Trust in Your Innate Self-Belief
Date: Thursday , May 07, 2015
Headquartered in London, UK, Amadeus Capital Partners Limited is a venture capital firm specializing in growth capital investments in companies at all stages, from seed, startups, early venture, late venture, emerging growth, and venture buyout.
An entrepreneur faces many challenges on the path of taking an idea from concept to reality. The challenges tend to be similar, to varying degrees, across the world. They include attracting capital, recruiting a team and motivating them to work towards a common goal, finding the product-market fit, knowing and keeping ahead of competition, and of course,regulatory requirements.
For me, as a venture capitalist, this is one of the most exciting times for entrepreneurs, with the development of wearable technologies and the internet of things. Moore\'s law has driven computing costs down to a point where these wearable technologies and connected devices will open up immense opportunities for new services.
In my experience, successful entrepreneurs have an innate self-belief, which helps them navigate many challenges by systematically breaking down problems into bite-sized chunks that they can tackle. But that same self-belief can also blind them to options they had not themselves considered - and that is where bringing in venture capitalists or other non-executive directors, with broad experience, can really help.
An important step in developing a business is attracting finance. The entrepreneur should identify the most appropriate form of capital for the business and how best to source that capital. This could be family support, bank or other debt, venture capital or, if the business already has revenues and profits, private equity.
To approach and convince the right funders, the entrepreneur should ensure that the potential investor is appropriate for the stage of investment, the sector and the geographical location or reach of the business. Some investors specialize in start-up capital - usually locally due to the amount of mentoring required; others specialize in early growth (series B and C rounds), others in profitable companies wanting to expand. Having established the right type of investor, the question becomes how to make a successful approach.
Many venture capital providers invite business plans online and most do review these, but a personal introduction through mutual acquaintance - especially in emerging markets - is often more effective. Failing that, make a direct approach to the individual in the funding institution whose track record demonstrates the likelihood of some affinity for the business.
Another problem is finding the product-market fit - assuming here that the entrepreneur is developing a product to meet a market need, rather than trying to create a completely new market.
Entrepreneurs need to have deep understanding of their potential customers\' problems (current and anticipated) and seek to address them with a solution that meets most, if not all, of those problems. Many new products fail because the fit to market need is insufficiently strong for adoption. Sometimes, it\'s easier to approach market needs in steps. Find the one thing that the customer really values and address that, rather than trying to create a mega-solution like the Swiss army knife. Keep it simple.
Having won the first customer and worked with them successfully, it\'s a good idea to get that customer to be a brand representative, by referring your business to other potential customers or by offering a testimonial. Few things work better in any market than endorsement and recommendation.
Assuming a good product-market fit, it is critical to implement the right business model to scale the demonstrated value in a capital-efficient manner. For instance, there is no spending money to ramp growth in traffic if you haven\'t thought through how you plan to address conversion of this traffic into paying customers. Again, this is where including outside broad business experience can be valuable.
One of the biggest challenges for entrepreneurs is hiring. This tends to be more art than science and often a process of trial and error, which even the most successful global companies get wrong from time to time. The key thing is to attract people who are motivated by trying to solve the same problem and always to be candid with them on the state of the business. You are building a team and, while the business remains small, need to work as a team.
When recruiting for senior positions, ask yourself if the candidate you are seeking to attract can anticipate and solve problems that might arise in the next two years. That is one way of forcing yourself to look beyond your current needs.
Many entrepreneurs experience failures before success - it\'s a learning curve. The most important thing though is to find a problem that makes you passionate to solve. When you are faced with challenges, it is that very passion that will keep you engaged. So focus not just on the output of the business, but think also about the input that will get you to your destination.