You’ve got the next billion-dollar idea and you are looking to make the big jump into the “fairytale” journey of an entrepreneur. You have read all the startup books and know everything about the great founders that became successful overnight.
The startup journey is similar to a survivor’s journey, and the last person standing is not necessarily the strongest or the smartest, but the person with the most skills who manages to outlast the other players. But before you start your adventure in the mysterious land of startups and possible unicorns, make sure that you are prepared. Here are five key components of the entrepreneur’s total startup capital that you should think about.
Pick the industry that will be the most advantageous considering the skills and expertise of you and your team. Keep in mind that some industries are more competitive because they have lower barriers to entry and do not require a significant amount of capital. Other industries are less competitive but are more complex and capital-intensive. Pick your industry carefully, and do not disregard factors such as regulations, the velocity of change and emerging new technologies.
In the fintech industry, for example, the regulators are slow-moving and approvals are often required from financial regulators such as Financial Industry Regulation Authority (FINRA) and the Securities and Exchange Commission (SEC). I know this because it took the company I co-founded almost eight months to obtain the funding portal license. The best advice I learned is this: Find an expert who has already been through the same process who you can learn from.
Gather as many experiences as possible and develop as many skills as you can. For example, if your software relies heavily on a specific application program interface (API), then make sure you personally have a general understanding of it. This will help when your team is developing the software and during the integration process. If one of your software’s major integrations is payment services, make sure to read its API documentation or ask one of your software engineering peers for some help.
You likely have access to knowledgeable advisors, from VPs of major startups to successful entrepreneurs. Remember that every piece advice should be taken with a pinch of salt and some careful consideration — the VP of engineering at a fashion tech company might not be the best person for fashion advice but would be a great person to talk about software architecture.
Try and find the genius in each advisor and to focus on asking them for advice relevant to their expertise. For example, one of my advisors and mentors is great at building competitive advantages and is, therefore, my go-to-person when I have strategy questions.
Don’t reinvent the wheel. Figuring things from scratch takes time, energy and a lot of trial and error. Look at what others have been doing and how you can take advantage of what they have built.
Besides looking at what the direct competition has created, you can also talk to experts in the field who can give you insights on how to build or improve the process. You can also look at similar processes in different industries. One way that you can save time is to use open source codes for your prototype. This will save time and energy both coding and debugging.
Every entrepreneur will tell you how important it is to build your network of investors and professionals within your industry. You also need to build a network that can help you on a project basis — individuals to talk to about creating a press release, financial modeling or your hiring process. This can be really helpful and save you significant resources versus relying on freelance websites to find a suitable person for a one-time assignment.
In the past, there has been so much emphasis on raising capital, but that’s not the only factor an entrepreneur should consider. Increase your chances of success by raising your startup capital in terms of skills, knowledge and expertise.
BusinessCollective, launched in partnership with Citi, is a virtual mentorship program powered by North America’s most ambitious young thought leaders, entrepreneurs, executives and small business owners.