When it comes to growing a business, no matter what you call it — accelerating or hitting the gas — venture investors want to see GROWTH.
Find a Pattern, then Product-Market Fit
In the beginning of building your business, you will stumble and fall, and the more you perceive, the more you’ll learn. Eventually, this will lead you to a pattern, hopefully a pattern of customer contracts and deals. You’ll start to see what feature is valuable to a customer, what problem you’ve solved, or what a customer is buying your product to do. And, there’s a good chance it will be very different from what you set out to do in the beginning.
Once the pattern grows, and you start to package a product that sells to a repeatable customer for a repeatable use case you’ll start to hear the words “product-market fit.” For a seed-stage investor, this is the Holy Grail. You’ve developed a product that can be sold to multiple buyers, who fit the same profile, to solve the same problem. Usually, this is when your investor will turn to you and say those words everyone hopes to hear: “It’s time to raise more capital.”
Beware Growing Too Quickly or Early
As the founding team, it’s on you to always know what your business needs. It’s usually some combination of time and money, and the further along you get it includes connections, access to talent and a knowledgeable board. When you’ve reached what appears to be product-market fit, you’ll also need to know if more capital is the right thing for your business now.
Your venture investors will want to see the company grow rapidly, become incredibly valuable and generate returns back to their fund. The caution is growing too quickly, or too early as it can bring the entire business down to its knees. So, before you jump on the gravy train and raise that next funding round, ask yourself: is raising this funding round right now that best thing for this business? Odds are, if you wait three, six or 12 months, you’ll be in an even stronger position to raise that funding round, and the business might be better off for it.