Starting a startup and scaling a business is not for the faint-hearted. It will consume your life, emotions, energy, and finances. Therefore, it is crucial to set yourself up from the beginning with the proper foundation and ensure that you and your business don’t become a statistic. Most companies do not fail due to having a bad idea. Instead, they fail because they cannot validate their idea as profitable and scalable.
Today's startup environment is challenging, with over 90% of startups failing, a 60% drop in VC funding YoY in Europe, and some VCs asking for their money back. There are mixed messages over funding, with some people saying it's a problem and others saying there is no problem. It seems to be a sectorial issue, and it’s a different game now that the easy money has gone, which might not be a bad thing!
To survive this shift, startups and businesses scaling need to have a commercializable solution that can be scaled, and they need to have evidence to prove it by completing all the necessary groundwork at the start. This includes understanding the market size in terms of value and customer/user numbers, establishing the size of the opportunity, and knowing the market and customers better than they know themselves. It’s also essential to understand the challenges and issues that customers face today and in the future, how they buy and the typical buying cycle.
Another crucial step is ensuring the product fits the market and customers and understands the value it delivers. It’s also essential to identify competitors and know where they are on the journey, and develop the business model. Only then can businesses clearly understand their brand, messaging, and website needs. They also need to work out the KPIs that matter for the business, know the industry standards and have experienced people set them realistically. It is essential to measure performance to understand why you're doing well, amplify it, and know why you're not doing well to correct the course.
It's essential not to continue doing the same things and expecting different results when the evidence suggests otherwise. Every business and product is unique, so it’s essential to document all the evidence and not accept generic business advice. Once businesses have done their homework and have all the necessary information, they can move on to branding, messaging, and building a website.
Finally, taking the time to think things through properly, having a runway with a few bumps, and then running like the wind is crucial. It’s essential to adapt to today's funding environment, whether seeking your initial funds or looking for funds to scale. This means understanding the game's new rules and taking the necessary steps to ensure your business's success.
The Business Model Canvas is a strategic tool that helps startups and entrepreneurs to develop and communicate their business ideas effectively. Here are some advantages of using the Business Model Canvas for a startup, especially when pitching to venture capitalists (VCs) for funding:
In summary, the essential themes from "Surviving the VC Shift: Navigating Stricter Investment Criteria & Adapting" are: the startup failure rate is high, and VC funding has decreased; VCs are becoming more selective and are requiring evidence of a scalable commercial solution; startups need to do their homework at the beginning, understand their market and customers, and have evidence to prove their value; it is essential to understand KPIs that matter for the business and to measure performance to know when to course correct; don't continue to do the same things expecting different results; take the time to think things through and adapt accordingly.
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