I recently changed my status on LinkedIn to reflect that I’m an angel investor, and you know, I’m not convinced it was a great idea. Why? The truth is, I’m getting bombarded with early-stage startups asking for advice on their pitch decks. I take a look but ultimately can’t give them much attention for one main reason — none of these pitches talk about marketplace. This isn’t the first time I’ve encountered this egregious omission. In fact, I can’t count the number of start-ups I’ve heard of or heard from forgetting to include marketplace in their pitch.
Marketplace is absolutely the most important aspect of any early-stage company. It’s a bold and factual statement, I know. But without marketplace, how do we know if what we have is it? And how do we really know when we have it? Perhaps you saw what the competition was doing and then went out and spoke to potential customers to seek feedback on your idea before building what you think they want. Or maybe you found the perfect market fit and your first customers made your product successful. For me, it comes down to having the evidence that someone wants to pay for your idea as an investor.
For the last six years, as both an angel investor and mentor, I’ve been helping early-stage companies bring their ideas to life. It’s been my passion. The founders I volunteer with know that for me, it’s all about helping them with the marketplace — introducing them to potential customers who can eventually help lead their sales growth and business development. This growth has to be the fuel that feeds the fire within you as an entrepreneur. And if you want to succeed, my attention (and the attention of investors like me) know and talk about marketplace. Fortune magazine released a survey by founders and the number-one reason for their failure is the lack of demand for the product. That’s a huge part of marketplace and not knowing your marketplace. Frankly, this should be self-evident. If no one wants your product and no one is willing to pay for it, your company isn’t going to succeed. Case closed.
The biggest gamble I took in my business career was quitting a great job where, after seven years as vice-president, the owners were about to give me equity — they heard I was being drafted by the competition. I decided to give notice and join the new firm — I got equity and was made president. The first thing we did when I came aboard was research what our competitors were doing in our marketplace and how we could separate ourselves from the sharks. Next, we went directly to our existing — and, more importantly, potential — customers to seek valuable input about what they wanted. That was truly the secret to our success — the company went from a few employees with a few million in sales to 55 employees and $50-plus million in just five years. And since we’re talking about marketplace, get this: We had 98 percent of the industry’s Canadian marketplace. That was my first exit.
I’ll leave you with this: A few years ago, I was involved in a program called Up Next, which aimed to help 18- to 29-year-olds with entrepreneurship. One of our committee members brought her 12-year-old son to observe. Driving home, his mother asked, “What did you learn today?” A typical tween, he went on about bits and pieces he’d heard. But the one thing he said was drilled into him was this: “It really doesn’t matter how great the idea is if no one wants to pay for it.” Smart kid and, I’m calling it now, future entrepreneur.
