By Victoria Grace, founding partner Colle Capital

After many years in early stage venture capital funding, I’ve seen the good, the bad and the ugly of the startup world. There are a few things that almost all successful entrepreneurs have in common, and plenty of mistakes to be avoided as well.

For your best chance of success, here are five tips for establishing a startup that can really go the distance. Plus, if you’re looking for investment, look at my post below, where I share industry insight into the most common ways entrepreneurs accidentally sabotage their funding pitches.

1. Find a co-founder and team with complementary skill-sets

Picking the right co-founder can be precarious and time consuming. Many venture capitalists favor startups with two strong co-founders over those with one, because they are generally considered to have more chance of succeeding. The co-founder model can mitigate risk of burnout and makes it less likely the company will collapse if a key figure leaves.

Each principal should ideally bring a unique skill set and lead a different section of the business. For example, one co-founder might guide the technological side of the company, while the other heads up finance and operations. In this scenario, each co-founder tends to be more passionate about their section of work, and brings highly specialized knowledge that complements the other’s, optimizing the efficiency of business operations.

But while there are undeniable benefits to having a co-founder by your side when the going gets tough, it’s not impossible to succeed by going it alone with a single founder or principal. It is crucial, however, to make sure the team around you has skills and passions that fit well with yours and that you have a really strong second-in-command who you trust to make decisions and lead when needed.

Being the sole founder of a company also makes it even more important to have structures in place to ensure that your wider team is incentivized to work hard – usually this is very effectively achieved through equity ownership.

2. Build a team that can do it all

Whether your team is tiny or substantial, team members must be able to work together and cover all the critical functions of your business without any gaps.

It’s important to make sure all bases are covered, but don’t hire people just to tick a box. Often entrepreneurs replicate traditional management structures, instead of searching for people who can fulfill the functions their company needs.

Staff members who are hungry, multi-skilled and willing to pitch in and fill gaps are invaluable, especially in small- and medium-sized companies. People are any startup’s most valuable asset, so make sure every hire is a great one.

When I recommend a business for investment, what I’m really putting my faith in is the people. A good team is the single most important factor in making sure a startup succeeds. You can have the best idea in the world, but if it doesn’t have good people to make it happen then it will probably fail.

3. Find multiple investors

It’s a good idea to diversify your investment streams as much as possible, even if your business is still in the early stages. The key here is to have multiple sources of capital because delays often need to be resolved with an injection of cash, so having a few parties pitching in additional capital is always good.

Obviously, this can be a challenge. Maybe it was hard enough to find that backer in the first place! But if one investor has faith in you and your ideas then the chances are that others will too.

Lots of new entrepreneurs get complacent once they’ve found their first financial backer, and shift their focus entirely to developing their idea and business. Obviously it’s important to do this as well, but if you stop searching for investment it can lead to problems in the future. With only one backer you might struggle to expand at the rate you’d like, and it’ll be much harder to push back against your original investor if you need to.

Having multiple investors keeps your options more open. And remember that venture capitalists have more to offer than money: each brings a unique set of assets. While some are great at strategy and hiring, others have your domain expertise and can tap into their network to help your company. So it’s worth spending some time to find a broad group of investors who can bring different value to you down the road. You’ll have to answer to more stakeholders, but it’s worth it to make sure you diversify the sources of knowledge you can draw on.

4. Don’t do it just for the money

All entrepreneurs want to make money, and the prospect of financial reward is a powerful motivator. But money hardly ever provides all the motivation you need to keep going through the ups and downs of building a business from scratch.

Make sure you find something that you feel passionate about in addition to making money. You need to be interested in what you’re doing and believe that it offers benefits. If you aren’t sure, how are you going to convince anyone else to buy what you’re selling?

Figure out what motivates you. Is it finding new, more efficient ways of doing things? Is it introducing a completely new product to market? Do you have a passion for utilizing technology to solve problems? What is the purpose of your company?

You will need to care about what you’re doing to overcome the hurdles. Rather than pursuing an idea that could have the biggest profit margins but leaves you cold, pick something that’s financially viable and that you feel excited about – and then the money will follow.

5. Make sure your target market is big enough

You might have the most wonderful solution in the world, but if the problem it fixes only applies to a small universe of customers then you need to turn your focus to something else.

If the market for a new product or service is too small then it will be almost impossible to find investors. No one will take a risk on something with a small potential for returns, and sometimes products and services simply aren’t marketable. Restricted markets certainly aren’t the right territory for entrepreneurs in the early stages of expanding their business.

Depending on how niche the market is, it might be possible to come back to “smaller” ideas when you’ve built your reputation and revenue. If you can integrate them into your business model cost-effectively, then you can make additional profits from them. But start with a focus on ideas that are broad in scope.

Now get out there and win!

It’s never easy. But if you’re on the Agility Ventures website, you’re already a passionate entrepreneur who’s doing a lot right. You’ve picked a market with so much potential – logistics is complex and full of disruption, and that’s what makes it so exciting and full of opportunity. Do your research, make informed decisions and bring the innovations you want to see to market.

 

Find out more about Victoria Grace and her relationship with Agility here bio box, and keep checking the Agility Ventures site for advice and articles to help you succeed on your entrepreneurial journey.

How To Sabotage Your Investment Pitch

By Victoria Grace, founding partner Colle Capital

I’ve seen hundreds of investment pitches since I founded Colle Capital in 2015, and plenty of the decisions I’ve made about who to back have been really tough.

I’ve also had some very easy decisions because plenty of pitches have resulted in an almost instant “no.”

To even get to the pitch stage means you’re doing something right. There’s something promising or intriguing about your idea that makes potential investors want to hear more. But there are basic mistakes that entrepreneurs make, and those mistakes sabotage their chances of winning the financial backing they seek and need.

Let’s be honest, getting in the room with a potential investor is usually a rare opportunity. For most startups, the chance to pitch is hard-won. When it comes, understand that many investors start by looking for reasons not to trust you with their money. So if you want to sabotage your chances, there are plenty of easy ways to do it.

Don’t do your research

Before I even contemplate investing money in someone’s idea, I invest my time. Colle Capital is set apart by its research diligence. By the time we sit down to listen to a pitch, we know as much as possible about everyone involved in the project.

You torpedo your chances of success by not bothering to do your homework on the investor you’re pitching. It’s always obvious when entrepreneurs don’t really know us, and it’s a warning sign. If they can’t be bothered to find out who they’re inviting to take a stake in their business, they probably haven’t thought about a lot of other things either.

If you want to be taken seriously, invest time in finding out who you’re talking to. Have you scoured the website of a potential investor? Figured out how your company might fit into the investor’s strategy? Gone through the LinkedIn pages of the principals? Contacted people who might be willing to tell you what it’s like to deal with this firm or person? Get in touch with your wider network and find out what they know.

Fire off unsolicited emails

No unsolicited emails, please. Cold calling and unsolicited emails usually raise a flag and damage your credibility. Credible contacts come through introductions and common connections. Use your network to find someone who can help open the door for you.

As part of your research, you should be looking and listening for hints that your potential investor has a reputation for being difficult to work with. Not all funds are as supportive or patient as others. If your would-be backer might cause problems down the line, consider looking elsewhere.

Write a whole book

The length of a pitch should be ten pages. You need to succinctly summarise what you’re building, and be crystal clear in your wording. You want the writing style to be conversational and enjoyable to read, not dense and jargon-heavy.

This doesn’t mean dumbing down: you need to produce a high-level overview in a format that intrigues people. Then provide the data to back the premise of your idea and offer proof of a viable market for it.

All investment pitches should contain the basics:

  • Why your solution makes sense and why people will buy it.
  • What the competitor landscape looks like. Nobody wants to back a product with a hundred direct competitors, no matter how great your solution is.
  • The background of each of your team members. You need to show that your team has the skills to execute your idea.

In my experience, many entrepreneurs write pitches that are too long and hard to understand because they have difficulty explaining complex ideas succinctly. But that’s your job! Get to the point, cut out the jargon, identify the numbers that will support your case. No investor should have to slog through your pitch because you were too lazy or undisciplined to be clear and concise.

Be inflexible and dictate the terms

Confidence and assertiveness are crucial qualities for any entrepreneur. And investors want to see some level of confidence from you. But arrogance and inflexibility are complete turn-offs.

A great way of putting someone off working with you is to act as though you know everything. You might be brilliant and have an incredible idea, but entrepreneurs need enough humility to understand when their pet project might not be what the market’s looking for.

If you can’t pivot, adjust or accept feedback, you’ll kill the company eventually, even if your original ideas are good.

The lead investor is the one who draws up the term sheet, not the entrepreneur. Of course it’s negotiable later on, but dictating what your company’s worth is from the outset is something that doesn’t go over well with most investors. Presenting your own valuation of the company at the pitch meeting is a great way to really irritate your would-be backers.

What to do when you’ve nailed your pitch

As you prepare to deliver your winning pitch, remember that you should be choosy too, and avoid investors who aren’t a good fit. In the fight for financial backing, it can be easy for entrepreneurs to forget they can decide who sits on their board. Look for people who bring real value in addition to their money and use your research to find out who’s worth having in your corner.

Once you’ve found them, avoid making the common mistakes in your pitch and you’ll stand a much better chance of securing the investment you need to make your idea take off.

 

Find out more about Victoria Grace on the Agility Ventures blog. For more advice on how to run a successful start-up, take a look at her 5 Top Tips for New Entrepreneurs.

Introducing: Victoria Grace from Colle Capital

Victoria Grace

Victoria is Founding Partner of Colle Capital, an early-stage technology venture fund based in New York City. She has been a member of Agility’s Technology Innovation Forum since 2015, identifying ideas, technology and companies with the potential to transform logistics. She started her career in medical research and worked as an investment banker. She is co-founder of the networking site Work It, Mom! for professional moms. 

Colle Capital

Colle is a successful venture fund that specializes in working with young companies that are early on in their lifecycle in a variety of industries. The firm prides itself on the depth of research it does on investment targets. It takes its name from Edgard Colle, a Belgian chessmaster who perfected an opening strategy employed by top players.

Colle + Logistics

Victoria and Colle invest in different sectors, typically in industries that are complex or facing complex problems. Victoria is drawn to difficult fields because when a sector has challenges and inefficiencies she sees opportunity for innovative answers. The breadth of the logistics sector means there are gaps that invite incredible new solutions. Victoria is passionate about innovations that will flourish because they solve tough problems.

The Next Big Thing

Colle Capital is looking at how artificial intelligence, machine learning and deep learning can be used to solve specific logistics problems. The Colle team sees a lot of opportunity in AI, but leveraging it efficiently and economically is definitely a challenge.

Victoria is intrigued by last-mile solutions, and believes there is plenty of room for innovation despite the number of startups in this area. She also thinks that sometimes the best answers come from areas she hasn’t considered, places where no one even realizes there’s a problem. For her, the most exciting thing about investing is that you don’t know exactly what you want or need until an entrepreneur brings you an ingenious solution.

Entrepreneurs

Aside from putting together much-needed financing, Victoria is able to offer young companies and entrepreneurs important coaching and advice based on her experience. She urges startups to prioritize research in order to understand every aspect of their business and the marketplace thoroughly before they take any leaps – something she sees overlooked surprisingly often. Entrepreneurs looking for investors should also devote time to researching potential investors. Young companies can’t usually survive if they find themselves backed by unsupportive funds or stakeholders that can’t bring value.

 

60 seconds with Victoria Grace

Colle Capital is helping revolutionize the logistics industry by…

…identifying and working closely with the companies that are looking to innovate processes in the sector.

Favorite thing about investing in logistics

There are so many components in the supply chain that there are always new opportunities for innovation and efficiency.

Best resource for diving deeper into logistics

An industry partner who knows the pain points firsthand. We’ve partnered with Agility Logistics and they’ve been a wealth of knowledge for us.

The next 10 years in logistics will be…

…focused on artificial intelligence and machine learning. Machines will work quickly to optimize and speed up various processes and eliminate inefficiencies. We very much focus on these types of solutions when looking at new companies to back.

Tell us a fun fact about Colle Capital

The derivation of our name… It has various meanings and it’s fun to see what people focus on when they learn about Colle Systems (the chess move our name is derived from).

Biggest motivator

Meeting new people and learning new things. I am very fortunate that I’m able to do what I do. I get to meet amazing, innovative, talented people who teach me something new every day!

Favorite things to do outside of work

I love traveling and spending time with my kids and husband, and I play tennis, ski and scuba-dive.