Hi! How are you today?
I really enjoyed the hybrid Pitch Night at the Venture Cafe yesterday evening and the different online and offline pitches. A lot of kudos for Anoesjka, Laura and all the other members of the team.
Some thoughts on the pitches.
It is interesting to see how fast people learn online in a hybrid Summer School, even during this Covid-19 crisis.
There are some things that struck me during the pitches however. The first thing has to do with what founders of startups learn & presented about financing their startup.
Corona & startup financing: lessons learned.
Corona shows that most startups (and scale-ups by the way) have run into financial problems for the same reasons:
- (dramatic) decline in revenue from paying customers;
- too high unneccessary costs;
- too high redemption costs;
- too high costs of external investors, loans and credits.
The reason why many founders of startups still make these mistakes is easy to find: because in our ‘growth-driven’ financial economic model, we teach starters that they have to grow to generate more profit. Why? In order to satisfy their own ‘needs’ and above all to be able to pay of those investors, banks and other providers of loans and credits!
“Founders of startups & many profit-/economic growth driven investors & external financiers do not have the same interests”
And certainly not to survive this crisis. In practice, there is no need for ‘growth’ and old-style scaling, which is an economic myth. That ‘must’ from external financiers in order for their financing to pay off. What do successful founders of startups different? W
What do successful founders of startups and other entrepreneurs do differently?
Successful startups focus on generating revenues from (fast) paying customers, including online during Covid-19. They avoid unnessecary costs and to try to avoid external financing as much as possible. That has been the case since 1997 when I started assessing startups in corporate venturing at ABN Amro and this is also reflected in the stories of 22 meaningful entrepreneurs in my new Dutch book ‘Groeien zonder te groeien’ (‘Growing without growing’).
There are some exceptions of course: for instance if you want to develop a physical product or if you want to build and run an online platform or marketplace for instance.
And what they also do consistly is focu on ‘Customer Readiness’ and not on ‘Investor Readiness’. Check out this blog.
If you want to read more ‘Corona Survival Tips’ in English, than bookmark these blogs, ok?
Tony de Bree