About the test
We have included some key questions about a company stage:
Revenue and Revenue Growth.
Product development stage.
Founding Team conformation.
Every company is different, and every product/service is different. It’s impossible to automate the judgment on whether a new company has potential or not.
What we can automate based on our own experience with hundreds of early stage startups is traction; which translates to de-risking.
In the end, investors look for companies who are likely to succeed, and the progress that you can show prior to raising your first round of capital speaks precisely about that. This is what the test assesses. A correlation of your traction vs what early stage investors expect these days.
I want to quote one of our mentors, Elizabeth Yin, here:
Having run a startup that raised money and now in running a VC, ironically, if I were starting a product company today, I would start out with the mentality of bootstrapping for as long as I could. And, maybe, just maybe, I might consider raising more money under a few limited circumstances.
1. Was growing 30%+ MoM in sales and my operations could not keep up to fulfill those sales
2. Was a marketplace with high engagement
3. Was growing net revenue 30% MoM for many consecutive quarters where I felt confident to really pour big money in marketing channels
A very small minority of the companies we come across fulfill those requirements, and we really want startups to reconsider their paths.
Why are we doing this?
About 6 months ago we had to embrace a hard truth: many of customers were churning because they were going out of business. They had trusted our pitch deck builder to build their investor presentations, but had failed at raising capital.
This is why we decided to start working on a new product prototype called FounderHub.
A ‘classic’ cancellation story would be:
‘loved your product, so easy to use, but we’re closing our startup because we couldn’t raise any money’.
A pitch deck doesn’t make or break a company. It most certainly helps, but it’s the business stage, validation, de-risking and vision of the founders that makes a difference. But still, we’d like to see more companies succeed.
This is why we started the development of a new startup fundraising platform called FounderHub. While still in the earliest stages, it clearly lays out our vision of helping entrepreneurs like us navigate the ruthless complications of starting a business. While we believe in our product, our team, and our company, in many ways we got lucky of having access to people, capital and resources that got us to where we are now.
Here’s a good video we made about this,
So what is FounderHub?
We are positioning the product as a platform to help you fundraise. In reality, we want to provide an automated, verified way to tell founders that are too early that they should go back to building their products instead of worrying about investors. For the founders that are ready, we want to help them navigate the complicated process of starting a company.
You can check out FounderHub at founderhub.io.