“He is not winning pitch contests anymore,” said my friend and fellow angel investor.
I was in a discussion on the startups we’ve seen over the last year. I haven’t seen the entrepreneurs or heard from many of them in a while. I was wondering what happened to them.
“What do you mean by that?” I asked.
He said, “When these startups are in their formative stage, they spend lots of time talking to the startup scene. This leads them to Customer Discovery at the ATDC or Pitch Practice at the ATV and then on to pitch sessions at the local shared space businesses around town. Finally, if they are engaging, on to professional pitch competitions at TAG and Venture Atlanta.”
“Then what happens?” I asked.
“Then they either get funding, self-fund, or become the walking dead,” he said.
The Victors: Those That Get Funded
When companies with good founders get funding, they leave the startup scene immediately. They disappear, and that’s a good sign. You can be sure they are heads down working on building their company. They are now selling to people who are buying their product or service.
The Warriors: Those That Self Fund
These entrepreneurs come to realize outside investors are not for them. Maybe their target market is too small and valuations are too low. Or the people wanting to buy in are not the partners they want long term.
So they pivot. They self fund by starting as a service business instead of a product business. They build their product while getting paid by their market to do so. It takes far less money to get to sustainability in services, and they discover friends and family can close the funding gap.
The Walking Dead: Those Never Funded
These entrepreneurs are the wrong guys with the wrong business plan. But they stay active in the startup scene.
They never leave.
They never pivot.
They never realize it is never going to happen.
These people are at all the networking meetings and pitch camps completing applications for accelerators and competitions. They develop terrific slideware and amazing pitches but without results.
I admire their tenacity.
I just don’t understand how they eat and pay rent.
The goal of being in the startup scene is to graduate.
Your goal is to build a company, not fame in a market that doesn’t care. Plan on using the startup scene to build your leadership team and your investor team. If that’s not happening within six months, you can be sure you are the walking dead.