Find advisors who can help you be accountable!
And more advice from Charlie O'Donnell, the sole Partner and Founder at Brooklyn Bridge Ventures. The fund makes seed and pre-seed investments and was the first venture firm located in Brooklyn. Brooklyn Bridge Ventures manages $23 million across two funds, leading or co-leading investments of around $400,000 in New York City companies that have yet to raise $750,000 in prior rounds. They have invested in the first rounds of The Wing, Canary, Hungryroot, Ample Hills, Clubhouse, Imagen, and goTenna, among others.
1.Watch out for "Happy Ears!"
The earliest thing that founders make a mistake on is that they have "happy ears." They test out an idea or run an idea past someone. People are generally trying to be supportive. Maybe the founder gets some constructive criticism, but the entrepreneur is only interested in hearing the positive feedback. For example, they pitch an investor, and they say, "this is a little too early for us, but it is super interesting." The entrepreneur will walk out of the meeting thinking I am getting all this interest from VCs, but they didn't write me a check. They will talk to a potential customer, and they get some positive feedback, and they say, "when you get started, let me know." However, some companies may be looking for your exact type of product. They might want to co-build it with a founder. They might say that they will give you the money to build it and help you customize the product. If they wanted it, that is what they would do. I think entrepreneurs need to learn not to have "happy ears." They fail to take inaction as a signal.
2.Don't be deterred as a solo founder.
Founders often make mistakes in how they set up their team, especially in relationship to co-founders. They feel like they need a co-founder. They hear that VCs won't fund them if they are solo founders, which is not valid. There may be instances where somebody says I really would like to see someone with a complementary skill set on the team, but that person doesn't have to be your co-founder that takes 40% or 50% of the business. You could hire somebody. Maybe the first technical employee can get a higher percentage of equity than a regular employee. That is the difference between a founding employee and a co-founder. Don't base the whole company on giving somebody half of something that is not a peer in the company. They would never be the person running the company if you weren't there.
3.Don't raise too little money.
Many times people think that less money is more comfortable to raise. I believe that is not necessarily the case. It unintentionally signals for lack of ambition. Or they wind up creating a goal that is halfway to nowhere. For example, I recently took the pitch that was a healthcare concierge retail space. They were trying to raise $500K to beef up their plan and do some research. At the end of the $500K, they still weren't going to have a physical space up and running. The founders believe that this is already the idea. They needed $2M right off the bat because that was the amount of money that they needed to open up a location. Investors don't want to fund research; they want to fund the product.
4.Find advisors who can help you be accountable!
If you don't officially have board members or even investors, I think there is a value in putting together a small, focused group of people that can advise you. You get in the habit of regularly reporting, meeting, and talking with these people so you can have accountability. So many times, people raise money, but they don't officially create a board, so they don't have board meeting. The function of a board meeting is very useful. You look at what you tried to do last month that didn't work and what you are trying to do next month. Ask your advisors for help. Act like an adult company from the get-go.