First off, we at Icebreaker.vc would like to thank everyone who attended the Pre-founder Project last month as well as our portfolio founders who took time out of their weekends to share their incredible stories with us. The Pre-founder Project was a success, and that’s not just us patting ourselves on the back. With almost 50 attendees and three days of content, we collected everyone’s feedback and saw an NPS of 82.8!
As we discussed in February of 2017 in Icebreaker’s first blog post ever, one of our main goals is to help talented individuals build new deep tech startups from scratch, and with over 30 investments made, we can say we are doing just that.
We created the Pre-founder Project as a way for pre-founders to connect, learn, and start building their own strong tech companies. Friday was focused on getting to know each other and hearing founder stories from Pre-founder Project alumni, Saturday was all about idea iteration and building strong teams, and on Sunday we had a deep-dive on how to build a company from the idea stage as well as the fundamentals of how venture capital funding works.
For this blog post, we would like to delve into 10 learnings we hope the pre-founders who attended the event gained throughout the weekend:
How to build a company from an idea
How to validate your own idea (idea assessment framework)
The first twelve months of a startup (Prompter, WhaleLend and Flowhaven)
Building a great founding team
From an idea to series A
How venture funding works
Networking and its importance
Pitching your idea
How to differentiate yourself in the market
The next steps you have to take
1. How to build a company from an idea
When we are talking about ideas for a strong tech company at Icebreaker.vc, we use a very broad definition of an idea – not just the product description. A product description can be summarized in a sentence, but you cannot do so with a great idea. A great idea makes use of many interrelated elements, like team, market, competition, and timing.
Because of this broad definition, we understand why pivots – in other words, changing directions significantly – are behind many successful tech companies. Even these companies have kept some elements of the original idea while simultaneously made big changes to some other elements. One example is Shopify, a company that began as an online store for snowboarding equipment. And when building an online store, the e-commerce platform means a lot not only for the user experience but also for the management of the store. The founders of Shopify were unsatisfied with the existing e-commerce products and decided to build their own one that would better match their needs as e-commerce entrepreneurs. This product eventually became Shopify and the company’s main product. Nowadays, Shopify is a publicly listed company with a revenue of $580 million and 3000 employees.
As we have mentioned before in previous posts, we strongly believe ideas are not worthless and you should use time and energy to truly assess, ponder and improve your idea.
Here’s a framework for thinking we created to assess and improve your idea or have a read of our very own idea guide.
3. The first 12 months of a startup
The best way to learn the best practices on building a startup from scratch would be hearing from the people that have already ‘been there, done that’. So to have some of our portfolio founders come in a share their stories was a very valuable asset for our pre-founders. During the Sunday portion of the PFP we saw three of our portfolio CEOs talk about their first twelve months; the good times and the bad times. First, we had Lauri Hynynen, ex-CEO of Prompter AI, talk about their year trying to build Prompter and how the team ended up being acquhired by Matchmade. Then we heard from Yichen Wu, CEO & Founder of WhaleLend, who talked about his experiences on trying to breach the crypto-market with its ever-increasing association with scams. And lastly, we had Kalle Törmä, CEO and Founder of Flowhaven, talk about his experiences with the licensing industry and a general look at how his startup has been performing.
Even though each founder had a drastically different story and product, each of them went through similar processes in their first twelve months. They covered topics ranging from building a team, building the product, and later on, acquiring their first customers. But the most important lessons to learn were personal in nature. When you decide on becoming a founder you have to be prepared for drastic changes in your working life as well as your personal life. Would you be prepared to be among the 90% of startups that fail? Are you prepared to take a massive pay cut after living comfortably with a corporate salary? Are you prepared to spend less and less time with your loved ones and others you like to hang out with outside work? These are all questions that you should ask yourself before taking that dive into uncharted waters.
4. Building a great founding team
Finding the right person or persons to help build your company is one of the most crucial parts of becoming a founder. Like Yichen said in his presentation, “you are going to be spending more time with them than your wife or husband”.
In your startup team, you want to aim for a diverse group of people. Intentionally implementing diversity in your team, both through soft skills and hard skills, will ensure success. You need people with soft skills that fall into three roles: a leader, a manager, and a doer:
A leader is required to help with hiring, selling, and fundraising. This person will inspire the rest of your team to work to the best of their ability. The leader is also able to inspire others to follow through with investing in your startup or purchasing your product.
A manager is essential to stay organized. Someone who is efficient at managing will keep your team on task. They will also be best at streamlining the workflow for all aspects of your startup; this efficiency could save you both time and money.
A doer will get things done. Leaders and managers are more likely to spend time planning, calculating, and analyzing before springing to action. A strong doer is the one on your team who will plow ahead to smash your startup’s goals.
Remember to look at the hard skills offered by each of these types of people as well. You will inevitably need someone who is great at sales because you need to sell your product to buyers and your company to investors. You will also need someone who is proficient at product development so that you create a high-quality product quickly.
As tempting as it may be, do not hire your friends, or a family member who just really needs a job. For your startup to succeed, you have to focus on creating a great founding team with the hard and soft skills necessary for success. Each person needs to be the best in their own domain.
For more information, check out Jukka’s article on the Notion.so site.
5. From an idea to series A and, 6. how venture funding works (at Icebreaker.vc)
During this portion of the Pre-Founder Project we had Aleksi Partanen, a founding partner at Icebreaker.vc, discuss some of the reasons we invest in companies at the seed and pre-seed level. These pointers were shared as a way to demonstrate the importance of keeping some things in mind at the beginning of one's own startup journey and that every venture capital fund has their own criteria for what they are looking for; mental check boxes on what to pay attention to.
For a more detailed look at what a possible VC investment criteria could look like and some of the things you should keep in mind when talking to an investor, have a read through this presentation.
7. Networking and its importance
Networking is very important and is at the heart of what we want to provide here at Icebreaker.vc. All of our events involve networking in one way or another. We want to bring together people who would never be able to connect if it weren’t for us acting as a medium.
Throughout our portfolio we have had founders find each other through our events, founders who have validated their ideas by sparring with other community members, and a variety of other related benefits that could not be done without the power of networking.
So that is something we tried to push for in our roundtable talks - a level playing field where pre-founders could sit down and discuss their ideas with each other with ease, allowing them to better understand and develop their ideas for the future.
8. Pitching your idea
Pitching your idea at the early stage of your company is something that you will be doing very often; convincing others that your idea is worth something and could amount to something in the future. When you don’t have any product to showcase, the only thing you can do is pitch it. Just like a business plan, a great pitch should be compelling and practical.
For this reason, you must have a thorough and in-depth knowledge of your industry and the idea you are selling. This includes knowledge of your target market, the particular problem that your idea is solving, anticipated revenues, the competition, rival products and uniqueness of your idea among others. In this regard, a great pitch must convince the investor that his money is in safe hands. And in order for others to believe that your idea has some validity to it, you have to believe in it yourself.
9. Market and Differentiation:
Spotting the growing markets and building products for the future is one of the keys to building a strong tech company. At the end of the day, it doesn’t matter how great your product or team is: it’s impossible to succeed in a bad market, be it too small or too crowded. The main things are to aim for big enough markets of the future and know your competition.
At the idea-stage we expect the founders to tell us how they are planning to differentiate from the competition. You don’t need to have a detailed plan but you need to have some idea what are you going to do about it: what do you have that others don’t?
In practice, building your competitive edge is a never-ending story. Strong tech companies often work on markets that are in constant change, and you need to improve and differentiate your product & brand all the time in order to stay ahead of the game.
To conclude, the PFP was a great time. Meeting new people, gaining new insights and getting that extra push of motivation by seeing other individuals who are as willing to take some time off the weekend to build their idea was amazing to see. Now that the event has gone and passed, you can still benefit from our community by joining our future events that cover many topics in the startup sphere!
To read up on all the content we went through on the weekend, please take some time in reading through the PFP notion site we created to supplement the event! The full list of the presentations showcased at the PFP can be found here.
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