Do you have an idea for an amazing and disruptive business? Building the next facebook or twitter? Here are a few tips from K.P Reddy, a serial enterpreneur, Venture Capitalist and startup catalyst courtesy of our CEO who had the pleasure of hearing him speak at the University where she is being hosted for the duration of the Mandela Washington Fellowship.
1. Be an expert in a field of study.
Find something that you are really good at and become king at it. Whether it is a particular form of technology, marketing or finance subject. For example, you should be able to say something like, “I’m among the top 5 experts in cryptocurrency transfer services among the unbanked in sub-Saharan Africa.” For you to achieve this, it means you have to dedicate an insane amount of time to reading and research. You should achieve top of mind status for your field. The only way to compete is to “out-read” the other guy.
2. Don’t rush and quit the day job.
Learn new skills first to de-risk yourself. Secondly, learn about the market you want to enter to de-risk the business. You have to be realistic based on the experience you have, because this is what drives results. DO NOT QUIT UNTIL YOU HAVE A PLAN.
3. Build your equity.
Ideas are a dime a dozen, they do not matter. You cannot base your equity on an idea. What matters is deliverables. What have you done with your idea? Have you documented your work? Before you go out hunting for investors, have you done your own due diligence? If any mistakes are to be made, make these on your own dime. Realize that some ‘founders’ have unfair advantage, be it a degree (and hence connections) from Stanford or celebrity status. Find a unique way to compete.
Capital is not to be used for founder salaries or exploration of business models. Capital is essentially meant to be used to build production platforms and to scale sales teams that are utilizing a proven methodology. Do not raise capital to a “dead end.” You must always know how much total capital is needed to execute on your plan. Your gross margin must be able to support your cost of capital. For early stage investment, you need to have revenue to validate the customer need. Think of capital as a highly structured supply chain.
5. Start with the exit in mind.
An exit doesn’t always mean selling your company off to some huge corporate investor. An exit strategy can be handing over to the next generation. Do not build a company around yourself. It should be able to exist successfully in your absence.
Finally, first things first: Build. Build. Build.