Less Not More: The Case for Maintaining Agility in Seed-Stage Startups
In startups, agility is everything. For seed-stage startups hunting for product/market fit, having the ability to turn on a dime and adapt…
In startups, agility is everything. For seed-stage startups hunting for product/market fit, having the ability to turn on a dime and adapt to changes is critical as you compete against larger companies. Some founders may find that maximizing the agility of their startup requires only a few tweaks. Others may need to entirely transform the way they think about and even define startups.
I particularly like Steve Blank’s definition, which refers to startups as a “temporary organization designed to search for a repeatable and scalable business model.” Blank’s use of the words “temporary” and “search” in this context highlights an incredible way for founders to think about their own startups.
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Consider two different scenarios: In the first, a founder has an idea and decides to embark on a six-month project to see if anything is there. In the second, a founder decides they want to create a company to do X.
The first founder — though slower in their approach — is able to make mistakes, iterate, and change course completely at any time. The second founder — though steadfast in their vision — is handcuffed to a single trajectory. Their priority becomes procuring all of the necessities of building a company, including office space, payroll, and HR. If at any point they decide to reorient, it would prove a much more difficult or even impossible task.
As a seed-stage startup, your agility is your lifeblood. The best founders are careful to optimize their team and capital structure for maximum agility.
When recruiting a team, it’s important (even ethical) for founders to be upfront about the risks. In the startup world, agility and uncertainty go hand-in-hand, and potential hires need to understand exactly what they are getting themselves into. Not everyone can or wants to deal with the rollercoaster of seed-stage startup life; your best bet as a founder is to assemble a small team of those who can.
To help you maximize the agility of your startup’s capital structure, I offer you advice as someone who’s been both a startup founder and an investor. There is something magical about raising only a small amount of money! It keeps your team, early product, and business model nimble and adaptable while you hunt for product/market fit during the seed runway. In contrast, raising an outsized round, while impressive to some, can tie a founder’s hands with the rigidity of an oversized team and inflexible product plan ill-suited to the inevitable zigs and zags of the seed phase. Founders who choose to raise less seed capital prior to product/market fit enjoy more options, such as experimenting and failing without breaking too much glass, pivoting as necessary, or raising another round at an increased valuation.
I encourage you to tackle the search for product/market fit with the right set of nimble resources, both capital structure and teammates. If your search brings you into the realms of smart hardware and machine learning, I want to hear about it. Leave a comment or get in touch with Ubiquity Ventures.
Ubiquity Ventures — led by Sunil Nagaraj — is a seed-stage venture capital firm focusing on early-stage investments in software beyond the screen, primarily smart hardware and machine intelligence applications.