After discovering a problem that you are passionate about solving, make contacts with others who are affected by that problem every day.
Your enduring competitive advantage is going to be knowing your customers better than anyone else. Set out a clear plan as to who your customer is and what they value. This could be a simple diagram that clarifies your market segments, or it could be a series of detailed buyer personas developed over many interviews with potential customers. This will show investors that you have a clear value prop. and know your market, and it’ll inform how you generate revenue as you evolve your business model over time.
Your team should be made up of people that you trust, including those whose skill set complements yours. All members should be bright and hungry with a keen understanding of your market. In the eyes of an investor, a great team with an average product is worth more than an average team with a great product; only one of those teams is able to iterate effectively, and willing to pivot the whole business if it means better serving customers.
Most startups begin with a minimum viable product (MVP) in response to the problem they’re solving. This is a shortcut to achieving product-market fit in collaboration with real users, as you can keep iterating the product based on customer feedback across interviews and constant A/B testing. Additionally, it gives the team a real product and customer base to show to investors. If, however, there is no evidence that people are using your MVP, an investor is very unlikely to pay attention. This is why you want to build your idea around customer problems – not untested or imagined solutions – and build a team that’s able to think on their feet and adapt to unexpected problems.
Once you have addressed these three first steps, you can start thinking about the next: your journey to raising capital through your existing networks, or with AfrInview’s network of specialist VCs and angel investors. Whether or not you’ve cleared these initial hurdles, keep your startup’s readiness to raise informed at every step.