Startup Advice: Zebra, not Unicorn.

If you are on the way to your own startup I want to share with you some lessons learned.

There are many ways to startup. Unfortunately, the Unicorn is the model that is most known in popular culture. It is the one you read about in the press, is what everyone tells you to aim for. Except that, last I checked, unicorns don’t exist…

unicorn
[ˈjuːnɪkɔːn] *noun
something that is highly desirable but difficult to find or obtain.

The thing is, many business ideas are good enough without having to be a unicorn

If you are working on your startup and polishing your pitch to go get seed investment you are playing the unicorn game. You have to know that everyone from the Angel to the VC investors is trying to figure out if your idea is the next unicorn.

Accelerators are nothing but unicorn hunting grounds. You will be shown how to perfect your pitch so that your embryonic idea can be seen in all its “Hockey stick” potential. And this is the right game to play for investors, for they know that 9 out of 10 ideas they invest in will not take off as they plan.

Don’t be blinded

I had a couple of friends that were importing organic coffee from somewhere in Africa. I met them at one accelerator. They were so enthusiastic about their coffee, and their coffee was really special. They did play the game of preparing the pitch until they were asked about scalability.

Fast forward a few years, they own a nice coffee shop that sells specialty coffee and has a quite nice atmosphere. They were never looking to be the next Starbucks, they only wanted to share their love for good coffee.

We were blinded

We were part of an accelerator that tried to groom us for the next investors. We declined two sensible offers to create a normal business from two very interesting partners because of this. The first one was an old contact that had just sold his company and was looking at something new to do.

We were resonating on the same wavelength when it came to technology and team. But when we started the financial discussions, our contact walked away. He saw through our Angel investors, we did not, and worst of all, our hands were tied.

The second one was a sensible offer to buy or license our technology from a potential customer. It was again a good technological fit, they even had some office space ready for us. Here again, the expected valuation from our Angel investor got in the way.

Happy ending with a twist

In the end, we found an agreement with a technology partner, but this made it necessary for us to do a deal using debt and removing the shackles that our Angel investor had placed on us. In short, we had to place the company in receivership so that we could transfer our IP to our debtors and business partners.

Lessons learned

I have been quite successful with my next company, weathering Corona and building up a profitable business in my area of specialty. From the beginning, I knew I did not want any investors muddling the waters. By focusing on sales instead of investors the business was cash-flow positive quite early and has stayed that way since.

I learned the following:

• I wasted lots of time perfecting the pitch and grooming our old startup for the Unicorn game. We would have been better off growing our customer and partner base.

• Accelerators are fun to be in, and it is cool to get to know the folks working on other ideas. But that is about the only value you will get from them.

• You are the product for the accelerators. Just like cattle growers, they will treat you nicely as soon as you are gaining weight and muscle where they want you to.

• There are better options to grow your network, and people out there truly trying to help you without seeing you for which return you can bring to them. It is better to work with them than with an institutional accelerator.

  
  

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Join the Zebras

By Zebras I mean the normal entrepreneurs that are looking to grab a market and create sales instead of going around chasing investors.

• Focus on customer acquisition and sales.
• Ensure your products or services are solving a need in the market.
• Grow based on your own financial muscle.
• If you decide to work with investors make sure not only that you keep your majority, but also that you keep the freedom to associate/sell or license your IP.

Good luck with your endeavors!

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