How to create, grow, and fund a tech startup: an operational framework
[Last updated: Dec 13, 2016]
Ok sure, we live in the world of Lean where founders can sometimes iterate a poorly built product all the way to Product-Market Fit. But, after building and advising tons of tech startups over the past 12+ years and watching countless other entrepreneurs try to optimize their game, I can confidently say that the process is always an inefficient mess.
What would be helpful for most founders is a robust operational framework for the super early days to help make operations a bit less chaotic:
Yes, plan to bootstrap and "fund" your company via profit. Don't think about raising outside money until you're growing rapidly and clearly see how you'll make investors a huge return.
If you're doing it right, investors will come knocking.
Along the way, of course, do everything you can to acquire paying customers who absolutely love your product/service.
Let's dive into the details
While of course you should avoid analysis paralysis, if you race forward haphazardly you will build something more minimum than viable.
It's important to note that the order below matters. I've learned the hard way, multiple (multiple) times, how doing things significantly out of this suggested order leads to miscommunication, wasted time, and unnecessary chaos. That being said, many steps can be worked on in parallel, just don't get too far ahead and leave other team members behind.
I'll be rolling these steps out as articles over time to flush out the topics in more depth.
Subscribe to my newsletter and I'll keep you posted when I publish new content.
Here's the basic outline
[Links to articles are updated as I write ‘em]
- The Idea (vision, problem to solve, product details, value & growth hypotheses)
- Overview Statement (boiling down vision, problem, and solution)
- The Market (competition, “why now”, addressable market)
- Customer Segments / Profiles / Personas
- The Roadmap (timeline of sprints & milestones)
- Overview Story (rough collection of initial user stories)
- Funnel Stages & KPIs
- UI Spec
- Tech Stack Decisions
- Data Architecture
- UX Flow Chart
- Brand Foundations
- Legal stuff (corporate structure, team comp agreements, terms & conditions, trade names)
- Financial stuff (financial model, where the initial $$ is coming from)
- Mockups (do as few as possible here)
- Private Alpha (i.e. make it a functioning product on a staging server)
- Coming Soon Page (email queue)
- Closed Beta
- Open Beta
- Product Iterations (focusing on what matters, communication with customers and marketing/sales)
- Exploring Product-Market Fit
- When/if to raise money (accelerators, types of funding mechanisms, etc.)
- The Pitch (how/when to use the Deck, Financials, Executive Summary, etc.)
- Closing your first round (pitching angels, super-angels, and early-stage funds)
- Communicating with investors (leveraging their skills and networks)
Foundational mistakes will affect your ability to raise money
Mistakes and bad habits formed during the foundation-setting process are costly. For example, most savvy investors (even in your pre-seed rounds) will take a careful look at not only your team, product, and market, but also at often-overlooked things like your financial model and cycle times within your funnel metrics. Unless you have a validated hypothesis of who your customers are, and can explain in detail how you will continue to acquire them successfully, good luck getting funded.
I'm writing up these steps because I'm meeting a growing number of entrepreneurs who are repeating similar mistakes, running into the same brick walls, and are having trouble getting into accelerators or finding success with angel investors and/or venture funds.
While there is no lack of content out there for all these steps above, I have yet to find a concise resource that ties them all together (if you know of any, let me know).
Author's note: as I mentioned above, feel free to subscribe to my newsletter and I'll let you know when I publish new content. Thanks!
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