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How Targeted Should An Early-Staged Company Be?

Question: How focused and exact should an early stage startup be in talking about the path their business will take? Does an approach of “We could take the business in X,Y or Z direction” have more or less appeal than “We are focused on doing exactly X and targeting consumers of Y and Z demographic.”

Our Take: Be honest. Be as clear as you can about your business, but don’t force yourself to make definitive statements that you can’t back up later. Obviously the more focused your business plan is, the better, but only if it truly is a focus and not window dressing in the attempts to allure investment.

Some startups have a very clear vision of what they want to do, some less so. Some of the most fulfilling discussions that we’ve had are with entrepreneurs who’ve created something that can go in several different directions. During the investment discussions the management team, along with their new investors, flush out the going-forward strategy. It’s fun to sit around a table and brainstorm about the possibilities. Speaking with potential investors and giving them all of your options is a good way to see how your future VC analyzes situations and how they can work with you in a collaborative manner.

Chances are that your business strategies will change either slightly or completely during your company’s evolution. Few, if any startups get it completely right the first time, so don’t feel like you should pretend to know everything from day one.

February 20th, 2007 by     Categories: Fundraising    
  • http://www.attention.ai Ian Wilson

    This is a paradoxical problem that I have encountered on several occasions. My venture has a technology that can be used in a myriad of product applications. This, I feel, is a great strength. However it makes for a very awkward “elevator pitch”, the value of the business cannot readily be summed up in a few words and trying to do so tends to so over generalize what the opportunity is as to make it bland and meaningless. Somewhat like saying “We personalize and prioritize information” to which you might think “so what do you do exactly?”
    Much advise focuses on this short snappy “sound bite” of what you do and that has great value in focusing the entrepreneur on just exactly what it is they do, do. However it is no panacea, in my opinion and focusing on that infers lost opportunities for investors.
    Now here is the paradox with this post, as I see it, brainstorming many ideas with potential investors allows the entrepreneur space to explain in more breadth these issues, but this all assumes that they have first managed to describe this wide ranging business opportunity in a sound bite snappy enough to get the meeting in the first place.
    That seems like a bit of a contradiction perhaps?
    What type of approach works well for you, to get from pitch to the brainstorming meeting, with businesses of this type (technology that can be applied to many disparate product and services)?