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Ethiopia, a country located in the Horn of Africa, is a sleeping giant in the startup ecosystem. With a population of over 114 million people, it is the second most populous country in Africa. Its economy, the fastest growing in the region, is the seventh largest in Africa. These factors, coupled with a burgeoning middle class and a young, tech-savvy population, make Ethiopia a fertile ground for startups. This article provides an in-depth overview of the Ethiopian startup ecosystem, highlighting successful startups, innovation hubs, co-working spaces, accelerator programs, and the challenges of building a startup in Ethiopia.

Ethiopia, a country located in the Horn of Africa, is a sleeping giant in the startup ecosystem. With a population of over 114 million people, it is the second most populous country in Africa. Its economy, the fastest growing in the region, is the seventh largest in Africa. These factors, coupled with a burgeoning middle class and a young, tech-savvy population, make Ethiopia a fertile ground for startups. This article provides an in-depth overview of the Ethiopian startup ecosystem, highlighting successful startups, innovation hubs, co-working spaces, accelerator programs, and the challenges of building a startup in Ethiopia.
 
Ethiopia's startup ecosystem is still in its nascent stages but has shown significant growth over the past few years. According to the Global Startup Ecosystem Report 2020, Ethiopia is one of the emerging startup ecosystems in Africa. The report notes that the country has a high potential for growth due to its large population, growing economy, and increasing internet penetration.
 
Successful Startups in Ethiopia
 
Despite the challenges, several startups in Ethiopia have managed to achieve success. These startups span various sectors, including agriculture, fintech, e-commerce, and logistics.
 
1. RIDE: RIDE is a ride-hailing service that operates in Addis Ababa, Ethiopia's capital. Launched in 2014, the startup has grown to become one of the leading ride-hailing services in the country. RIDE has over 1,000 drivers and has completed more than a million rides.
 
2. Deliver Addis: Deliver Addis is Ethiopia's first online food delivery service. Since its launch in 2015, the startup has expanded its services to include grocery delivery and courier services. Deliver Addis has partnered with over 100 restaurants and stores in Addis Ababa.
 
3. HelloCash: HelloCash is a mobile money service that allows users to deposit, withdraw, transfer money, and pay for goods and services using their mobile phones. Launched in 2015, HelloCash has over 1 million users and has processed transactions worth over $1 billion.
 
4. Gebeya: Gebeya is a tech talent outsourcing company that connects African tech professionals with businesses worldwide. Since its launch in 2016, Gebeya has trained over 600 tech professionals and has worked with over 100 companies.
 
Innovation Hubs and Co-working Spaces
 
Innovation hubs and co-working spaces play a crucial role in the startup ecosystem. They provide startups with the necessary resources and support to grow and succeed. In Ethiopia, several innovation hubs and co-working spaces have emerged, providing a conducive environment for startups.
 
1. blueMoon: blueMoon is Ethiopia's first youth agribusiness incubator. It provides startups with mentorship, training, and seed funding. Since its launch in 2016, blueMoon has incubated over 20 startups.
 
2. xHub: xHub is a tech innovation hub that provides startups with mentorship, training, and networking opportunities. xHub has incubated over 30 startups since its launch in 2014.
 
3. Iceaddis: Iceaddis is a co-working space that provides startups with a conducive environment to work and collaborate. It offers startups access to mentorship, training, and networking opportunities.
 
4. Selam Children’s Village: This is a co-working space that provides startups with affordable office space, internet access, and other necessary resources.
 
Accelerator Programs
 
Accelerator programs play a crucial role in the startup ecosystem. They provide startups with mentorship, training, and funding to help them grow and succeed. In Ethiopia, several accelerator programs have emerged, supporting startups in various sectors.
 
1. Sheba Valley: Sheba Valley is an accelerator program that supports tech startups. It provides startups with mentorship, training, and seed funding.
 
2. GrowthAfrica: GrowthAfrica is a pan-African accelerator program that supports startups in various sectors. In Ethiopia, GrowthAfrica has supported several startups, including RIDE and Gebeya.
 
Challenges of Building a Startup in Ethiopia
 
Despite the potential, building a startup in Ethiopia comes with several challenges. These include:
 
1. Regulatory Challenges: Ethiopia has a complex regulatory environment that can be challenging for startups. For instance, foreign ownership of businesses is restricted in certain sectors, making it difficult for startups to attract foreign investment.
 
2. Access to Finance: Access to finance is a major challenge for startups in Ethiopia. The country has a low level of financial inclusion, and banks are often reluctant to lend to startups due to the perceived high risk.
 
3. Infrastructure Challenges: While internet penetration in Ethiopia has increased in recent years, it is still low compared to other African countries. This poses a challenge for tech startups that rely on the internet to operate.
 
4. Skills Gap: While Ethiopia has a large, young population, there is a skills gap in certain areas, particularly in technology. This makes it difficult for startups to find the talent they need to grow.
 
Despite the challenges, Ethiopia's startup ecosystem shows great promise. With a large population, a growing economy, and a young, tech-savvy population, the country has the potential to become a key player in the startup ecosystem. However, for this potential to be realized, there is a need for supportive policies and initiatives that address the challenges facing startups. This includes improving the regulatory environment, increasing access to finance, improving infrastructure, and addressing the skills gap. With the right support, Ethiopia's startup ecosystem can thrive, contributing to the country's economic growth and development.

A Brief Overview of the Ethiopian Startup Ecosystem. 

Africa Fintech Summit

The Next Wave

TechSafari

Big Tech This Week

I bet anyone who has ever tried to build a startup has already heard about how brutal it is, but whatever you have heard, it is even more brutal when you are in the arena. Building a startup, for mots people, will be the hardest thing that they ever do. So in the pursuit of building a startup, many founders are advised to go all-in. To, put all their eggs in one basket, and then see if it works. So this brings us to our question; can one do it while working a full-time job?
 
For most full-time jobs, they run from 9 AM to 5 PM, hence the phrase, “9 to 5”. This would give any founder some time to work on their startup in the evening upto until midnight. So on a timescale, it is doable. And it has its own advantages.
 
You see, most startups struggle in the early days. There are a few exceptions, but the majority do not make meaningful recurring revenue in the early days. The early days are usually a battle to find product market fit which involves a lot of pivots. As a startup is doing this, it is burning a lot of money. And if a startup is not venture-backed, it pauses a serious question: where is the money going to come from? This is where your salary comes in.&nbsp;
 
If one is working a full-time job, their salary can work as the “angel investment” that makes the startup tick. Any founder or founders can get a portion of their salary and commit to invest in the startup for a year or two, as the startup goes through its natural growth to making consistent revenue. When a startup gets to this level, the founders can hunt for angel investment to allow them to move into the startup full-time, or better still, if the startup is making enough revenue, it can support both founders.&nbsp;
 
But for one to grow their startup, it is unlikely they can do this while working in a separate job full-time.&nbsp;
 
Another thing founders can do is to transit from full-time work to working as a consultant in fields that they are conversant with. Working as a consultant can help the founders to keep making significant personal income but without the rigours of full-time work.&nbsp;
 
Another route is to save money beforehand, then move into building the startup once the founder has built a big enough war chest to cater for the operating expenses of the startup in the first few months, while also catering for his ability to keep personal living expenses catered for.&nbsp;
 
Also, I know a few founders who took another path to funding the early days of their business. In this, these founders invested in passive income-generating activities, hit a certain monthly income, and transitioned to full-time building. This is also a path that is available for founders.&nbsp;
 
The founders can also look to get cheap capital. Cheap capital can be obtained from targeted grants. Grant funders are more relaxed than venture capital investors, and will give a founder equity-free financing. Once a founder gets this, they can use it to build their startup to a level that can attract angel investors or seed-stage investors.
 
Any founder needs to choose what would ideally work best for them. The reality is, that most founders are not in a position where they will get an angel investment to fund the early days of their startup, so they do have to get crafty. Yes, maintaining a full-time job and using those monetary resources earned to build your startup is one of the ways this can be done.&nbsp;
 
However, there are a few other options that a founder can use. In most cases, it is about understanding your own standing before building a startup. However, it is important that a founder budget for at least 10 months and if the founder can have those operating expenses, they will give their startup a fair shot at success. Building a startup that is entirely dependant on raising an angel round, may not be a smart strategy. Even angel investors make an entrance when the founders have done significant groundwork.&nbsp;

Can One Build a Startup While Still Working a Fulltime Job? What are the Options Available to a Startup Founder?

In the ever-evolving world of startups, securing funding is often a critical milestone on the path to success. However, finding the right investors can be a daunting task. With countless options available, how does a startup founder determine the best fit for their venture? Here's a breakdown of key strategies to identify and secure funding from the perfect investors.
 
Leverage Funding Data Databases.
 
One of the initial steps for a startup founder is to delve into funding data databases tailored to their region or industry. Platforms like Africa; The Big Deal, Digest Africa, or Disrupt Africa offer invaluable insights into what investors are funding, the stage of investment, sector preferences, and geographical focus. By analyzing this data, founders can gain a clearer understanding of which investors align with their startup's needs and objectives.
 
Evaluate Portfolio Startups.
 
Beyond funding data, examining the portfolio of potential investors is crucial. Startups should investigate the types of companies a particular investor has previously supported. This analysis helps determine if there is synergy between the investor's portfolio and the startup's industry, stage of development, and target market. If an investor has successfully backed similar ventures, it signals a higher likelihood of shared vision and strategic alignment.
 
Assess Strategic Value.
 
Securing funding extends beyond financial support; it involves finding partners who can provide strategic guidance, industry expertise, and valuable connections. Startup founders should prioritize investors who offer more than just capital. Consider whether the investor can open doors to potential customers, mentorship opportunities, or partnerships that could accelerate the startup's growth trajectory. Aligning with investors who bring tangible value beyond funding enhances the startup's chances of success.
 
Understand Investor Preferences.&nbsp;
 
Investors have diverse preferences and criteria when evaluating potential investments. Some prioritize early-stage ventures with disruptive technologies, while others focus on established companies with proven revenue streams. By understanding investor preferences, startups can tailor their pitch to resonate with the specific interests and investment thesis of potential investors. This targeted approach increases the likelihood of capturing investor attention and securing funding.
 
Cultivate Relationships.&nbsp;
 
Building relationships with investors is an ongoing process that requires patience and persistence. Startups should engage with potential investors through networking events, pitch competitions, and introductions from mutual connections. Establishing rapport and trust with investors early on lays the foundation for future collaboration. Even if an investor isn't ready to fund immediately, maintaining communication and updating them on the startup's progress can lead to opportunities down the line.
 
The Importance of Perfect Fit.
 
Choosing the right investors is paramount for the long-term success of a startup. Beyond providing capital, investors become stakeholders in the company, influencing strategic decisions and shaping its trajectory. A mismatch between the startup's vision and the investor's expectations can lead to conflicts and hinder growth. Conversely, aligning with the perfect investors fosters a supportive partnership where both parties work towards shared goals, maximizing the startup's potential for success.
 
In conclusion, identifying the perfect investors for a startup requires thorough research, strategic analysis, and relationship-building. By leveraging funding data databases, evaluating investor portfolios, understanding preferences, and cultivating relationships, startups can increase their chances of securing funding from investors who not only provide financial support but also bring strategic value and alignment. Choosing the right investors is a pivotal step towards unlocking growth opportunities and realizing the full potential of the startup venture.&nbsp;

Navigating the Investment Landscape: How Startups Can Identify the Perfect Investors

Raising capital is one of the things any startup founder will have to do. Paul Graham explained that the major difference between startups and other businesses is how fast startups can/must grow.&nbsp;
 
For startups to be able to hit this kind of exponential growth, they will need to raise funding. Funding helps startups to grow at whatever speed they want to. If a startup doesn't raise funding, its growth options will be limited to bootstrapping. Bootstrapping is when a founder reinvests their profits into the business over a long period. The problem with bootstrapping is that it limits a startup to growing as fast as its profits allow. This is slow, but steady and consistent growth.&nbsp;
 
However, external funding helps the startup to spend money that they don't necessarily make. A startup can have $100,000 a year in revenue, but spend $300,000 because they raised $1M for the next three years. The purpose of this is growth first, and profits later.&nbsp;
 
But when raising, how can a founder determine how much to raise exactly? Raising too little funding will cripple the startup while raising too much would dilute the startup. So the funding has to be exact.&nbsp;
 
To do this, the startup founder will have to sit down with his team. The founder will discuss what their next milestone or milestones are. They will then determine when they can achieve this milestone e.g. in the next 18-24 months. This is where financial projections come in.&nbsp;
 
The founder, alongside the finance team, will break down how much they project to spend every month throughout when they will hit those milestones. The projections should incorporate every expense, even those that will have to be added, so this has to be thorough.&nbsp;
 
After getting the monthly expense projections, the founder will multiply it by the number of months it will take to hit the milestone. For example, if I determine that my monthly expenses will be $10,000 and I will need 18 months to hit my milestone, then that means I should raise $180,000.&nbsp;
 
And after raising this funding, the founder should maintain the financial discipline needed to hit the milestone. Remember, the money you have raised is for your company, not for personal use. Investors have backed you to make returns, and if you use the money for personal fetishes, then it will be very difficult to make those returns.&nbsp;

How Can a Startup Founder Determine How Much Funding to Raise? 

Venture Capital investments in Africa are not uniformly balanced. In fact, the big four of Nigeria, Egypt, Kenya and South Africa have accounted for at least 70% of all VC investments in Africa over the past decade.&nbsp;
 
There are so many reasons why VCs invest in startups in some countries over investing in startups in others. Some of these reasons may be purely reliant on the quality of startups that come from one country over the others, but sometimes, the country is important. So what makes some countries, VC-friendly, and others unattractive? Several factors come into play:
 
1. Market Size and Growth Potential: Countries with large and growing markets are often more attractive to VCs. Nigeria, Egypt, Kenya, and South Africa, known as the big four, have sizable populations and expanding economies, presenting significant market opportunities for startups.
 
2. Economic Stability and Regulatory Environment: VCs prefer countries with stable economic conditions and favourable regulatory environments for business. Political stability, low corruption levels, and clear legal frameworks contribute to investor confidence.
 
3. Infrastructure and Connectivity: Access to reliable infrastructure, such as transportation, energy, and telecommunications, is crucial for startup growth. Countries with well-developed infrastructure and high connectivity tend to attract more VC investment.
 
4. Talent Pool and Innovation Ecosystem: The presence of a skilled workforce, including technical and entrepreneurial talent, is essential for startup success. Countries with robust innovation ecosystems, including universities, research institutions, and startup hubs, are more likely to attract VC investment.
 
5. Government Support and Incentives: Government policies and incentives aimed at supporting entrepreneurship and innovation can significantly impact VC investment. Measures such as tax incentives, grants, and startup-friendly regulations can attract investors to certain countries.
 
6. Access to Capital: The availability of capital, including both VC funding and other forms of financing, influences investment decisions. Countries with well-established financial systems and access to capital markets offer more opportunities for startups to raise funds.
 
7. Cultural and Social Factors: Cultural attitudes towards risk-taking, entrepreneurship, and failure can affect the startup ecosystem's vibrancy. Countries that embrace entrepreneurship and innovation tend to attract more VC investment.
 
8. Sectoral Focus and Specialization: Some countries may have specific strengths or specialization in certain industries or sectors, making them more attractive to VCs interested in those areas. For example, Kenya is known for its thriving fintech sector, while South Africa has a strong presence in healthcare and biotechnology.
 
By considering these factors, it becomes evident why certain countries emerge as more VC-friendly than others. However, it's essential to recognize that the landscape is continually evolving, and factors such as geopolitical dynamics, technological advancements, and global economic trends can also influence investment patterns over time.
&nbsp;

Why Do Startups in Some Countries Attract More VC Funding than Others?

A culture is very essential in a startup. A bad culture can sink a startup. This has been well documented in history. For example, We Work had a poor culture under its CEO, Adam Neumann, who was extravagant and sometimes, downright delusional. This rubbed off its employees and the startup is now worthless despite a $47bn valuation at some point.&nbsp;
 
Another example of a startup that struggled with poor culture was Uber. Uber had a toxic culture that was sexist and sometimes, accomplished things illegally. When these came to light, its founder CEO, Travis Kalanick, was pushed out by investors and a new CEO, Dara Khosrowshahi, took over. Dara made sweeping changes and has since put in place a better culture.&nbsp;
 
But how can one build a good culture while building their startup? We list some of the ways how to do so here.&nbsp;
 
Lead by Example: The CEO sets the tone for the company culture. Their behaviour, work ethic, and values should align with what they want to see in the company.
 
Communicate Clearly and Transparently: Open communication fosters trust and transparency within the team. Regularly update employees on company goals, challenges, and successes.
 
Define Core Values: Establish core values that reflect the company's mission and vision. These values guide decision-making and behaviour across the organization.
 
Empower Employees: Encourage autonomy and innovation by giving employees the freedom to make decisions and take ownership of their work.
 
Promote Work-Life Balance: Prioritize employee well-being by offering flexible work arrangements, promoting work-life balance, and recognizing the importance of mental health.
 
Foster Collaboration: Create opportunities for teamwork and collaboration. Encourage cross-functional collaboration and celebrate collective achievements.
 
Recognize and Reward: Acknowledge and appreciate employees' contributions through rewards, recognition programs, and opportunities for advancement.
 
Invest in Learning and Development: Support employees' professional growth through training programs, mentorship, and continuous learning opportunities.
 
Embrace Diversity and Inclusion: Build a diverse and inclusive workplace where everyone feels valued and respected. Embrace different perspectives and create an environment where all voices are heard.
 
Celebrate Successes and Learn from Failures: Celebrate milestones and achievements as a team. Also, encourages a culture of learning from failures and using them as opportunities for growth and improvement.
 
In conclusion, building a strong company culture in a startup requires intentional efforts from the CEO and leadership team. By leading by example, communicating openly, defining core values, empowering employees, and promoting work-life balance, a positive and inclusive culture can be cultivated.&nbsp;
 
Additionally, fostering collaboration, recognizing and rewarding achievements, investing in learning and development, embracing diversity and inclusion, and celebrating successes while learning from failures are essential aspects of nurturing a thriving culture.&nbsp;
 
Finally, by promoting internal mobility and hiring from within, startups can further strengthen their culture, retain institutional knowledge, demonstrate growth opportunities, strengthen team cohesion, and reduce recruitment costs. Together, these strategies create an environment where employees feel valued, motivated, and committed to the company's mission and success.&nbsp;

Creating a Culture of Winning in a Startup. 

One of the most transformative technologies of this century is Mobile Money. Pioneered by Safaricom’s M-Pesa, mobile money has grown to become the de facto “bank” of hundreds of millions of Africans who were excluded from the traditional financial system.&nbsp;
 
With mobile money, users can send money to their loved ones, make payments and also save money and even take loans. MTN Mobile Money and Airtel Money have become defacto unicorns, transactions of billions of dollars every year.&nbsp;
 
But Fintechs have historically struggled to replicate what mobile money has done. For example, M-Pesa alone has over 50m users. In Uganda, MTN Mobile Money and Airtel Money boast of over 20m users. Fintechs across the continent struggle to attract such figures, especially in places where mobile money has a stronghold. But why?&nbsp;
 
For starters, MTN, Airtel and Safaricom built something the Fintechs have not done, and that is, to build an agent network. The importance of an agent network in mobile money adoption can not be underestimated. The presence of agents, even in remote areas, means that mobile money can be used even in areas that are not served by the Internet or are hard to reach.&nbsp;
 
Agents act as points for onboarding new users, but most importantly, for cash-in and Cash-out transactions, which is one of the most important aspects of the entire mobile money ecosystem.&nbsp;
 
Mobile Money is also USSD-code first, instead of app-first. A big chunk of Africa’s population is still offline or uses minimal data (data is only used for the major apps like WhatsApp). This gives mobile money operators a big advantage. Using the USSD code, it means mobile money operators can tap into the class of people who use feature phones. Feature phones are still the most sold phones across Africa as smartphone penetration is low.&nbsp;
 
Also, mobile money operators use the network effect where mobile money accounts are directly tied to registered SIM cards. When someone gets a SIM card, they automatically get registered on Mobile Money.&nbsp;
 
Based on these factors, it will be hard for Fintechs to replicate the Mobile Money success. Fintechs, most of the time, are app-based and require Internet usage to function. This eliminates a large chunk of people.&nbsp;
 
Also, the majority of Fintechs are at the mercy of mobile money operators due to their lack of agent network infrastructure. For people to use these Fintechs, many rely on the existing mobile money infrastructure for people to deposit to their wallets or even withdraw money.&nbsp;
 
Based on these factors, it will be hard for Fintechs to replicate mobile money’s success. But as smartphone penetration and Internet usage keep growing, Fintechs could still carve out a prominent role for themselves by providing services that mobile money struggles with or by doing some of mobile money’s services better than mobile money itself.&nbsp;

Can Other Fintechs Replicate Mobile Money’s Success?

In entrepreneurship, networking isn't just a helpful skill — it's a fundamental pillar of success. Founders who excel at building and maintaining relationships often find themselves with access to valuable resources, opportunities, and support networks that can propel their ventures forward. Whether you're a seasoned entrepreneur or just starting out on your journey, mastering the art of networking is essential. Here are some key tips to help founders navigate the world of networking effectively:
 
1. Clarify Your Goals
Before diving into networking events or reaching out to potential connections, take some time to clarify your objectives. What do you hope to achieve through networking? Are you seeking mentorship, investment opportunities, partnerships, or industry insights? Having a clear understanding of your goals will guide your networking efforts and help you identify the right opportunities and individuals to connect with.
 
2. Build Genuine Relationships
Networking isn't just about collecting business cards or adding contacts on LinkedIn. It's about building genuine, mutually beneficial relationships. Approach networking with authenticity and a genuine interest in getting to know others. Take the time to listen attentively, ask thoughtful questions, and offer help or support whenever possible. Building trust and rapport is key to fostering lasting connections in the entrepreneurial ecosystem.
 
3. Diversify Your Network
While it's natural to gravitate towards people who share similar backgrounds or interests, don't limit yourself to networking within your industry or niche. Diversity in your network can provide fresh perspectives, new opportunities, and unexpected insights. Make an effort to connect with individuals from diverse backgrounds, industries, and expertise areas. You never know where your next valuable connection might come from.
 
4. Give Before You Ask
Effective networking is a two-way street. Instead of immediately asking for favors or assistance, focus on how you can provide value to others first. Offer your expertise, share relevant resources, or make introductions to people in your network who could benefit from connecting with each other. By giving generously without expecting anything in return, you'll build goodwill and reciprocity within your network.
 
5. Follow Up and Stay Engaged
Networking doesn't end after the initial introduction or conversation. Follow up with your new connections promptly, expressing your appreciation for the opportunity to connect and suggesting ways to stay in touch. Whether it's through email, social media, or in-person meetings, staying engaged with your network is crucial for nurturing relationships over time. Remember to offer support, celebrate their achievements, and provide updates on your own progress.
 
6. Attend Networking Events Strategically
While attending networking events can be valuable, it's essential to be strategic about which ones you invest your time and energy into. Choose events that align with your goals and target audience, whether it's industry conferences, networking mixers, or specialized workshops. Prioritize quality over quantity and focus on making meaningful connections rather than simply collecting business cards.
 
7. Utilize Online Platforms
In addition to in-person networking, leverage online platforms and social media channels to expand your network and engage with industry professionals. LinkedIn, Twitter, and niche-specific forums or communities can be valuable tools for connecting with like-minded individuals, participating in discussions, and showcasing your expertise. Actively participate in online conversations, share valuable content, and engage with others' posts to strengthen your online presence.
 
8. Seek Out Mentorship
Mentorship can be invaluable for founders navigating the complexities of entrepreneurship. Identify individuals who have achieved success in your industry or possess expertise in areas where you seek guidance. Don't be afraid to reach out and request mentorship or advice, but be respectful of their time and willing to reciprocate in any way you can. A mentor can provide valuable insights, accountability, and support as you navigate the ups and downs of building a business.
 
9. Be Patient and Persistent
Building a robust network takes time and effort, so be patient and persistent in your networking endeavors. Don't get discouraged by setbacks or rejections — view them as learning experiences and opportunities for growth. Keep putting yourself out there, nurturing existing relationships, and expanding your network organically. Over time, your efforts will pay off, and you'll find yourself surrounded by a supportive community of fellow entrepreneurs, mentors, and collaborators.
 
10. Pay It Forward
As you progress in your entrepreneurial journey and reap the benefits of networking, remember to pay it forward by helping others who are just starting out. Share your knowledge, make introductions, and offer support to aspiring founders and fellow members of your network. By contributing to the success of others, you'll not only strengthen your relationships but also cultivate a culture of generosity and collaboration within the entrepreneurial community.
 
In conclusion, networking is a vital skill for founders looking to build successful ventures and navigate the competitive landscape of entrepreneurship. By clarifying your goals, building genuine relationships, diversifying your network, and giving before you ask, you can establish a strong support system of mentors, collaborators, and industry peers. Remember to approach networking with authenticity, patience, and a mindset of reciprocity, and you'll be well-equipped to forge valuable connections that propel your startup forward.

Essential Networking Tips for Founders: Building Connections for Success

Building a startup? It is for your customers, not for your investors. If I am to rank the hierarchy in a startup, (Customers then employees then investors then founders).&nbsp;
 
When founders raise money from an investor, they tend to build the startup for their investors. The entire startup depends on making the investor happy.&nbsp;
 
In every case, a founder should know that an investor is more of an advisor. In many cases, they might offer good advice (and when this happens, you should work with that advice), but ultimately, the final decision will always be on the founder. This is because, you, as the founder will be left holding things together in case it goes north.&nbsp;
 
So, you should take the investors' advice as just that, advice. Listen to the advice, internalize it and marinate on it. It is not effective to just downrightly dismiss an investor's advice. In case you think the advice is wrong, please offer an explanation and an alternative route. Then work with that.&nbsp;
 
The most important thing is being receptive. A good aspect of any founder is being coachable. But being coachable doesn't mean simply being a doormat. You should stand your own ground when you think there is a better way to do something, and when this happens please explain.&nbsp;
 
The most important people when building a startup are your customers. Your customers can make or break a company. Any startup with a large pool of paying customers will survive even without external funding. If there is one group of people that any startup founder should listen to, then it is the customers.&nbsp;
 
The customers do not lie. They will only part with their money if the product solves a problem once paid for. And if a startup is making good revenue from customers, the investors will automatically be happy. They might advise you less because you are doing the right thing.&nbsp;
 
Then the next people on the list are the employees. This is simple because the employees will also be in the trenches with you every day. It is very important to keep them happy through the right compensation, building a good working environment and ensuring their growth.&nbsp;
 
This article isn't to say that investors are not important. Certainly, they are. Without investor money, the startup may not be in a position to grow as fast as the founders would love. Growing using revenue is what is called bootstrapping, but bootstrapping is slow and painful. Investors can make a startup grow in three years when ideally the same milestones could have taken a decade.&nbsp;
 
But at the same time, in your own building journey, you should know that your customers and employees certainly come first. They will make or break your startup. No amount of funding can help a startup founder if the startup doesn't have paying customers or if the work culture is toxic. Ultimately, even with funding, such a startup will fail. The startup graveyard is full of well-funded startups because of this. So don't build the startup for your investors, build it for your customers first, and then the employees. Once this is achieved, the investors will be very happy as a secondary recipient of your hard work in the primary areas.&nbsp;
&nbsp;

Don't Build a startup for your investors, But for your Customers.

A lot of people ask me for the single most important skill a startup founder can have. And I keep on saying the same thing. That skill is the art of sales. As a founder, you will be in a perpetual loop of selling.&nbsp;
 
When we talk about selling, the majority of people think of selling to clients. But that is not just all. But of course, as a founder, you will need to sell to clients. That is the only way your startup will earn any sort of revenue. You need to convince a client to part with their money. For a client to do this, they will have to be convinced that you are in the best position to solve their problem. So sell to clients.&nbsp;
 
A startup founder will also need to sell to employees. Let's be honest, working at a startup, especially one that isn't venture-backed is tough work. Many employees would rather work at legacy companies where the job security is greater, and the work is shared among a large workforce.&nbsp;
 
So convincing people to work at your startup is the mark of a great founder. You will need to sell to them the vision. The employees will need to understand that this is greater than the salary. This is especially true especially when trying to make key hires in senior positions.&nbsp;
 
You will also need to sell to investors. Investors are always bombarded with pitch decks from founders. For every 10 pitch decks, less than 1 are funded. In 100 pitch decks that the investors look out for, they will invest in less than 10.&nbsp;
 
The logic for investors to back a startup is simple. They will have to believe that the startup can make them substantial returns. So as a founder, you have to sell this vision to them. You have to convince them that your startup will give them those returns.&nbsp;
 
So if a startup founder had to master one skill, it should be selling. Sale to customers, to employees and to investors. And this isn't a one-time job. It is a loop that a founder will do all the time, every day. .&nbsp;

The Art of Selling is the Most Important Skill for a Founder. 

For every founder, a moment will come when they need to raise funds for their startup. Raising capital is truly a mark of a great CEO. Even though it doesn't guarantee startup success, it helps smoothen the journey.&nbsp;
 
Startups raise funding for different reasons. Some startups raise to expand into new markets, make key hires, build new services, continue research etc. Whatever the reason is, raising funding helps the startup to grow at the pace that it desires.&nbsp;
 
But funding is not a walk in the park. Less than 10% of startups raise funding despite the flashy announcements that happen regularly. With the current funding winter, funding is even harder to come by. So a startup needs to have a watertight fundraising plan. &nbsp;So how can a founder build one?&nbsp;
 
First, the founder has to take care of what he has control over. The founder needs to determine when to raise and how much to raise. The best time to raise funding is usually when you don't need it. A startup should raise funding with at least six months' runway. This is because the fundraising process is unpredictable and it can take longer than one expects. The less runway for a startup, the more desperate the founders will be and the less leverage while negotiating.&nbsp;
 
It is also important for a startup to raise funding when it is on a high that is, when the startup has hit some significant milestones. Investors love a rocket ship that is ready for takeoff.&nbsp;
 
The next step is to determine how much to raise. This is very crucial. Sometimes, founders tend to ask for too much money when they can't justify its use. To determine how much a company needs to raise, one will need to do some financial projections for operation expenses. Take your projected monthly expenses and multiply them by 18-24 months. This should be able to give a concrete figure to work with.&nbsp;
 
If you know how much to raise and when then the founder can begin looking at deciding which funding would work for them. There are various forms of financing, so it is important to get this right. A founder can look at equity financing (and decide on the round), or look at debt or convertible notes, SAFE etc.&nbsp;
 
With all of these in place, the founder can now move on to zeroing down on the investors. It is important to have a concrete list of investors who are most likely to invest so that you don't waste your time. Coming up with this list will include looking at some data.&nbsp;
 
You should look out for investors that have invested in similar startups. Similar can be in so many ways. Geography, sector, funding amounts, stage, funding rounds etc. If you have investors who have backed startups that are similar in any metric, it is a good starting point for you as a founder.&nbsp;
 
After that, pitch, pitch, and pitch.&nbsp;

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