10 Changes Happening In the Startup Environment

The landscape for startup ventures is rapidly changing according to Paul Singh, former Entrepreneur in Residence at the White House and partner at 500 Startups. Singh spoke at the dynamic International Startup Festival in Montreal a few years ago, and on reflection much of his perspective still stands, so I’m republishing the post.  The conference was sponsored by FounderFuel, a top tier mentor-driven accelerator that helps early stage startups raise seed capital. Accelerator program managers and advisers from Silicon Valley, Los Angeles, Boulder, Sydney, Charlotte, and Washington, DC joined  Canadian counterparts in Montreal to share ideas and learnings for accelerating entrepreneurial ventures.

Paul Singh, left, with startup program directors from Australia, Canada and Silicon Valley.

Paul Singh, left, with startup program directors from Australia, Canada and Silicon Valley.

Singh shared his insights on these global, technological and economic forces that are changing the landscape:

  1. Startup costs are getting cheaper, primarily due cloud technology. But it is increasingly expensive to scale at the products and markets fit stage.  So don’t get over-confidence from a quick build on your technology, because the market traction may be costly.
  2. Infrastructure is now virtual, diminishing the United States’ predominance as the mecca for innovation and new companies. The rest of the world is nipping at your heels.
  3. Traction is the new IP.  So instead of spending money and months tweaking your IP, go get a customer.  Reality is that the longer you are in the market with no customers, the more skeptical investors become.
  4. Capital is increasingly commoditized.  Look for added value from your investors.
  5. New reality is that money follows founders.  The best founders have access to capital.
  6. Early stage venture investing is not very sophisticated.  One venture capitalist later shared the “dirty little secret” that venture investing is very subjective, often based on chemistry with the founder.  Research and get to know the people behind the money.
  7. Advice, control and money are becoming unbundled.  Mentors advise, trusted third parties control outcomes through recommendations to venture capitalists, investors provide cash.
  8. Investing used to be about capital, deal flow and judgment. Today is it about access – can investors find and attract the best founders?  Accelerator program managers and investors may look outside their direct markets for good companies, increasing local competition.
  9. Accelerator programs should aim to provide the best access to functional expertise.  Get the best mentors, even if that means recruiting high impact employees in corporations to get into the operational weeds with founders. For example, a corporate marketing manager with a huge Google AdWords budget could be a fantastic mentor for a startup on online marketing.
  10. Scale and global perspective are more critical than ever. Accelerator programs should focus on specific verticals, regions or strengths with the goal to support the growth of local and global high growth companies. Go big or go home.

Bonus insight:  There are too many startups and not enough businesses.  According to Singh, one dollar of revenue counts as a business, so move quickly from incubating ideas into finding customers, getting traction and generating that first dollar of revenue.  If only it were that easy!

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