I’ve gone on a journey from teacher to agency owner to startup venture partner and it’s taught me a lot about how you make things happen in business.
Over the past three years we’ve partnered with over 25 startups to help them realise their vision, and we have come to realise that startup success is a process. A process underpinned by solid fundamentals and well thought out planning – it isn’t magic like the press may have you believe. We’ve learned a tonne about how to take a startup and help them navigate this process. Every journey is different but many things don’t change.
We’ve come to understand that startups need talented founders and a good idea – coupled with cash and exceptional execution. The last point is so important; most startups struggle to find product/market fit and it’s often because they aren’t able to execute their idea – they can’t turn it into commercial reality and that’s where we come in.
You Can’t Write a Novel and You Can’t Fly a Plane
People say that everyone has a novel in them and this reminds me of how lots of people view starting a business; they think they have it in them – that if their passion shines brightly enough they will succeed.
But no-one thinks they could become a surgeon or a pilot just by being passionate and hard working. Startups are often founded by people that have no experience conceiving an idea, bringing the product to market and building an organisation. Most founders simply don’t have the skills or experience to execute a very difficult process.
It’s not a surprise that 80 percent of startups fail and 99 percent don’t achieve their projections – startup founders are normally ill-prepared for what they are taking on.
The market isn’t set up to help entrepreneurs succeed; founders are being backed with a bit of cash and thrown out into the world to work it out. A few succeed and most fail, which is bad for everyone.
Let me tell you how we’re working on making more entrepreneurs succeed, but first let’s look at why the current model isn’t working.
The State of Startups in 2019
There is a three-way storm which means startups are struggling to get ideas off the ground; this threatens to seriously damage the UK startup ecosystem.
The Cash Pipeline is Drying Up
Research firm Beauhurst released figures that show a 15 per cent decline in startup funding between 2017 and 2018, at the early seed level things are much worse, as can be seen in the analysis by Mark Suster and discussed by Fred WIlson of USV. This is a serious problem because you need early investment to build a strong core of businesses that succeed and grow.
2017 was a very strong year so this may be a regression to the mean in terms of total cash, or the start of a long term trend. Uncertainty around Brexit doesn’t help, and we should prepare for a tough early-stage funding environment in the coming years. Either way, though, the flight of cash from seed to later stage start-ups is very real.
Hard to Find Engineers
Software developers are in high demand. Building great products requires a high degree of skill that needs to be acquired over years of training and experience. These skills are demanded by everyone – startups, tech companies, blue chip organisations and the government.
For a non-technical founder the challenge of finding great developers is a real headache. Founders are thrust into a world of unknown unknowns – if you can’t read code it’s hard to verify the quality of the work being produced. Even if the non-technical founder can find someone to oversee development that person will probably have gaps in their knowledge.
You also need UX/UI designers, product experts and creatives to build a great product: difficult roles to fill.
Harder for Investors
There are 10,000 technology startups in the UK. That is exciting. The government has worked hard to build a thriving ecosystem and lots of talented people are now deciding to throw their hat into the startup ring. This is generally good but can be problematic for investors.
A business angel with £50,000 to invest across five startups is now faced with a much bigger choice. Even if we assume that the percentage of startups that are viable remains constant the absolute number of those that aren’t is now very large. This creates uncertainty and funds can easily get distributed to the wrong start-ups.
In conclusion, if you are a startup founder with a good skill set and a viable idea it’s getting harder to find the right investors and team to bring your idea to life.
MOHARA: The Perfect Antidote
I started off by explaining why exceptional execution was so important and why many startups don’t prioritise this enough.
You need a financially viable way to deliver your vision in a world of reduced funding streams. Our innovative funding model provides expertise, partnership and is so much more than a cheque.
We have built a team of seasoned entrepreneurs, technology strategists, product managers, designers, developers, UI & UX specialists and researchers that are all trained to deliver products to create great outcomes for the end user. We use a blueprint that helps you turn ideas and assumptions into specific actionable steps – then we help you take those steps.
We work with and not for startups. If you want to outsource development of tech that you say you ‘need to build’ we’re not right for you. We are a venture partner, which means we work alongside you to develop your product and business proposition. Let me explain:
- The MOHARA model is equity, vested over three years and typically valued at £150k, and much reduced fees, in return for expertise. We do this because working with different startups allows us to deploy our resources and provide huge value while building a portfolio of startup investments
- We provide our entire product development apparatus to get your business moving in the right direction.
- You make incredible savings on development which is great but the real value is this: if you succeed then we succeed. This is huge. This is unique. This is the way forward. We provide everything at cost – no profit, no margin, no benefit to us other than to see your business grow and develop – it matters as much to us as it does to you.
If you hire a developer or agency incentives get skewed. Agencies make profit on every bit of work they do – they don’t get a return if you succeed. Of course, many agencies are well-meaning but the incentives between startup and agency start a long way apart.
Hiring employees carries similar risk. Employees may want the business to succeed but they also probably want a good salary, nice perks and sociable hours. Again, you’re starting far apart.
At MOHARA we need you to succeed so we do everything to enable that to happen. I think we are the best partner to bring your dreams to life, so if you have big plans for your startup get in touch on email@example.com.