Starting a company is not easy. In fact, venture capitalists and other financiers have coined the phrase, “Death Valley Curve,” which represents the period of time from which a startup receives its first capital investment until it begins generating revenue.
Depending on the industry, the expanse of this valley can differ substantially, as some companies require relatively little capital to get rolling—such as app developers—whereas others require substantially more, such as pharmaceutical and medical device companies.
While the odds may be against most new entrepreneurs—75 percent of venture-backed startups fail, according to a recent Harvard Business School study—it is important to think long and hard about whether or not your business has what it takes to cross that valley of death. For those who are up for the challenge, here are some tips and lessons learned for new entrepreneurs in any industry:
You can’t do it by yourself. Start by finding a partner whom you can trust. This person should not be a clone of you or work in the same way as you. In fact, it is much more effective to select a partner who brings a completely different skill set to the table.
For example, you will need to raise capital—but if your specialty is engineering, science or providing a service, make sure you find a partner who can balance that out by helping to raise money and better understand the business side of how a company runs.
Beyond your partner, the first few hires can make or break a company. Remember: investors don’t only invest in the idea—they also invest in the team bringing that idea to fruition. It is critical to recognize that experience matters, so don’t underestimate the value of someone who has successfully started companies in the past.
Have conviction. You need to be 100 percent convinced that your company is providing a product or service needed by society. Without that level of conviction, you will not be able to sell the idea to others. It’s important to talk to your prospective customers about your idea and its distinct advantages over your competitors. In the absence of an overwhelming response, go back to the drawing table.
Be patient. Recognize that Rome wasn’t built in a day, and your company won’t either. Start small, make steady progress and grow as fast as you can—without being reckless. At first, since you likely won’t have the funds that are needed to hire a complete set of experts, you will have to make it work with the talent that you already have.
Stay optimistic. During the hard times, it will be easy to feel disappointed, frustrated, angry and even scared that you’ve made a mistake. This is why it’s extremely important to remain optimistic. If you are not an optimist at heart, now’s the time for you to become one. Optimists have the ability to recognize that low points are only temporary and to persevere to achieve the next high point. If you are looking at that glass half full, go for it.
Your endurance will be tested. Entrepreneurship is a lot of hard work and can be very stressful. Not only will you be constantly working long days, but you will also likely need to put your vacations on hold for several years. This will be tough on both you and your family, so it’s important to make sure your loved ones are on board with your journey.
Although the risk of failure is high when starting a company, if you have a vision of what you can achieve and how it will make a difference in the world, then it is extremely rewarding to cross that valley of death and see your concept take flight.
Dr. Jack Regan is the CEO and founder of LexaGene (OTCQB: LXXGF; TSX.V: LXG): email@example.com / 800-215-1824