Jason Hishmeh's Blog: The 6 Startup Stages

A tech founder recently shared with me their excitement about raising capital at a very high valuation. He informed me that several venture capitalists told him the valuation actually seemed quite low. Despite this positive feedback, no investment had been secured yet, and the only traction so far was a PowerPoint presentation.

Investor feedback, while encouraging, can sometimes give founders a false sense of confidence, ultimately slow down the fundraising process, and sabotage their chances of success.

It’s essential for founders to have a realistic understanding of the true value of their startup.

Recently a startup asked me to introduce them to investors.

I asked them a few questions and realized they had no up to date financials, no financial reporting capabilities, and no ability to provide investors with updates as they scaled.

I told them I was not comfortable introducing them to investors due to this.

I instead gave them some advice on FP&A (Financial Planning & Analysis) tools to put in place to fix these gaps.


By
Jason Hishmeh

Recently I was in discussions with a startup founder who informed me their company's valuation was over $20 million. At this point he only had an idea - no team, no product, no revenue, no traction.

For many founders, they believe having a high valuation is a sign of success. In fact, this may doom their chances of building a successful company.

What they often don't realize is a high valuation means higher expectations of what the founder must accomplish in order to provide an ROI to the investor.

If the founder has no track record of success, an investor is unlikely to believe they can accomplish what is required to deliver that ROI.

For many startup CEOs, they are first-time founders.

The idea of giving away equity can be scary.

You don't want to end up with "dead equity" or a "broken cap table".

However, it's also important for founders to incentivize others to join their startup and they can do that through equity.

A founder must be able to craft deals, discern how to best build a team, and incentivize people.

If it's your first-time doing these things, then you should seek an advisor who can help you navigate those decisions.

If you're a non-technical founder starting out, I recommend you check out my book for guidance on each stage of your startup journey.

In my book I discuss this desire by most startup founders to try to raising millions in funding from VCs (Venture Capitalists), what type of investors to consider for your situation, and how to approach them.

As an entrepreneur and tech investor, I interact with over 500 startups per year. Many are first-time founders. Many spends countless hours pitching to investors who will never invest into their startup - focused on pitching to the wrong investors.

It's important to understand what type of investor to approach for your particular situation. And how to approach them.

Otherwise you could waste countless hours that would be better spent focusing on building your business, getting new customers, and growing your revenue.

The 6 Startup Stages: How Non-technical Founders Create Scalable, Profitable Companies