One of my startup buddies, a founder of seven companies, once said this:
“When I was 25, I founded my first company. My grandmother, bless her heart, told me congratulations, you’ll be profitable in 4 years. I said, ‘Oh no, you don’t understand, we are going to be wildly profitable in our first year.’ What did she know? She was a schoolteacher. She smiled. After all, she founded 2 schools, her husband founded a couple of companies, and her parents were angel investors in the Roaring 20s, decades before angel investing had a name. It is embarrassing how much closer to the mark she was than my forecast.”
Why does it take so long to become funded and profitable? Usually, he says, because startups focus on the wrong things. Most focus on not having enough money to finish their amazing technology. And money is almost always a problem. How to get money? His favorite rule is “Nothing good happens until you get in front of a customer.”
He says the best way to success is to find a way to make this kind of pitch for money: “I have a great team, we have customers for the tech we already have and know how to build, but we need money to grow faster”. In simple terms–Team, Tech, Traction–are the keys and getting them fast is vital to getting venture investment. He says, “If you are stilling mulling the same problems nine months from now, you are dead.”
I hear him, but as I have said before, I think this means venture capital is very hard to get for a cleantech startup. There are many reasons why building something physical and getting traction for it in the market inherently takes longer than creating a software product. As a result, software companies tend to look much more attractive to VCs. There is a need to find other routes to get to the Team, Tech, Traction metrics than venture capital–or cleantech startups need to be predominantly focused on software solutions.
Still he is a clever dude and worth heeding. His advice is in a slide presentation he calls “Startuplandia”. Click here if you want to take a look.
ABOUT THE AUTHOR
Gary Simon is the Chair of CleanStarts Board. A seasoned energy executive and entrepreneur with 45 years of experience in business, government, and non-profits.