You’ve got the seed of a new idea and are excited to get started. Here are some practical tips on next steps to help you access support and maintain momentum.
It often feels like there’s a thousand things competing for our attention and that it’s impossible to prioritise. Or that the next step feels too big to even attempt.
To avoid this I think it’s helpful as an early stage founder to view the path as one of many small steps. The next step is always achievable and clear, the focus is just on getting the most important goal completed each day. This helps avoid analysis paralysis and feeling overwhelmed by the scale of the challenge.
Below I’ve outlined the answers to some common early questions. If in doubt, focus on increasing your clarity what your customers are willing to pay you for and how will you reach them.
How do I know if my startup idea is any good?
Don’t try and find out by asking friends, family, advisors or experts what they think! In reality it’s very difficult for anyone to know whether an entirely new product or service is viable.
The best way forward is to develop empathy and understanding with the people who have the problem you are proposing to fix - your customers! Speaking to the people who will give you money and become customers is where your time is best spent.
You can use the information from these discussions to validate customer demand and prototype delivering what value to them would look like.
However, beware! Asking people “would you buy my product?” is a common pitfall that won’t yield useful answers. Instead read The Mom Test, it’s a short playbook on effective customer development techniques. Reading it will save you time and pain.
Next steps:
Are you thinking you can skip this step? We all have excuses about why we already have the insight and don’t need to speak to customers. I’ve written about why there are only bad excuses for not doing customer development.
OK, I’ve spoken to customers, what next?
So you’ve developed an effective method for repeatedly speaking to potential customers. They’re now not telling you what they might hypothetically want but giving you real confidence in what it is they will truly pay for.
The next step is to validate (or invalidate) your newly developed assumptions about what your product or service will be and who will pay for it. At this point the common founder temptation is to lock ourselves away and start building our product in earnest. But it’s very important to develop further evidence about what our product is, who our customer is and how we will find them.
The Lean Startup methodology contains lots of simple and actionable ways for testing and modelling an early stage business.
Further resources:
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Read this Lean Startup summary blog that summarises the key principles or read the full The Lean Startup book
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Create a Lean Canvas, it’s a simple one page worksheet that models the key aspects of a business
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If you want to go deeper the Y Combinator Library is an excellent free resource, written by the team of the world’s most respected accelerator
What funding and support are available for UK startups?
There is a bewildering array of different funding and non-financial support options ranging from startups accelerators, grants and loans. Some are amazing value, some are worth considering and some are an outright rip-off.
Be cautious about signing up for any deal that is in exchange for equity - they will own a piece of your company forever so make sure you’ve fully thought through the valuation and terms.
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A good overview of UK startup funding options from SeedLegals (automated legal support for startups), they have lots of good fundraising content
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To keep up to date with funding options other than classic VC Considered Capital is a great UK specific newsletter
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If you’re a social enterprise then Good Finance, The School for Social Enterprise and UnLtd all have useful lists of grant providers in the UK
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A list of 180+ UK accelerators from Entrepreneur Handbook
Generally speaking if you’re pre-product, pre-revenue and a first time founder then it will be harder to raise significant money from investors.
Accelerators and incubators can provide early practical support as well as some initial capital, although this will sometimes be in exchange for equity so check the terms of any deal carefully.
Should I assume that I need to raise investment for my startup?
Not necessarily, there are a range of ways to generate the capital necessary build a successful startup. Each has pros and cons depending on the type of business you are building (potential size, speed of growth, business model) and your preferences as a founder.
The funding offered by venture capital (VC) funds tends to dominate the headlines as it is a ‘product’ being promoted. However VC funds are only really suitable for companies that expect to reach a ‘unicorn’ valuation of $1bn in less than ten years. More on this in my article here: Founders & Angels: How well do you understand the Venture Capital business model?
Bootstrapping is a popular alternative route - re-investing profit from the business in product and growth. This typically results in much slower growth, which for some businesses also means lower risk as there’s less pressure to get everything right quickly. This often also means the founders retain ownership of the company, rather than quickly becoming minority shareholders as is the case with the VC route.
It’s common for some startups to bootstrap to a certain point and then take outside investment to scale the business more rapidly. This can result in more attractive investment terms as the business is more mature and lower risk.
Further resources:
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Newsletters such as The Bootstrapped Founder and funds such The Calm Fund are great examples from the thriving ecosystem outside of the VC funding model
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Sifted has lots of stories from founders about their experiences of both taking VC and taking the indie bootstrapped path
Do I need a tech co-founder and/or funding to build a product?
Not necessarily. And in fact having too much capital or too much engineering capacity at the beginning can be counter productive. It will be tempting to disappear and build the ‘perfect product’ but in practice an iterative approach is better. It lets you test your early adopter customer’s willingness to pay and adapt to their feedback.
This is because at an early stage it’s not that clear exactly what the solution (product) is to the customer problem that you’re working to solve. You may have a hunch but without a lot of people consistently buying it then you don’t have true validation.
A rented software / no-code / low-code approach allows you to build and charge for a prototype or Minimum Viable Product in Lean Startup terms. What you build may not be perfect but that’s OK. Your goal is to be proven wrong or right quickly about what customers want. This way you can evolve rapidly and maintain momentum, if you’ve just spent six months building something it’s much harder to throw it away and move on.
Further resources:
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The IndieHackers community is a treasure trove of resource efficient ways to build a successful startup, I especially recommend their newsletter
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No-code communities like Makerpad are a common place to find founders building their Minimum Viable Product. Using a no-code approach allows you to postpone using expensive bespoke development teams until you’ve got revenue from early customers
There’s no single right way to build your startup, the most important thing is to understand the pros and cons of each route so that you can make an informed choice.
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