Tips for Startups Navigating the World of Business
Advice for startups from VC and Partner at Polaris Partners, Gary Swart.
Gary Swart, VC investor and General Partner at Polaris Partners ($4B under management), was the key speaker at a recent Fireside Chat Event at Founders Floor.
Before stepping into his VC role, Gary was the CEO at oDesk, which is now the popular freelancing platform, Upwork.
Gary offered his advice to startups who are looking to learn more about what they can expect during the different stages of business. This is his advice.
Starting out and making it work
Starting a business is not easy, it requires a lot of planning, refining and long hours. Too many entrepreneurs try and do too much on their own for too long. When you’re starting out, it’s important to identify the areas of your business that you don’t have enough knowledge and experience in. Gary suggests you take the time to upskill yourself in these areas or partner with people who can do what you can’t. Successful business owners know when to delegate in order to get things done.
Employees are crucial to the success of your startup but how do you hire high-quality people when you don’t necessarily have a lot to offer in terms of remuneration and benefits? The key is to find people with characteristics that align with the qualities you want to see in your business. Integrity and motivation are two of the most important characteristics. Gary pointed out that the right employee will be able to tell you why they would want to work for your startup versus a larger organization. Employees that are right for a startup are passionate about what you’re looking to do and want to be there from the start, learning about what makes a business tick.
About that funding
Many startups worry that they’ll lose out on early stage capital if they crowdfund in the beginning.
Gary stated that you need to go where you feel you’re going to get the most leverage. As long as you can show execution, nobody’s going to care where you got your capital.
The only way that crowdfunding might affect your funding journey in the long run is that you might miss out on a warm introduction if you don’t raise your seed capital through an investor from the start.
If you’re ready to approach an investor, make sure that they’re a good fit for your business at its current stage. In terms of how to approach investors, warm introductions are always best. Gary mentioned that there are so many startups taking the cold call route that it’s made funding a lot harder to obtain.
Gary feels that most investors want to see three important things when they sit down with a startup:
- Product market fit
- The problem being solved
- Market size
By emphasizing these three areas, you’ll have a better chance of grabbing an investor’s attention.
Managing the growth phase
As important as it is to grow, you need to make sure that your startup isn’t growing in the wrong direction, which is why it’s important to figure out your business model. Your startup might be doing well now but does it have the potential to bring you big business?
Gary suggests that in order to effectively manage your startup’s growth you need to recognize where you are as a business. You’ll need different tools at different stages of your business and you’ll need to surround yourself with the right people at each stage.
So how do you know what stage your business is in?
During the early stages of business, you’ll be more about vision than execution. You’ll have a few clients, many of which won’t be paying full rates. You might have established a product market fit but this stage is really about proving your vision and idea.
Once your startup starts growing, you’ll have clients who are actually using the product, some revenue will be coming in, you’ll have developed an ideal customer profile and your sales cycle will be much shorter. Repeating patterns are a sign that your startup is growing.
Remember, companies can be in different stages all at once. The various areas of your business can be at different levels all the time because your business is always evolving.
Growing into a marketplace
Gary explained that before you can open your doors, you need to have product and quality product at that. You need to have enough liquidity in a marketplace. Focus on bringing the clients to you first before you start expanding your offering.
For example, it’s easier to have one shelf of products and many clients who increase the demand for your products than having two shelves of products but not enough demand.
The best marketplaces have virality. When you look at your own marketplace, ask yourself if you aggregate one side, will the other side come organically?
Remember that your business evolves over time. Amazon didn’t decide to sell everything all at once, their offering evolved. Your market will tell you what next steps to take.
Selling and partnering up
A big part of growing might mean selling or partnering with another business.
Mergers are hard and require a lot of strategic thinking before you go ahead. Seriously think about the value the acquisition would bring.
In order to successfully acquire or partner with another business, your synergy needs to be strong and the partnership needs to make sense in the long run.
Starting and growing a business is a time-consuming, exciting, and rewarding process. Businesses grow when they learn to focus on their specific requirements at each stage and understand what will be important in the next stage.
Interested in taking your startup to the next level?