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Raising Funding with Just an Idea, Signs You Shouldn’t Hire a Sale Rep - Tactician: #0076

March 12, 2024

"Raising funding with just an idea? It's like saying, 'I'm inventing something to leverage my unfair advantage.' And the investors are like, 'We don't know what it is, but we’re in. Take our money!'"

12/03/24

Raising Funding with Just an Idea

Why Read:

  • Understand the importance of scalability in fundraising, strategies for showcasing your startup's potential and unfair advantages.

Author:

  • Sahil S, VC at Stedu Fund

Link: 

Key Concepts and Tactics:

  • Investor's Perspective on Funding Startups Based on Ideas:

    • "Most founders think that investors will only invest if a startup has tons of traction or some million-dollar revenue, but this is not true! I have invested in around 28 startups just based on the idea with zero traction."

  • The Importance of a Scalable Company:

    • "A start-up is a company that is designed or created to grow very quickly. So if you're not building a company that grows very very fast then you're just building a small business... early-stage investors want something that can show that your company has the potential to scale."

  • Investors' Thought Process During Pitches:

    • "They always think about how this startup will be worth billions of dollars and what’s the conviction for this... Investors always think about startup ideas in three parts - Problem, Solution, Insight."

  • Defining the Problem Your Startup Addresses:

    • "Founders should solve the problem which is - Popular, Growing, Urgent, Expensive To Solve, Mandatory, Frequent... Most investors like this type of idea as it gives people a lot of opportunities to convert and grow exponentially."

  • Solution-Oriented Approach to Startups:

    • "Founders should aim that 'I am going to solve this problem - whatever it takes!' If you are using Problem in search of a solution approach - your startup never going to grow efficiently."

  • Insights and Unfair Advantages:

    • "Investors always want to know these things from founders. So during the idea presentation founder should focus on their unfair advantage over the others and why they can win in the market."

  • Types of Unfair Advantages:

    • "So there are five different types of unfair advantage - Founder Advantage, Market Advantage, Product Advantage, Acquisition Advantage, Monopoly Advantage... As a startup, You need to have at least one."

Signs You Shouldn’t Hire a Sale Rep

Why Read:

  • Learn key traits and red flags to consider when hiring sales reps, ensuring alignment with their startup's needs and growth goals.

Author:

  • Jason M. Lemkin, SaaStr Founder

Link: 

Key Concepts and Tactics:

  • Product Complexity Experience:

    • "Your Product is Just Much More Complex Than The Other Ones They’ve Sold: There are rare exceptions here, but in general, sales execs just struggle to sell much more complicated product than they’ve sold before."

  • Financial Motivation:

    • "They Aren’t Focused On Money: Sales is about a lot of things, but making money is one of them. If they’re not focused on making money, they may be good at something. But it’s likely not sales."

  • Social Media Activity:

    • "They’re Constantly on LinkedIn. Like Posting Multiple Times Every Day, Constantly: A little of this is OK. But if they are spending tons of time promoting themselves, their experience, their courses, etc. on LinkedIn — be wary."

  • Personal Buying Conviction:

    • "You Wouldn’t Buy From Them: A classic SaaStr theme, as true today as it ever was. If you honestly wouldn’t buy from them — well neither will your prospects. At least not in the early days. Not during founder-led sales."

  • Undivided Attention and Commitment:

    • "They’ve Also Got Another Job: I know a lot of folks want to work 2 jobs at the same time today, or 2-3 additional big side hustles. But I’ve just never seen early sales rep excel that do this. It’s too intense, you have to be a product guru as an early rep."

  • Sales Demonstration Skills:

    • "They Can’t Sell You This Pen: I don’t know if these days, a sales rep has to come to the first interview being able to do a strong sales demo of your sales product. But at least make sure they can do it before you send over an offer."

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