7 Growth Strategy Tips for Tech Founders
When starting a new company there are challenges and obstacles along the way. Over the last decade, the tech industry has seen rapid development resulting in a surge of tech startups entering the market. For a first-time tech entrepreneur, navigating this highly competitive industry while acquiring the required funding from angel investors can be a daunting task. How you start impacts whether you make it or not. Tech startups often fail as they overlook the need for a robust startup growth strategy. Our experts at Seven Startup Advisory have put together 7 top tips for tech startups, specifically for tech entrepreneurs, to launch a successful startup and attract interested angel investors.
1. Employ the right team — Presenting a high potential team to angel investors can play a major role in their decision to invest in your startup or not. Hire people you think will love working in your tech startup. Attracting the right talent to join your company requires a well-defined Vision, Mission, and Core Values. While a tech entrepreneur might have the technical subject matter, they may lack expertise in other areas that an expanding startup demands. Is there a secret sauce? Well, an early human resource (HR) hire in a tech startup is liable to contribute significantly to building a successful company. Empower your HR team to get the best people on the bus, manage people performance aligned with the company’s performance and targets, to drive the startup growth strategy.
2. The right mindset — Building a truly global company is a lonely journey. You’re constantly learning and embracing new challenges to keep your business alive, working hard and hustling. Founders have to be resourceful. Having the right mindset while creating a startup growth strategy is essential for long-term success. To bring your A-game, you must look after your health, share your time with family and friends and nurture your spirit. Tech founders should embrace opportunities but say no to things that don’t add value to their startup.
3. The right product — A major mistake that tech founders make is assuming that they know what the audience wants. There’s nothing worse than spending months building a product that no one wants to use. Angel investors also prefer to see a minimum viable product (MVP) before they consider investing. Get your product out in the market as quickly as possible so that you can make the necessary changes.
4. Innovation — Innovation should be the focal point of every tech startup. Innovation attempts to predict the future — studying the market and the macro and micro trends, to determine how the company and the future can be aligned. By matching real-world customer demands with in-depth tech knowledge, tech startups can gain a competitive edge over big multinational businesses. According to “Innovation Matters” a report by PA Consulting Group, two-thirds of organisations say that innovation is crucial for survival, yet fewer than a third say they are innovating successfully to drive growth and increase revenue. For example, can innovation be introduced to specific processes, an agile methodology into a process or the Lean Startup model? Tech startups that have an innovative and disruptive startup growth strategy are much more likely to deliver rapid results.
5. Intellectual Property — Tech entrepreneurs often fall short in protecting intangible and intellectual assets. Startups should be familiar with Intellectual Property (IP), which mainly consists of copyright, trademark, and patents, especially for protecting their own IP and respecting the IP of others. For a first-time tech entrepreneur, their intellectual property and innovative startup idea are their most valuable assets. It’s important to engage experienced IP legal counsel to protect the company’s assets and to ensure that there is no infringement on other patents. Tech startups should also ensure they have iron-clad client contracts, to protect themselves against future complications. IP lawsuits can be incredibly expensive and messy. Further, angel investors shy away from tech startups that fail to safeguard themselves against future legal complications.
6. Spend wisely — Budgeting carefully and avoiding frivolous spending is critical for all startups. For first-time entrepreneurs, it’s imperative to stick to a fixed budget following a documented startup growth strategy. When architecting a startup growth strategy, tech startups should prioritise spending on product development and high-quality code. The typical rule in SaaS for a growing company is to spend 40% of revenue on sales & marketing, 20% on product/R&D and 20% on general administration. At the initial stages, however, you should be spending heavily on your product. For items such as hardware and furniture — always ask can we lease or rent? Postpone any financial transactions that are of a lower priority. Once the budget has been approved, tech startups ought to avoid changes and follow a predictable spending pattern.
7. Fundraising — You have a product and a little traction, and now you need to grow. You’re acutely aware that a lack of funding is one of the top reasons why several startups fail. Tech entrepreneurs must be ultra-clear on their valuation, fundraising objectives and have a compelling story and growth strategy, to attract angel investors. Startup consultancies like Seven Startup Advisory assist first-time entrepreneurs to fulfill their funding needs by introducing investor psychology and helping entrepreneurs develop innovative and disruptive business models. At Seven Startup Advisory, we understand that other than bootstrapping your business, money from friends and family, and loans or grants, there are four main sources of fuel for your startup: Angel Investors, Angel groups, Syndicates and VCs. We develop a detailed startup growth strategy, targeting rapid yet sustainable growth and positioning your startup as a strong investable proposition for angel investors. A study by Fundera highlights that 20% of small businesses fail in their first year, 30% in their second year, and 50% fail after five years in business. At Seven Startup Advisory, our experts work with founders to develop a sustainable business strategy incorporating growth tied to funding milestones and investor ROI.
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Amit Khanna is the founder of www.7startup.vc and has 18 years of experience with Startups and the Enterprise with an MBA, focusing on Growth and Investments. Amit supports entrepreneurs with every aspect of their business including concept and product development, investor presentations, fundraising, and scaling up.
