Why your startup needs more time, than money

Funding is essential for startups. Always. For the purpose of product creation, launch, and expansion. Deeptech firms, in particular, may require several million euros to break even.

Even if they haven’t fully thought their idea through, most entrepreneurs’ daily lives are dictated by their pursuit for financing. Investors, on the other hand, want to see a lot of potential for growth. That’s why, in their pitch decks, entrepreneurs include graphs of global market sales volumes; they claim that with just 1% market share, the company will already be profitable. Investors enjoy the concept and are willing to put money into the idea. In a simplified form, this is a standard procedure in the startup world. And it’s not really that bad. After all, everyone involved knows that the perfect world shown in PowerPoint presentations can and will look very different in reality.

As an early-stage investor, I’ve helped build many VC-backed companies and accompanied several other startups on their journeys. As a result, I am well aware that there is no such thing as a guarantee of success. Regrettably, there isn’t a cookie-cutter approach that improves the chances of success. But there definitely are methods to lower risks and increase the odds for building successful ventures.

The validation of ideas is the be-all and end-all

The inventor and statesman Benjamin Franklin once said: “By failing to prepare, you are preparing to fail.” Now, if that saying is to be taken as an appeal to startups and VCs, it should read: “Invest more time than money.”

Yes, startups need time above all else. Time to put their ideas through rigorous testing, to adapt them again and again at short intervals on the basis of newly gained feedback, so that a product can be created based on user feedback and desirability, and has a chance of attracting paying customers.

From my everyday life as a founder, I know about the power of validating an idea, which requires time first of all. Before the first euros are invested into marketing, ideas have to be thoroughly tested on the market: the validation of the team, technology and above all the business model by means of pilot projects are fundamental. The more diversified validation inputs are — for example from research, industrial partners or potential customers — the higher the chance that early mistakes can be avoided and the right strategies for success can be identified.

At Merantix, we are focused on turning cutting-edge scientific research into ventures and have built and validated a tailored company building process. The initial ideation and validation phase in which ideas and concepts are tested in real-market conditions, before a team and a product are even built, can take up to 6 or in some cases even 12 months. By doing so, our founders make sure once a product will be marketed, it is received by an audience that is happy to buy it.

More time for the road into the future

I’m aware that the appeal to invest time rather than money in startups doesn’t lead to an immediate solution. The future certainly has crises — keyword: climate change — up ahead, however, it should become the ‘new normal’ that startups are given more time to create substance from their ideas and that they are not simply showered with money.

Because it doesn’t matter how well a startup is endowed with money due to their convincing PowerPoint skills; if a product can only be pushed into the markets by the power of money, then it is doomed to fail. But if money is used to buy time, then this can be the beginning of something big.