What Not To Do in A Start-up

• Raising funds: Do not keep fund-raising under wraps. Be decisive: either in or out. Testing the market is a fallacy.

• Cash management: Cash in bank is great but don’t fail to spend wisely. Don’t spend without a solid product market fit. Once you have that, don’t hesitate to spend.

• Growth strategy: Strategy is also about what you choose to not do. Having a strategy but not following it, while being overly rigid about it, defeats the purpose.

• Dealing with investors: Avoid two things—keeping investors in the dark and following every directive from them. Remember, you’re running the company. While it’s crucial to listen to their advice, ultimately, it’s your company, and you call the shots.

• Raising funds: Don’t dive straight into numbers. Take time to introduce yourself and explain why you’re the right team for the opportunity.

• Cash management: Don’t automatically invest/burn more if you have more capital. Think what’s absolutely necessary to get to the next big risk-reduction milestone and set the rest aside as if you don’t have it.

• Growth strategy: Don’t tape up strategy or cultural norms on a wall and expect any of that to be adhered to. Strategy and culture are products of what you do.

• Ensuring compliance: Don’t put off governance and compliance items till you are “bigger.” Put in place governance guardrails appropriate to the size and complexity of the company and scale up as you go along.

• Dealing with investors: Whether on your board or other investors, give them homework whenever you meet them.

• Cash management: Founders should remain frugal with spending. That should be part of the company’s culture irrespective of how much cash is in the bank.

• Growth strategy: Do not optimise business for the short term; remain focused on long-term goals.

• Managing consumers/users: Listen and embrace consumer feedback. It is the most important metric that drives success or failure.

• Technology development: A 30-member engineering team can build a better product than bloated 100-plus member teams. Smaller teams can be more efficient.

• Dealing with investors: Don’t over-promise and under-deliver. Transparency is the key to trust.

• Raising funds: While it’s tempting to raise as much capital at highest valuation, it often back-fires in the long run. Raise a bit more than what you need but not too much, choose investors well (focus on good fit and not just valuation offered) and raise funds at a reasonable valuation; exorbitantly high valuation will haunt you during the next round of fund-raising.

• Cash management: Don’t invest in risky products to maximise yield. Have a board-approved investment policy for cash, which should only be in banks or liquid mutual funds. Never park money in non-callable deposits tempted by higher interest rates.

• Growth strategy: Don’t formulate strategy just to align with “what’s hot” or what investors are looking for. The best strategies are always market-backed and emerge from customer data/behaviour/insights. Don’t be wed to a particular strategy.

• Employee management: Don’t surprise employees, build a culture fostering open communication. Be transparent.

• Raising funds: Don’t overestimate TAM (total addressable market) This can raise doubts about your understanding of the market and credibility. Failing to segment the market can lead to a superficial understanding of TAM.

• Cash management: Don’t keep cash in bank! Founders and investors have been focused on cutting costs at the expense of growth. While it’s essential to maintain prudent cash reserves, founders should evaluate opportunities to reinvest into the business to drive growth and create long-term value. When everyone is fearful, it is time to be the aggressor, if you can afford it.

• Ensuring compliance: Don’t do it for the sake of doing it. By prioritising compliance early on, companies can establish a solid foundation for growth and mitigate potential challenges along the way.

• Dealing with investors: Don’t treat them like just investors. Establishing a strong foundation of trust, transparency and alignment between founders and investors can prevent conflicts and foster a productive and supportive relationship that benefits both. Even if you’re not actively seeking funds, a coffee chat could provide invaluable insights.