Mentor Journey: Misconceptions From the Field - Ecosystem Edition
There are some really prevalent misinterpretations all around entrepreneurship, depending on the perception you are looking from. I often encounter them personally in my mentoring work, learn about from conversations with entrepreneurs, people who work in support programs.
This article will share some of the most common misconceptions encountered and observed during the past five years!
From the perspective of the entrepreneurs
If I win this competition, get accepted in this incubation/acceleration program, or make it through this hackathon, that would be real validation for my startup.
That is perhaps one of the most popular misconceptions observed in the field! Many entrepreneurs consider acceptance and rejection as part of the personal and/or startup idea validation.
That is far from being correct, simply because it is based on the wrong source. Your startup idea validation comes from the customer and the market. Your personal validation comes from handling your team, your decisions, and, most of all, handling your emotions during the significant ups and downs of the startup journey.
So don't let the big check and the Facebook posts fool you and go out there, talk to your customers, include your team in the process and build your company one step at a time.
It is all about the money!
Yes, money is an essential resource to get your company going. But your focus should not be on getting investors. Instead, focus on understanding customers. Find convincing primary validation before you decide actually to go and pitch to investors. Remember, there are 100 million Egyptians. There is the probability that you aren't the only one who got this idea, and the chances are that investors have already heard some version of it.
Investors are always looking for someone with a convincing business case and not wishful thinking, hopes, and dreams.
In Egypt, it is not passion that drives investors to write checks. This is not Silicon Valley, boys, and girls, no matter how many times you hear it in talks and presentations. You really need to showcase serious validation for an early-stage startup, with customers, sales, and proof of potential growth.
You want to be taken seriously, be serious about it!
From the perspective of acceleration/incubation program teams
Startups must have an MVP to showcase seriousness!
Almost all of the local programs insist that a startup team must present an MVP to showcase seriousness.
It is fascinating how that request took a wrong turn!
Most people think an MVP is actually a working "proof of concept" for a product or service, and it is preferred if it is already selling in the market.
That is not an MVP!!!
That is a product selling! An MVP is the simplest materialized form of your value proposition with which you can learn the most insights about your customer with the least resources possible.
That approach directs the entrepreneur to build something, just for the sake of judgment at a panel. That is really not the right message to send our entrepreneurs. They need to focus on validating the value proposition and the business model. Instead of asking for an MVP, ask for validation, solid proof for the value proposition, and the business model. You can always ask for a very early engineering prototype in the case of a tech startup. I call it the ugly prototype because it usually looks terrible, but it is ok as long as the engineering works!
Somebody else did it. Why should I accept you into my program?
This type of question reflects a limited mindset. It really doesn't matter if a startup is doing the same thing as other startups in the market. The question is how well the founders understand the market they want to enter and compete in, the customers, and what they will do with that knowledge. Talk strategy, not product!
Another thing is the tech used to deliver the value proposition. Sometimes, a startup can have a better tech to deliver the same value proposition already available in the market.
The entrepreneurs are really not applying to go to heaven; they are looking for a place to help them discover an idea's potential in an organized and systematic approach. That is your job, to help them blossom mentally, not to judge them on their limitations. So guide them. If the work is not good enough, do not accept them to the program, respectfully and professionally. But give them feedback about why they were not admitted, give them pointers, advise on how to improve, what they have missed, and ask them to apply again on your next round. Guess what? This how you create a pipeline of startups for your next incubation/acceleration cycle.
From the perspective of Angel Investors
I have the money; I will build the startups!
For some reason, some angel investors decided to build a mass startup factory. They scout for ideas by attending startup pitches, getting all the insights after an extensive discussion with the pitching entrepreneurs. They hire talented individuals, give them a budget, and ask them to deliver profitable revenue streams. Well, that is not very angelic of you guys!
Founders are driven to see startups succeed. Hired employees are not necessarily willing to sacrifice the same amount of time, effort, and focus on a job. They will work as much as the salary inspires them or until better pay comes along and inspire them away. On top of that, you will lose the faith of entrepreneurs as soon as your startup factory becomes a well-known "whispered" fact.
I don't know if this is a sign of investors losing hope in Egyptian entrepreneurs, greedy ego manifestation, or simply a practical way of getting a faster return on investment. But this phenomenon will further widen the mistrust gap, slowly but surely growing, between local investors and founders.
Thank you for taking the time to read this blogpost.
Goodwill and Respect!