It’s tough being a founder OR need... HELP!
21 December 2022
You talk about support services for start-ups being few and far between...why is that?
Service businesses need to make money, but, unfortunately, it's very difficult to make money out of startups because they don't have any! That is the heart of the problem. Many, many well-intentioned organisations and individuals would love to help, but sadly, not all of them have the appropriate skills or experience to be helpful.
Accelerator programs have mentors who may be former bank managers or accountants, lawyers, and so forth, who may not have had any entrepreneurial experience. What they have is deep knowledge in niche areas, so you really need to collect fifty of those individuals, nip them all together (which is quite a job), or you have to try and figure stuff out for yourself.
As a founder, the key question is, "How am I supposed to be good at all these things? I can't be good at everything. I can't be good at finance, corporate structuring, tech, sales, human resources, marketing, and fundraising; how could I be?"
A founder is (probably) the individual who will be passionate enough about their business to want to learn quickly. But two things are happening at the moment: people are just trying stuff out and making unnecessary mistakes, OR they are tying themselves into expensive resources that may not deliver. As a result, they are increasing their cash burn at exactly the wrong time.
As an example, we see this very specifically in the fundraising space. Many bad actors are happy to take an upfront commission, charge very high fees, and tell you they have great networks and investors. Then, they’ll come back and tell you in three months that they’re sorry, but your business isn't very good, and they haven’t been successful in raising funds, BUT they’ll still take their fee... thank you very much.
This 'let-down' experience is true across the board in terms of the services startups need. We think there’s an opportunity here to do a couple of things. Firstly, to get much better at the provision of fractional services provided by organisations or individuals that know their stuff and ensure those services are priced appropriately for startups. Quite a lot is going to be 'giving back,' quite a lot of it is going to be pro bono, and quite a lot of it could be for a little bit of equity.
What services do you feel a start-up needs during the early stages? What's the big miss?
How does Capital Pilot fit in? What can it offer?
Initially, Capital Pilot’s role was to help companies with fundraising. That's our core mission. Companies don't survive without fundraising; many fail because they do it badly. They fundraise badly because they don't have the experience or the expertise around them in order to do it well.
That's a massive problem that we are fixing by providing subjective, low-cost, high-quality, standardised feedback which enables startups to improve. For instance, a business may need to improve the quality of its advisory board because it needs to demonstrate more domain expertise and startup experience. They go to work on that, bring a few people on board, and then come back to be reassessed and, guess what? Their rating has gone up. - Ensuring companies are confident that they’re in the best possible shape is a monumental part of our mission.
The area we are now beginning to explore through the community of Boost Fund founders is the development of a highly active, safe space for founders to share experiences and to request help from other founders. Everybody is keen to help in this marketplace. Everyone loves to help - it isn't a dog-eat-dog competition. It's a “you share my pain, and I’ll share my ideas and thoughts with you”.
It's a very sharing space, but that sharing intent is not activated. We feel we're in a great position, through the input from all of these companies, to identify and provide the services that can help them on their way.
So many businesses say, “we’ve captured this data,” and many say, “recruiting’s a nightmare.” Still, I bet you out of those fifty companies invested in by the Boost Fund so far, fifty different recruiting solutions are being worked on, and maybe 42 of those aren’t very good and aren't delivering!
If we can identify a recruiting structure or process, or concept that we know works and deliver it to the community, we can make an impact not only in the fundraising space but on other important scaling aspects of their business. Bulk buying services is cheaper and helps identify fantastic individuals who can be shared between different organisations - helping many companies. The opportunity for creating a safe place in the community and the sharing of service providers is a massive opportunity.
How do you feel these services land with the startups? How does it make them feel?
The first way to answer that question is to talk about the negatives - how does it make you feel when things don't go well? Or, when you've written a cheque for a service that turns out to be not very good and wastes a bunch of money? Those experiences can induce fear and panic, which may mean you’re even less likely to risk finding another service provider. It can make you weary and/or mistrustful.
Being mistrustful is a bad place to be if you’re trying to be the leader of a business with a positive momentum and a positive mindset to drive growth and change. There is a split in the marketplace at the moment for service providers. You’ve got the big four or six accountants, the big banks, and a few others who will say, “oh yes, we love startups; we help startups''. Well, again, to what extent can a tax partner from one of the major accounting firms deliver value to a startup? It’s a very, very different world from the one they inhabit.
It’s a CSR thing - businesses get a branding advantage from saying they are involved in startup land, but the service they provide is close to nonexistent because the start-ups can't afford them!
At the other end of the market, there are affordable services provided by people that, in many cases, if they’re any good, would probably be working for KPMG. But they’re not working for KPMG because they’re probably not very good! So, the startup's choice is cheap and useless or unaffordable and good but possibly not very focused on the space. The ability to take away the risk factor around making decisions about services you’re procuring is, I think, psychologically huge. Imagine if you could rely on a network of trusted people who only have good intentions to provide suggestions for service providers that have demonstrably created good work for other companies. Imagine that!
It will result in freedom, confidence...relief. Who needs Google?
Are you fundraising soon?
Capital Pilot’s Investability Assessment and Rating should be the first port of call for founders preparing to raise funds. We provide objective feedback on your investor proposition, with clear suggestions on how to improve. In addition, we provide rated startups with lists of matching investors to help focus your campaign.
The Capital Pilot website has a wealth of resources on different aspects of fundraising, which can be found HERE. Everything you need to know about preparing to meet investors all in one place.