Two innovators are waiting to meet a potential investor. Which is most likely to be smiling this evening?
One sets out to build a great company, which needs great products to sell its customers. The other has a great product that will need a great company behind it to fulfil its potential.
Both can feel optimistic and are well prepared for their meetings, but must ask different questions of themselves along the way.
Investors see a lot of pitch decks and there are a few regular features that rise to the surface
- Understanding the market – not only scale, but the more subtle parts of trends, gaps in supply and relevant regulations or constraints
- Having a great product with a competitive edge – because without this it is an uphill path
- Solid leadership and management – with integrity, passion and all the right skills
- Understanding the risks – to demonstrate awareness and control
The challenges play out in a recent Research Brief by CB Insights of the top 12 reasons start-ups fail. The number one reason, unsurprisingly, is running out of cash or failing to raise new capital, although that is probably a consequence of what was brewing underneath. The rest reflected on one hand the range of market need and product related questions, and on the other hand the personal aspects of leadership and team.
Most pitch decks will lead on matters of product and technology, with market forecasts and a business plan that may show the scenarios of cautious, likely and optimistic outcomes.
Our two innovators are pitching from different starting positions, and it is likely that neither of them has all the answers and all the skills on their own. They will undoubtedly be self-assured (it’s hard to get to this point if not) but it is a rare ability to self-examine, acknowledge gaps in skills or understanding, and do something about them. That is what they must do to really face up to what might get in the way, and how they should be equipped to handle the challenges that will no doubt arise.
Some of the best leaders I have worked with were clearer on what they couldn’t do (because what they could do was never in doubt!) and set out to plug the gaps with other talent. Successful companies grow from teams that cover all the bases and can act together to move quickly down a single path. What might the team look like when the founding few become thirty with departments and hierarchies to contend with? That is perhaps the key question at this stage.
Whether developing new products to meet a market need, or building an organisation to mobilise your product, the softer parts of the growth plan are often the most difficult for innovators or technologists. Some early thought in this area can have untold benefit as the business expands.
So which of our two friends is in the strongest position? It could be either, and if the technical propositions are credible, then it all comes down to the team, and that grows from the very beginning.
What has been your experience of early-stage team planning? Let me know in the comments section below. I’d love to develop these ideas in future posts.