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Now, there’s nothing wrong with building a lifestyle business. They can make millions of dollars in revenue and be fully owned by an individual — but lifestyle businesses typically can’t become multi-billion dollar companies and rapidly scale (although there are always exceptions).
So for those who want to start a venture-scale business, there are a couple of steps to building your successful startup.
Understand the space
If you want to build a venture-scale business, you have to target an industry that has the potential to support rapid growth and large markets. Really understand the players, the market opportunity and the market space that you want to build in.
Ask yourself if you have the skill set
And if not, can you bring it through your team?
The right skill sets really build a company. If you’re strong on the technical side, bring in a co-founder who’s strong on the business side of things to help you build, scale and share the emotional burden of building a business. I guarantee you it will be a spiritual journey (including long nights of the soul).
Create a pitch deck and a prototype
Business plans are obsolete. Any investor who asks for a business plan doesn’t understand how successful early-stage businesses are started and built.
All you need is a pitch deck, clarity in what you’re doing, and ideally an early prototype to show inventors. Think deeply about your business, and be prepared to model out scenarios for both success and failure.
Get ready for fundraising
Once you finally decide to start building this company, whether it’s in biotechnology, the future of food, Web3 or something else, you need to make sure that as you’re building, you’re ready for fundraising.
Founders should raise SAFE notes. With SAFEs, founders can focus on building the company and not get distracted by legal negotiations.
Some old-school investors don’t like SAFEs because they like the controls that come with convertible notes or a price equity round, and will push founders into doing a priced round and finding a lead investor. However, SAFEs are much better for founders to remove the need of finding a lead investor (who has enough conviction to cut you a large first check) and to give you time to build true conviction and a real business for investors to see vs just the initially pitched concept.
Choose an accelerator
But it’s not that simple. Having co-founded IndieBio, one of the leading biotech accelerators, and having backed many founders that have gone through Ycombinator, Big Idea Ventures, TechStars and others, I can say there are a lot of really important things to look for in an accelerator program.
It’s especially important that the people who run these accelerator programs and back these companies have experience in building and scaling the types of companies that you want to build.
Most importantly, you need an accelerator that’s willing to invest. There are a lot of zero investment, no-cost or low-cost accelerator programs that, quite honestly, are a waste of an entrepreneur’s time. Go with accelerators willing to put their money where their mouth is and invest in you and your idea!
For accelerator programs, it’s much more important that they have the right investor, entrepreneurial and technical networks than if you’re there in person or whether you have to do demo days. The programming is generally not that important, and in some cases, can be a negative if they take up a lot of time or are taught by people who have never built startups themselves. Entrepreneurs should be able to learn from talking to and getting advice from people who’ve done what they want to do.
What are the risks?
Technology and entrepreneurship always have hype cycles and crashes. We’ve seen it over and over again; the Gartner hype cycle. Everyone goes euphoric for technology with euphoric levels of funding, founders and starting companies, but then comes the inevitable crash.
These are the risks of technology. Through these hype cycles and crashes, out of the rubble emerges great companies, perhaps a requirement of technological cycles. The dot-com industry is a perfect example of that. Out of the rubble of the dot-com industry crash came Amazon.
We also saw it with automobiles — a former animal industry product with the horse and buggy, that got replaced with a product of the technological industry — cars. At its peak, there were about 300 automobile companies globally. Then, there was a massive collapse of automobile companies, and everyone lost faith in it. But eventually, General Motors and Ford emerged as dominant leaders in the space. That hype cycle was necessary to create these giant companies and the marketplace eventually figured it out.
If you choose not to go the accelerator path, you still have options. There are other great early-stage angels and pre-seed investors. The companies destined to succeed are led by mission-driven founders who share my belief in the power of entrepreneurship to lift humanity and our world.
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