Guest post by Clayton Mooney.
I returned with ZERO promising leads, my first 3 trips to Silicon Valley.
Meetings led to “you’re too early for us,” “it’s not a right fit, but please add us to your updates,” and “I challenge you to think bigger.”
One of these pieces of feedback is not like the others.
1. You’re too early.
That’s likely the most common feedback you’ll hear when an investor passes. It took me years to realize that too early means the investor cannot see the rocket ship of a company you’re building—which is up to you to help them visualize. Or if they can, they can’t see the fuel that it needs, and they don’t want to be the first one to bring the fuel to you.
You are exactly where you’re supposed to be in your journey as a founder.
2. Not right now, but please add us to your updates.
This request is the 2nd most common feedback we’ve received over the years. It also took me far too long to decide if it were best to send updates to investors who said not right now. We decided to not include investors on our monthly updates email list.
Why? Our reasoning was that you should be in it to win it, and nobody should play for free.
The same goes for advisors, which I see all too often with tech startups closely affiliated with tech transfer offices at colleges. If an advisor wants to help for free, that is awesome. If an advisor wants to help but also wants equity, that is not that awesome. At least try to have the would-be advisor invest a small amount into a round, so you know they’re serious.
The individuals who believe in you enough to have written a check at the earliest stage are betting on you. Celebrate every yes—once the money hits the bank, but not beforehand.
3. Think bigger.
It’s hard to do anything about being too early. A request for free information can be frustrating, and it’s still a no. BUT, thinking bigger is something you can control right here, right now.
When we’ve raised a round in the past at Nebullam, I’ve made too many mistakes to list. The biggest mistake I’ve made is not thinking big enough.
You should be thinking bigger about markets, building your team, and revenue.
A. On markets, don’t start off with TAM, SAM, SOM. Start from the bottom. How much do your customers spend? How many people/organizations of that demographic exist? That’s your starting market. Here is Nebullam’s markets.
B. On building your team, you can’t go at it alone. Hopefully you have a co-founder and, together, you can build and sell to your first handful of customers. If the CEO sells and fundraises, the CTO can build and ship. I like to think of a company as a giant 1,000-piece puzzle. If you complete it, you reach a happy and successful exit. Each piece is scattered across the world, representing a person, organization, partnership, or viral event/variance. The most valuable pieces are people. You should be hiring for now, finding those adjacent and border puzzle pieces. The ones who can strategize AND execute. I recommend past founders as founding and early team members. I’m grateful for each and every Nebullam team member because they’re past founders, leaders, and get-shit-done individuals.
C. On revenue, I think you should charge earlier, and double the price you’re thinking about. Then let customers determine the pricing. As a founder trying to reach ramen profitability, your subconscious is tricking you to think you need to charge less because you couldn’t afford what you’re selling. Your perfectionism is tricking you that you can’t charge for your beta or prototype. They’re both wrong. While you’re proving and disproving your value proposition assumptions throughout customer discovery, you should try to think about how you can get to revenue NOW. How you can grow revenue NEXT month. And then how you can make it Recurring the FOLLOWING month.
If you need help in thinking bigger, I’m hosting an event in Ames, Iowa next month. It’s called Young Entrepreneur Convention, and it takes place Saturday, October 30. We started it as an annual event back in 2016, with a mission of founders helping founders. Thanks to amazing sponsors such as Iowa State University, Zarley Law, Rippke Design, and many others, we’ve been able to award over $150,000 in cash and prizes to date, in our elevator pitch competition. We’ve hosted guests such as Jason Calacanis, and this year’s lineup includes founders and investors who have been there and done that, willing to share their playbook and practical advice with you.
If you’re an Iowa State University student, your ticket is free. If you’d like to attend but the $99 is outside of your budget, reach out to me.
Clayton Mooney is the co-founder of the Ames-based company Nebullam and is a familiar face in the Iowa startup ecosystem. This story was originally published on Substack.