Startup stages and crossing chasms

As a #startup, what stage are you at on your journey?

Where would a #VC or any #investor put you?

And is any of this important?

------

When being pitched there are a number of things that run through my head. I break them down into 2 core sets of information.

1. Do they fit my investment thesis??(more on that tomorrow)

2. Where are they at on their journey? (as below)

Both datasets are intertwined but I wanted to unpack stages a bit.?

This was mainly driven by conversations I had last week where I thought founders were doing the wrong things at the wrong times e.g. spending too much in problem-solution mode.?

This is especially dangerous as we’re (probably) walking into tricky times as valuations are dropping and nerves are appearing across the venture sector (Inflation, interest rates, conflict etc are stirring jitters but to be fair it’s early days.?However, as a founder - be prepared).

What stage is your startup at?

(There are many definitions and naming conventions, these are the ones I use. Not exhaustive nor definitive by any means. More for conversation and for you to define for your business.)

Problem-Solution Mode

Just out of ideation, 0-a few clients, little/no rev, some version of a MVP and a smattering of interest from potential clients with warm noises. Probably bootstrapping or some FFF or angel money in the pot. It’s a fun but unholy mess working out what you do, who you serve, why and how. Nothing is scalable or repeatable yet.

Founder-Market Fit

This should be in brackets really as it’s not truly a stage BUT it’s something you’ll come up against with clients and be judged against by investors. So worth a note. Fundamentally - Are YOU the team? The way I see it is that you need founding technical and domain smarts. This is a contentious one as many investors don’t need either. But instead look for personality types (which are easily Googlable). I don’t buy it personally. I want to see that you can build something and that you know a little secret as a founding team. As well as all the good personality stuff.

Product-Market Fit

You are now fishing where the fish are. And catching regularly. They need and want you. You have the beginnings of a scalable-repeatable sales model. It’s all coming together. Founders sales has been bottled and transferred into functional teams. Sales have become pull sales in many cases. Defined ICPs are behaving how you think they should. Rev is increasing steadily but not necessarily at scale.?

Go-to-Market Fit

It’s now all about depth, then growth. Rinse repeat. Owning markets. Defining your category. And how far you go broad or deep e.g. vertical SaaS or new verticals. Which ICPs, which territories.

Scale

You’re no longer a startup (or are you?). This is where cost and revenue lines diverge. The gap between increases (or can increase, as you find efficiencies. Unless you shove it all back into the marketing column). You’re now a global business. Twiddling your waxed moustache / or lady equivalent while watching the Monaco F1 from your super yacht.?

------

It’s worth noting that some startups cross these chasms in months-years while others take decades. Remember that comparison is the thief of joy. Also to consider that nothing is linear. Sometimes you’ll take a step or 2 back, sometimes you’ll do both at the same time depending on what, who and where you’re operating. ?

But knowing where you are and what to do to progress can be nothing but a good thing. Happy defining and owning. X