In part 1 of this post, I summarized some of the bumps/lessons that, despite being ‘common sense’ still had to be experienced.
Sales cycles: As a startup, everyone makes you wait and everything seems to move at a glacial pace. Banks and corporations take time. We all ‘know’ this but yet the world of enterprise sales continues and partnership deals get inked. I had bet the farm that SMEs and accountants would be relatively quicker once we showed them the magic. And in some ways, they were. It’s all the distractions along the way that tend to make for disproportionately long sales cycles. Add to this, trust and the “I need to set some time aside to make this work for us, as this could be good for us” procrastination, and as of this month we were still seeing users back from 15 months ago. In traditional marketing-speak, there is healthy increasing awareness and interest, but desire and action are still patchy in this channel.
Earlier this year, I heard of the shutting down of a better capitalized competitor to one of our modules. This competitor seemed to have a better team, funding and for all impression, was being used as a benchmark in the segment. Reading their blog, it seems as if they were also hitting up against the inertia / “this is not important enough for me to take action now” wall.
As an underpaid/unpaid entrepreneur your time gets wasted by others a great deal. Hence, choosing the right battle and sales cycle are critical. We spent a lot of our early days looking to partner with players with whom we saw a natural fit (and together we could really tackle a problem everyone was talking about). Inertia / immunity to change dominated.
Some needed years to understand this fit and were not ready (or convinced), others wanted to do it themselves and have since become part of someone else’s show. And a couple, well, have put in hundreds of millions of dollars and are now trying to do it themselves. For a partnership to work, all sides need to align at the right time. Else, it’s just another sales cycle that runs afoul of timing.
Capital. The reality of the power law of investment is sinking in though – apparently more and more unicorns to the detriment of start-ups with better tech or nuanced solutions. We wanted to bootstrap to positive cash flow and then raise capital to expand. Hence we didn’t spend much time looking for funding but when some big name investors approach you, it’s easy to get drawn in. The few conversations we did have were fairly representative:
- “We like disruptive marketplaces and if this works, and if you get this right it will be huge. But actually, we don’t think you’ll be able to get customers so show us a bit more”.
- “We love what this can do. Do come back when you’re raising a Series A”
I would have put this as an avoidable mistake (i.e. we made the decision early on) if I hadn’t seen examples of investors having awoken to the potential of Fintech and B2B finance, backing what appear to be ‘me-too’ start-ups. Bootstrapping until ready to take money is great if you’re able, but when the competition can burn cash on speed and awareness and potentially box you into Zombie company status 12 months down the line is not a path to take lightly.
Packaging: We all like to believe that our ideas will prevail and that the audience is able to get past their own preferences and biases. Otherwise, why try? The reality, whether we’re selling in a boardroom, or pitching to investors, who’s doing the pitching matters. Whether the team is in the investor’s ideal zone, or “doomed to fail because of x” determines total package appeal and the willingness of the investor audience to part with their brilliance and cash. Timing, team, tempo – whatever the reason, we clearly weren’t the right ‘package’ and, without money being thrown at us, remained bootstrapped. Seeing that many investors have piled into our space, I don’t think it’s likely to have been only the idea. Hence, team, and timing rank as top suspects.
Maybe a few more elements (people, timing, market forces) needed to be in place for idea and team to make it to the next level. Hard part is figuring out if timing and all the parts are in place. Many a venture career has been made or broken by this!
We didn’t achieve what we set out to do in the time envisaged. But we learned a lot more than we planned. And the journey not only equipped us and made us stronger, it’s also energized me to stay on the entrepreneurial path!