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Table of Contents
Table of ContentsHow much money to startWhat investors look for in a startupSISP: Worst way to start a businessProtecting startup idea: should you?
For the first time in my life, I decided to quit my full-time and well paid job at age 23 to pursue entrepreneurship. This year, I joined a program with Antler - a Singaporean Early Stage Venture Capital Firm to collaborate with other members to come up and execute on an impactful startup idea.
It’s not because I’m so sure about the future, or I want to earn money incredibly fast (tbh I love money as normal person): but to explore a variable of randomness, to starting up a business that impact the people in a big way is always a big dream to pursue.
Yesterday, I talked with a manager at Antler - anh Anh Hoang (his Vietnamese name is Hoà ng Anh) via “Ask a VC” session. Per our fruitful and informative, I think it is important to capture it and share it back with the community, at least with my social circle.
This post also includes a collective knowledge I learned from the interview session with anh Erik Jonsson - a partner at Antler, and product brainstorming session with our PM, chi Daphne Huynh.
How much money to start
Normally, a rule of thumb is that you have a run-way fund (in form of cash) equivalent to 6-12 months of living expense to . Say you burn money at the rate of $500 per month, then multiply it by 12 you will need at least $6000 in your bank to survive in one year without monthly salary. If you don’t have that amount cash in your bank account, you’ll be very fragile in terms of basic needs.
The next thing is that you should consider who will impact financially upon this decision, the more the dependees you have, the more risk you bear. A great example I learned from Erik is that: if you don’t have anyone to take care for, a risk is contained in pie-like shape (see the image)
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For this reason, although knowing that ideal age for starting up is 4x, I decided to start it as soon as possible. In case of returning back to job market, I can really do it anytime I want, as long as I still code, still learn, still execute and make relevant impacts.
Sneak peek: At Antler’s program, we have these awesome perks to help you build your idea comfortably: renumeration to cover basic needs, 100000 USD of cloud credits, and free office. That’s huge thing to consider.
What investors look for in a startup
There are two main things that that investors often look out for:
- Founder/Product fit:
- Is the founder has the right person to solve this problem?
- Does the founder has enough expertise to execute? → say they want to build an AI startup, are they an AI expert themselves?
- Are the founder motivated enough to solve the problem? → do the founder empathize with the problems deep enough so that he has an incentive to build this product for next 5-10 years.
- Product/Market fit:
- Do the market need the product?
- Is the problem urgent and painful enough?
- Is the potential market for big enough?
- .. and not idea: because it is hard to evaluate ideas solely based on its look, even big VC like Y-combinator can not evaluate whether a startup will succeed.
There’s a video that I really about startup idea evaluation:
SISP: Worst way to start a business
The worst to start an idea is to start it with a solution, rather than a problem. In Product Development this has a term called SISP - “solution in search of a problem”. An great example for a SISP situation is that normally it came in a form of “X-for-Y” solution.
For example, “A social network (X) for racer (Y)“. This might be a good idea (or not).
The problem is that it did not start with a strong market base:
- Do Y really wants X? → Do the racer really want to have a proprietary social app for their community? Or they just use facebook anyway.
- Is Y a massive market? → Are racers it big market? If yes, then how many people are willing to pay for such services?
I was suggested to take a step back for a number of times, either from anh Hoang Anh or chi Daphne, to learn more about the true market need, not just. I think it’s a valid point
A video to learn more about generating and testing startup ideas:
Protecting startup idea: should you?
This is a haunting question that follows me for a while. I found out the answer is pretty simple and standard for all founders who asked the same thing.
That is, no matter what ideas you are building, either a SaaS or medical product, your competitors will copy you anyway, and take that as a positive signal because that means you’ve entered a big market. At the end of the day it all comes down to who build it faster, and better.
Also I learned from Daphne that this kind of afraidment mainly stems from the fact that one think their ideas are so great, and forgot to evaluate the idea appropriately. Take simple-to-build app like Snapchat, even software engineers know how to reverse engineer, they cannot do anything anyway.