Ever since Forbes published in 2015 that 90% of startups fail, finding the key to success has been crucial for entrepreneurs. Bobby Chernev reiterated that statistic in August 2020 stating that 9 out of 10 new startups fail.
What is the key to success? We thought it best to ask someone who went through the ‘How to build a successful business’ phase themselves. For this, we turned to our founder Biswajit Kundu Roy, who discussed the Dos and Don’ts of founding a company as well as his top tips for others to overcome this daunting challenge.
Read on for handy templates to create an Investor Pitch that helped Coastr win Seed Funding!
Founding a Startup
The first stage of establishing a startup is of course the innovative idea that motivates and inspires one to take on such a challenge! Shikhar Ghosh’s Harvard Business School study showed that out of the 7 key reasons for failure, a problem with the product itself was the most important reason. This step is often overlooked in the excitement of running your own business. We interviewed Biswajit about his founding journey and what he did differently to others to ensure success.
Q: Why did you decide to take the leap of leaving a comfortable job to take the risk of creating a business from scratch?
A: “As they say ‘Fortune favours the brave!'. I have always followed my passion and strongly believe that’s the best way to succeed. I also believe in constantly learning new skills and stretching my boundaries, which is why entrepreneurship seemed like a natural fit. Most importantly though, you need a strong support mechanism and I have a wonderful life partner to thank for that.”
Q: Where did the idea of Coastr stem from?
A: "I am an avid traveller and a regular car rental user, but I hated the experience of renting a car from the incumbents. Being a technologist, I remained baffled at how the operators managed their businesses in the most old fashioned way. This made it seem as if technology hadn’t caught up with the car rental world! I am also a problem solver by nature and I was desperate to find a technology solution that can improve the lives of users like me."
Q: How does a business start? Describe your journey?
A: "Like any good idea, it needed proper market research, lots of validation with people and finally a team who could execute the idea. I spent the first 6 months purely on research and talking to over 50 different people about the business idea, getting feedback and constantly refining the business model. During this time, I used my personal network extensively for validating the idea and recruiting people to join me in the journey to build up the business. One distinct advice that I can share is never be disheartened or defensive while receiving feedback. I used it constructively (and objectively) to keep refining my idea, no matter how negative the feedback was."
Q: How did you connect with Advisors? How important is it to do that?
A: "If you can relentlessly ask people for help, you may be pleasantly surprised by the outcome. I started with my personal network and actively sought referrals to find the right advisors. Advisors can play a big role in your early days by not only sharing experience but also opening up their own network to open doors for you. They also bring immense credibility to the Board and management structure which can provide confidence to early stage investors."
Q: How did you solve problems during the founding stage?
A: "I believe in the concept of a lean startup, so we decided to find some early adopters (customers) who would want to buy our product before we even started to build anything. Having a customer led product development strategy has helped us achieve a product market fit early and avoid expensive failures. We also took the “Minimal Lovable Product” (MLP) approach to launch an early prototype within 6 months of development timeline. We used to call it our ‘ugly baby” but it allowed us to learn immensely from our users as we rapidly iterated and kept launching new features every 2 weeks which helped to keep them engaged. Limited engineering capacity and resources was also a big challenge during our bootstrapping phase and we saw a constant churn of people who worked with us in this period on a part time basis. The ones that stayed are going to be the future stars in the business!"
Q: Why do you think startups fail? How not to?
A: "I strongly believe that most startups fail either due to their inability to think commercially to achieve early product market fit or if they cannot hold on to their culture as they grow their teams. I have seen some startups raise a lot of money and scale very fast but not remain focussed on product and revenues. Having a strong eye on profitability and costs should remain central to any business, big or small. In addition, companies are about people, so having a strong set of cultural values help to bring the right people into the business. I spent a lot of time initially (and continue to do so even today) to embed the values that we strongly believe in."
Q:If you were to start again what would you do differently?
A: "That’s a difficult one! Maybe be better at choosing who to bring into the business. The right fit can elevate your business, collective skill set and even the morale of the team. On the other hand a wrong person can create breakdown of communication, delay in implementing ideas and worst of all, a person with a bad attitude can hamper growth and even lead to loss of other talented people within the team. So going forward I will be stressing very hard on a good recruitment process, while continuing to focus on an open door policy to promote healthy working relationships.”
Hiring is definitely an important stage of a startup. Tim Jackson explained in Medium how a ‘high percentage of company founders raise money’ and then they ‘run into trouble’ when the company growth means that they prioritise hiring many people instead of the best people. It will definitely save time later if you get that person right straight away."
Once your startup idea is developed, investment will be your next fateful step. Bobby Chernev found in 2020 that 82% of startups fail because of cash flow problems. Investment is not just important for the initial stages but also throughout the innovation life cycle to ensure a sustained level of growth. Coastr is proud to have a number of VC partners which have supported our growth so far.
We asked our CEO Biswajit to describe how he secured funding and impressed investors!
Q: From where do startups get funding?
A: "I would suggest bootstrapping is a great way to start any business because it helps to find great people, who are motivated by the challenge rather than money or other prospects. Typically, the first round comes from family and friends or angel investors who you may know from your personal network. Most importantly, it is advisable to find investors who are not only bringing in capital but also their experience and personal network."
Q: What tips would you give budding entrepreneurs on how to get the right funding at the right time?
A: "Only raise money once you have an early prototype. It helps founders focus on getting the product launched early and start the commercialisation process. I raised our first round once we had an early version of the prototype and we used it to launch the MLP with 2-3 customers."
Q: What changes did you make once you had secured investment?
A: "Having a strong corporate governance is critical to securing investor confidence and driving transparency into the business. Once we had full time people in the business, I set up the Coastr Board and worked with our management team to establish the right management structures to support decision making within the business. In addition, I also spent time with the Board and management team to develop our corporate strategy and cross functional budgeting to help set our cost and revenue targets."
Q: After a successful pre-seed funding, what are your expectations from the second round of funding? Anything you are doing differently?
A: "The seed round for us is about scaling up operations and customer acquisition while continuing to invest in product development and future phases of our business. The seed round investment is very different to the pre-seed round (and typically the most difficult round) as here you are talking to institutional investors about serious investments into the business and they expect to see a good set of metrics that demonstrate product market-fit has been validated, some early revenues and a strong pipeline of customers. The fund raising in this round also requires more dedicated time for the founders in preparing the right documentation, investment pitch, financial forecasts and often a good pitch video for investors to sell your idea."
Don’t get complacent after securing the investment!
Although you deserve a pat on the back for your successful investment fund raising at this stage, building a long lasting and successful startup requires growth and expanding at a sustainable rate. Neil Patel, the Digital Marketing Guru, explained that growth is what “investors need and markets want”. Rapid growth is a sign of a “great idea in a hot market”.
So, how to make your product a long term success? Biswajit reveals all the tricks and tips below:
Q: When did you know that the start up was going to be a success?
A: "Right from day 1! Jokes apart, I keep evaluating our progress every month. I spend a lot of time with the team to evaluate the customer feedback on our product. In addition, the response from the market and investors is another measure of growth and validation that we are moving in the right direction. I am not easily satisfied and believe the only way we can be successful is through constant innovation."
Q: How can a start up continue to grow?
A: "Revenue.Product.People. Keep focusing on these 3 aspects and growth will be inevitable."
Thank you so much for reading and we wish you all the best for starting your own business!
Coastr’s Pitch Deck Template
To help you further we leave you with the pitch deck template that Biswajit used to successfully land investment. We mastered this template after going through many examples and the original pitch decks of big brands like Facebook and AirbnB.
Here is an example of a simple in-house Investor Pitch Video!
We made this in house using no paid tool. Sometimes Investors get charmed by a video as it ads a personal touch instead mailing them a Pitch Deck presentation.
We encourage you to reach out if you have any further questions.