Published BY KEVIN MONSERRAT
Start-up CEOs are struggling immensely.
CEOs of startups around the world are struggling to death. We do not say this lightly—it’s the truth. Business founders, no matter their level of success, face many struggles. It’s been theorized that entrepreneurs, by the same qualities that make them eager to start something new, are predisposed to anxiety and depression. Going all in on a start-up causes people to neglect their own physical and mental health. They simply work themselves to death.
Some have even taken their own lives. Aaron Swartz, Jody Sherman, and Ilya Zhitomirsky are just a few of the well-known cases. These three founders were successfully growing their businesses, but despite their triumphs, the pressure was too much to bear. Entrepreneurs tend to burn brightly and burn out. It’s a serious problem, and not one that can be faced alone.
Entrepreneurs are struggling because running a start-up is hard and inefficient.
As the founder of a start-up, you’re operating under a great deal of stress. Before you launched your business, you probably knew that many things were going to be difficult: raising and managing funds, developing your products or services, researching your competitors, finding your customer base, building your team, defining your pricing strategy, proving your sales and marketing channels and learning things the hard way. However, there’s no way you could have been prepared for all the setbacks and struggles.
One of the hardest, most time-consuming aspects of a start-up is raising capital and aligning investors –and it creates no value to your customers. Let’s face it, no one will buy your product or services because you’ve raised millions. Yet it requires that you:
· Gather data and forecast your finances – the famous hockey-stick chart that we see on all presentations.
· Prepare a pitch deck to tell your story which everyone has an opinion on.
· Reach out to multiple potential investors sometimes without interest or capability to invest and attend investor meetings with a great level of information asymmetry. Too many start-ups are meeting too many investors and too many investors are meeting too many start-ups...
· Create field term sheets and proposals defining who carries the risk.
· Make it through painful and costly due diligence before to execute final documents.
· Do all this at a rapid speed, under a great deal of pressure and urgency.
Only then can you start getting money wired in and surviving your first and second round is only part of the battle: most start-ups require multiple rounds of fundraising over the first few years. It takes careful timing and coordinating. It takes good communication, people skills, and excellent business sense. It’s incredibly time consuming and might even turn into a full-time job. It could take anywhere from a few months to more than a year before you start receiving money.
These inefficiencies kill businesses.
Sometimes, it’s hard to remember that raising money isn’t your end goal! It should only be one step in the process of starting a successful business - and it's neither a success factor nor for every business. However, the fundraising process is where many start-ups end. The failure rate is too high, because the normal way of doing things is incredibly inefficient. Even top start-ups CEOs are losing their precious time and sometimes failing too.
All start-ups, in our experience, are wasting their equities. As start-ups raise money almost each year, they’re are spending the capital of previous investors to raise more capital. In addition, when these start-ups are spending their capital six months after the financing, they’re actually spending their equities in the form of cash at the complete wrong valuation as there were valued at the last round without considering the progress made in between.
So, as it usually turns out, you’re simply raising capital to raise more capital. It’s impossible to know how much progress your start-up will make in six months’ time. If you raise money every year for five years, you’ll have spent almost 50% maybe more of your time raising capital. And, even worse, most of the capital will be spent at the wrong valuation. It just does not make sense, so why do entrepreneurs do that?
Entrepreneurs should be focusing on their business, not spending all their time raising capital.
When raising capital becomes a full-time job, you have a problem on your hands. This goes back to the problem of stress, overwork, and depression that we discussed at the beginning of the article. When fundraising becomes an endless circle and you’re devoting more time to it than you’re devoting to your dream and goals, problems will inevitably arise—not only with your new business, but with your own personal health and mental well-being. To be successful, you need to find ways to become more efficient so you can spend time on what really matters to your business, staff and customers.
You don’t have to struggle silently. We can help.
Consilience Ventures is here to enable you to succeed. At Consilience Ventures, we help high-growth start-ups become global leaders by reducing the level of friction that comes with creating a tech start-up. We’re committed to entrepreneurs, and we know the difficulties you face. And, we found how to solve the inefficiencies and remove the obstacles that plague so many high-potential start-ups.
We take a unique approach to funding called “sprint financing” as opposed to “waterfall”, designed to support entrepreneurs and accelerate productivity. Our solutions provide fast-track financing and professional support, allowing you to take the next steps toward future growth.
Consilience Ventures works with seed and pre-series A technology start-up companies. We also work right alongside investors, corporations pursuing engagement and acquisition strategies, and business experts who can provide the services start-ups need to enhance their offering! Here’s what you need to know about us:
· Consilience Ventures does not take any transaction fees.
· You can pay as you go.
· We’re the only one on the capital table.
· We do not take any board seats (however, we want to be involved in the most strategic deliverables)
· We prefer to invest alongside traditional investors (VCs, business angels and family offices).
· We have the capacity to follow all the rounds on a data driven decision basis.
· With Consilience Ventures, you’ll be working with business experts and service providers with true skin in the game.
Do you think your start-up is a good fit for this network? Contact us today to discuss the Consilience Ventures community and to tell us about your business! If you’re interested in joining this network of start-ups, investors, and business experts, we are currently accepting applications and can submit referrals to get you to the next stage. We look forward to hearing from you!