I played with the idea for my tech business for a long time before a friend of mine actually pushed me one day, over a long lunch, to make it happen. He had worked in Silicon Valley and suggested hiring a chief technology officer and going in to see some venture capitalists. If only it were that easy.
At this point I didn’t have a clue what a venture capitalist (VC) would be looking for, or how you talk to one. I’d done business in San Francisco and knew a few people there, so I took my friend’s advice, and managed to get meetings at some big-name investors. I walked into a major VC firm’s offices with just 15 minutes to pitch my business. I had arrived at this point feeling pretty optimistic, but quickly realised that this was a totally different world. Despite my best efforts and obvious enthusiasm for my business idea, they didn’t call me back.
Getting a startup off the ground is one of the hardest things I’ve ever tried to do. At a Guardian Business Made Simple event in Bristol last month, I spoke about the challenges that business founders face to create a successful company and gave my view on how to overcome them.
When you’re a startup and you haven’t got market proof (who has at that stage?), all an investor is really backing is you, your team and your idea. You might be able to show all the passion in the world for your idea, but to convince an investor you’ve got to learn a completely new language. You need to be able to understand and communicate in their language and talk about where you fit in the market, how you’re going to monetise, and most importantly how you’re going to scale, or manage your business’s growth when additional pressures are put on it.
We didn’t get any investment for a full two years after that first VC meeting in San Francisco. The experience taught me that you can have the best idea, but if you can’t present it in the right way it’s unlikely to cut through. Getting funding takes a lot of hard work, research, countless presentations and some good storytelling.
You also need a degree of luck. In fact, I’d say creating a business that takes off is about two-thirds luck; the challenge lies in finding a way to keep going long enough to get your fair share. Timing helps too, so that you get in front of an investor who is looking for your risk profile (which means the amount of risk involved in backing you), is ready to hear about your idea, or has been pondering making a move into your sector. It all sounds so easy now.
You’ve got to know what other competitors are doing. Even if you have a unique idea, someone somewhere probably has something similar. At my company, we started by telling people the world needs an online mapping platform – ignoring the famous one they already knew about – but that didn’t get us very far. Now we explain how we have a very different type of platform. Different and, in our view, better.
Arguably, I’d say the important thing to do is to put the right team together. You may have an amazing product in the works, but it’s going to be people who get it to fruition – get a good mix of employees and find a way of making different skills work together. Remember the adage “hire people smarter than you”. Aim to recruit staff who are so good they scare you – those are the ones you want in your team.
Tim Fendley is the founder and CEO of Living Map