The start-up mentality is everywhere – people all around us are starting businesses, formulating ideas, working tirelessly to make their impact, but is it as glorified as people make it to be? I guess that depends on how you approach it. The start-up culture has been present for decades now, and thus, we’ve had time to learn from failure to understand ways of going about it that are more efficient than others. I had the pleasure of interviewing Jesse Bardo, VP of Early Stage at Silicon Valley Bank, to hear his take on what a mature approach to start-ups really looks like.
Given Jesse’s current professional role, as well as his previous experience of being a founding member of EverTrue, a TechStars and Bain backed SaaS company, he has a unique perspective that he was willing to share with me. As Jesse helped grow his company, he focused on smart approaches that built off the mistakes of others.
Let’s talk funding.
“[We] started [our] company in 2011. There was an idea to pour gasoline on the fire and just keep pouring money into it. Fast forward to today, the entrepreneur today is much savvier. People are older.” So, what does this now look like for others? Jesse talks about the beauty of bootstrapping.
Bootstrap: to get into or out of a situation using one’s resources.
It isn’t easy to bootstrap – especially when you have different variables in your life that require an income. But what bootstrapping allows for is the pre-seed maturity of a company. There is a growing culture around market research and proof of concept. An idea may sound cool, but with no credibility, it will really struggle in raising funds.
Welcome to the first step of a mature approach: focus on your proof of concept.
With the growth of family offices that are focused more on long term success, Jesse points out, there are more options for funding, and thus, more autonomy in the start-up to determine when is the right time to take on investment.
“You need to be well thought out; execute over a year and a half runway. Companies aren’t looking to burn through [cash] in 6-8 months [anymore], they aren’t hinging on that.”
Start-ups are becoming a lot more well-thought out. Before taking on any money, you need to know how much you need, why you need it, how you will use it, etc. There are many more questions being answered before-hand, bringing us to point two of a mature method.
Step 2: funding should be rocket-fuel for your already built rocket-ship.
I really loved this analogy that Jesse shared with me, because I think it does a great job portraying a concept that is easy to understand on the surface-level but hard to grasp internally. As a start-up, to be successful, you need to have internal stability. It is not healthy, as Jesse mentions, to just burn cash and become dependent on the investor. It can be tempting to get funding right away. Investing your own time and resources is a heavy risk, but if you believe in what you are doing, and it’s a risk you can afford, then, according to Jesse, it is a risk worth taking.
“There is an inflection point that a start-up will hit to establish some significant independence. If you need an investment to reach that point, then go for it. It is not an easy decision. It takes expertise and even luck, it’s timing. It is always a moving target so never stand still.”
It’s a tough road lying ahead for start-ups, filled with unpredictable twists and turns. That road in itself is inevitable, but how you handle your journey is not.
Step 3 : build your company with a client-first mentality.
Nowadays, in order to be a successful start-up, you need to offer your clients/customers a value that is greater than equity or a dollar amount.
“It is the intangibles that helps facilitate success. Giving back and ensuring your clients priorities come first will make you and your clients better. It will lead to positive paths.”
This is a trend we are seeing all around us, not only in the start-up world either. We see a shift towards corporate social responsibility (CSR) and the intrinsic motivation that it can provide employees. There is a plethora of research that supports CSR as an initiative that facilitates long-term success. And as Jesse has seen, from his personal and professional experience, this is no myth.
So, let’s recap: the three steps to a more mature approach to start-ups.
- Start with your due diligence (market research, client discovery, proof of concept)
- Getting funded too early may not be in your best interest
- Clients drive revenue, so treat them right
As the saying goes, a smart individual may learn from their mistakes, but a wise one learns from the mistakes of others. The past start-up ecosystem was filled with decisions that helped us learn what works and what doesn’t, influencing these previously three stated points as well. So, what is the truly mature method? One that learns from the actions of others.