It has never been so easy to get a startup up and off the ground these days. Scaling and succeeding is hard, but just to get from napkin to prototype and some users is so much less of a hurdle than it was previously.From a technology perspective, so many parts of the stack have been made easier–from spinning up servers on EC2 and S3, to getting hosted Rails infrastructure on Heroku. If you want to build an eCommerce site, it won’t take a developer long to get you up and running on Shopify. Even the one time blogging platform of choice WordPress can, without a lot of hassles, can be manipulated to be your entire site’s content management system.
Still, you need some amount of development experience to do all of this so you still need to hire–or why not just do it yourself? Marc Cenedella of TheLadders coded up the first PHP versions of his site, and that was more than five years ago. More recently, Jim and Vinny the founders of Yipit taught themselves how to code to get their service up and running, after working in investment banking. Don’t want to learn code? You can outsource your development to India, the Ukraine, Buenas Aires, or even Indiana. That’s right–Indiana. If you’ve got an idea good enough to get accepted to Sprout Box, the team there will actually build your app.
There are incubators to help you out on the financing side, too. The success of YCombinator and Techstars has spawned countless new incubators. New York will feature five this summer alone–Techstars, DreamIt, Startl and the NYC Seed/EDC Media and Finance incubators. They each come with money and mentoring to help you get off the ground.
On to of that, connected communities of entrepreneurs are better at incubating and supporting startups now than ever before. Whether you’re at a Plug and Play, Dogpatch, General Assembly or just hanging out in the lobby of an Ace Hotel, you’re never that far from a peer group of startups in any big city.
Plus, there are a ton of in person networking and educational events related to startups that are free or relatively inexpensive. When I started at Union Square Ventures six years ago, there were literally two monthly events to go to–the New York Tech Meetup (member #71) and I think the Video Meetup was around then. Now, events like the First Round tech talk on Android bring out scores of attendees–we had over 100 Android developers show up. My weekly newsletter on NYC events, with over 3300 subscribers, covers over a dozen events each week–and that’s curated!
Online communities provide lots of valuable information as well. Experienced entrepreneurs and VCs share what they know on their blogs, and anyone can get thoughtful answers to tough questions on Quora.
When things get easier to launch, that should mean that the bar is higher–and speaking for myself, it is. When you have such low barriers to launch and great support structures, you should expect investors to have higher expectations of progress these days. When you can get a mockup going quickly, and send it over to UserTesting.com , crowdsource feedback on twitter, and participate in community pitch events, you shouldn’t be surprised when your flat month to month growth causes a hiccup in your fundraising. I hear people tell me that the reason their site hasn’t grown yet is because they haven’t started marketing yet. Really? Why isn’t it growing its own yet? Are there not enough blogs out there about viral loops? Did you not understand your customer’s pain point well enough in your lean startup process?
It may seem like everyone’s getting funded these days, but I suspect you’re going to start hearing push back on behalf of investors. When you’ve seen the third or fourth attempt at solving the same problems, I suspect that you’re going to be a little more patient when evaluating them. You expect to see the fifth, sixth, and seventh tries, maybe with a stronger team. On top of that, when you see a bunch of companies doing the same thing and few are getting traction, you start to wonder if they’re working on problems that just aren’t enough of a pain point in the market.
Many investors especially relatively new ones, did a flurry of new deals last year and are spending a greater percentage of their time helping those companies hire or raise new money this year. Getting them to think a about new deals isn’t impossible but it will take a more compelling opportunity to get their attention.
The percentage of companies funded at demo days of all these various incubators is bound to go down as well–even as the quality of the companies goes up. If you have three to five times as many incubator programs as you did before despite the new money in the market you can’t possibly expect just as many of them to get funded.
Does this mean that the good times are over? Is the bubble bursting? I don’t think so…especially since so many of the inflated deals we’ve seen are coming as huge B and C rounds–those may not wash through the system for another year or two. If those companies work on revenues, they may actually work themselves out. What it does mean is that it’s undoubtedly going to take more effort, more traction, and better teams to compete for seed and angel funding than it has recently. This is a very good thing. Achieving success is so hard relative to just being able to get off the ground that only the very best teams with the best execution should get funded.
Hopefully, those that have trouble getting out of the gate will regroup, pivot, etc and make another go of it with a different approach. That’s why it’s really important to have advisors and to meet with investors who are willing to give you direct, honest feedback and models that they don’t think will work, market opportunities that are too small, or products that just don’t provide enough customer value. We sometimes get too caught up in being pro-entrepreneurship and supportive of those who have taken the plunge that we don’t get them the feedback they need to use their time the most effectively. I know when I was an entrepreneur, I sure do wish that all the people who gave me a pat on the back for launching would have given me tips to improve the product we were building.
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