The Startup Green Lights

When I meet with a startup founder, certain cues jump out. They shout, “This one’s a winner!”

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Today, I thought I’d run down a few of the things that impress me most:

1) You’re open with information.

The best founders have nothing to hide. Be open with investors about customers, revenue, etc.

The strongest founders are excited to share their progress! Adopt that attitude, whatever stage your company is at.

2) You’re humble. The best founders give all the credit to their team.

The only thing they take credit for is the mistakes!

This is a key trait of good leaders. Always put your team in the spotlight and yourself behind the scenes.

3) You’re close to your customers. Great CEOs talk about their customers constantly.

They know everything about them. They go to the same conferences and read the same magazines.

Because they know so much about them, they can give them exactly what they want!

4) You have strong product velocity. I recently invested in a company that pivoted from SaaS to a marketplace model in just a few months.

Already, the marketplace is doing $2 million a year in revenue. A year ago, this product didn’t even exist!

This is incredible product velocity. When I see that, I’m sure you can adapt to a changing business environment and succeed no matter what.

5) You’re growing fast.

Every startup is born tiny. In order for it to ever matter, it has to grow, fast.

If you’re growing revenue 20% month over month or more at seed stage, you’ve got my attention! You must be doing something right.

6) Your burn is under control.

I advocate growing at warp speed. But you have to make sure you don’t go broke in the process.

Keep you burn multiple at 3 or less for a seed stage company. This makes sure your growth is cash efficient.

7) You’re realistic about valuation.

Toto, we’re not in 2021 anymore.

Last year, some startups were worth 100 times ARR or more. That was then, this is now.

Today, a high growth seed stage company is worth about $8 million pre-money. These companies usually have $5,000 to $25,000 a month in revenue.

When a founder has realistic expectations, I know she’s focused on the right thing: building the company for the long term.

If you work hard for your customers and cooperate with investors, you’ll get noticed. And you just might get a very large check.

What gets you most excited about a startup? Leave a comment at the bottom and let me know!

The next blog will be on Tuesday – I have an acting gig. Have a great weekend, everyone! 👋

More on tech:

The Startup Red Flags

The Burn Multiple: What Is It, and What Can It Do for You?

The Startup Metrics That Make Investors Drool

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