What is ‘Early Stage’ these days?

I had the pleasure of attending Climb23 last week, an event in Leeds attended by a coterie of startups, scale-ups, investors and the great and good of those who support the startup ecosystem. During the conference, there was an interesting discussion with a point raised on what is ‘Early Stage’ these days in the startup context? From what I saw and heard, I think there is now a growing divide between the definitions of founders and investors as to what ‘Early Stage’ is. The bigger question is how do we then bridge this gap?

The easy side to explain is probably that of the founder. To the majority of founders (and tsf.tech) an early-stage founder is someone who has an idea and can be anywhere from just having the idea through to having their MVP completed.

It’s been in this space that tsf.tech has been helping, supporting and building tech companies since its inception. There are obviously still criteria we look for in founders we work with, such as domain expertise, but generally speaking, the lower boundary of an early-stage startup is anywhere from inception through to having a functional MVP.

The investor perspective is slightly different. From the discussions at Climb the investors that class themselves as early-stage investors, the majority look for the usual founder criteria and viability the same as we do. More importantly, and really the basis of this blog, is that they want to see the MVP and some see traction/revenue.

The reasoning behind this we can assume is risk management and can we really blame them in this economic climate? Risk always has to be managed. However, in a world where developers are expensive, having the funding to get off the ground often means that it’s only previous founders or the wealthy that can afford to get their startup off the ground. That means swathes of the entrepreneurial community fail to launch. To tsf.tech this level of startup is far more akin to a scale-up as the investment is often being used for just that, to scale up the startup.

Now, can we change the investors’ mindsets about what stage ‘early stage’ is? Probably not, or if they did, they would just use a new term and that doesn’t really help founders does it? So what will help?

This is where I go on a slight tangent and then try and pull it around to be relevant. I’ve been lucky enough to see Derren Brown many times. The man is a genius and his understanding of how humans think and work is incredible, but unlike most in his field, he does not describe himself as a magician, he’s a mentalist and an illusionist. He never attributes his shows to magic, it’s about the show and illusions to make those watching see and believe what he wants. Now that’s something to ponder… can we create an illusion to stand in for the otherwise expensive MVP, both in the eyes of customers and investors. These days I believe we can.

These days there are a number of solutions aimed at those who cannot code (myself included). Enter stage right the likes of Bubble.io, Adalo, Shopify, Adlao, Sharetribe etc. All of these tools mean you can create platforms of a middling level of complexity yourself at home. Believe me, I’ve done it. Do these platforms offer all the bells and whistles? No. Should your MVP have bells and whistles? NO. Ahhh so here may be our answer.

By creating a platform from the seeds of a low code system with a very manual back end, it’s very possible to build a POC/MVP (build – check) that users can interact with (traction – check) and spend on (revenue – check), throw in some hard graft on marketing and low and behold we have a real life, bootstrapped, working startup. I’m not saying it’s easy, but it’s very doable.

The question then becomes will these so-called ‘early stage investors’ invest on that, only time will tell but the successes of the likes of SoSquared suggest it’s doable! It just means that at some point that effort will have to be thrown away to build a platform that can scale and be more customisable to your needs. 

So ‘early stage’ is just that, ready to put in the hands of early users, still has rough edges, but gives founders something tangible to talk about and pitch, and something for investors to observe in motion in the market, just ignore the founder behind the curtain pulling the levers manually.

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