NDRC’s Gary Leyden, SOSV’s Caitriona Kelleher and Techstars’ Connor Murphy sat down at the Enterprise Ireland Start-up Showcase for 2020 to discuss the most important elements of a successful start-up team.
Today (25 February), Enterprise Ireland held its Start-up Showcase for 2020 in Croke Park, Dublin. As well as shining a light on many of Ireland’s most exciting new start-ups, the event hosted a number of panel discussions, offering attendees some interesting insights into what it takes to successfully run a business and make the right decisions for a start-up.
The event also highlighted some of the organisation’s recent achievements, including the fact that Enterprise Ireland ranked second globally for seed investment in 2019, investing a total of €24m in 127 start-ups last year.
Speakers at the Start-up Showcase 2020 included NDRC’s Gary Leyden, SOSV’s Caitriona Kelleher, Techstars’ Connor Murphy, Channelsight’s John Beckett, Tandem HR’s Aisling Teillard and Act VC’s Debbie Rennick.
‘We’re just idiots with a chequebook’
At one panel, Kelleher, Murphy and Leyden spoke about some of the most common mistakes that start-ups encounter in their early days.
“I think it’s primarily around team formation, single founders and people who think that they can do it on their own, or that they can do it with a part-time co-founder,” Kelleher said. “We at SOSV do not typically invest in single-founder companies. It’s just too hard. There’s just too much to do.
“They have too much on their shoulders, it’s mentally very draining. You’re asking people to grow really fast, really quickly and the acceleration is high pressure. They need people to bounce off, they need people to share the load with them, to celebrate and support them.”
Murphy added: “There’s three main mistakes. The first is team dynamics or founder fallout, the second is not finding the market – sometimes the market is not there. The biggest one and the most painful mistake that I preach most about is premature scaling.
“Premature scaling is typically when you get your first bit of capital in and you meet ‘Mr Smart VC’ – we’re all idiots, by the way, we’re just idiots with a chequebook so you’ve got to listen to us more. Often the advice you’ll get from an investor at your stage is to hire salespeople.”
But Murphy advised against this approach. “People skip the marketing phase and start hiring salespeople – that’s how you start burning through cash. Don’t hire salespeople until you are drowning in leads,” he added.
‘Dating is a good analogy’
In Ireland alone, there are a number of options when it comes to choosing an accelerator programme. Murphy shared some advice on how to choose the right one for each business. “Techstars has been lucky that we’re one of the first that existed, we used to be called a boot camp, but we started in Boston and Colorado in 2007,” he said.
“The market has exploded and there’s now more than 2,000 accelerators around the world. It’s like a university model where you can do an undergrad with an organisation like NDRC – which is one of the best in the world, we’re always knocking on Gary’s door looking for his best companies. Then there’s like a master’s level where you’re entering a new market, that’s the sweet spot for Techstars.
“That’s the way I would look at it. Which network do I want to access in my geography and in what industry? I’d look at it like, what’s the world’s best master’s programme from a student point of view, which we probably all understand.”
‘Dating is a good analogy. It can all look good on paper, but it’s not always a good fit’
– CONNOR MURPHY
From the perspective of Techstars, the accelerator considers companies based on what kind of people are behind them. Murphy, who is managing director at SAP.io Foundry and a mentor at Techstars, said that this is also true at SOSV and NDRC as well as at the bigger accelerators around the world.
“Dating is a good analogy. It can all look good on paper, but it’s not always a good fit,” Murphy added.
“You have to do your research and apply. There’s no perfect answer, but you need to ask yourself where you are going to build the best network and bring the company to its next level.”
‘I care about the team because that’s what I’m stuck with’
Part of the reason that a good team is such an important factor for many accelerators is because they have to work so closely with start-ups for extended periods of time.
Murphy said: “You spend 90 days, very intensely, in a room under pressure with each other, and the key to success and building trust is not being like, ‘I can give you a cheque, I’ll see you in six months, send me some emails!’ It’s very personal and complex.”
“I want a founder that I want to work for, that I want to sell. My first thing is asking if I can sell their vision. Can I sell their team, can I sell the founder themselves? Am I going to get excited every single day talking about them?
“We are investors but we’re so early that I’m going to be talking about these founders for the next seven or eight years. I want to find out why someone’s passionate and if they can convince me, I need to be able to convince someone else. It needs to pass the airport test.
“I don’t care about your idea. I really don’t care about your traction. I do care about your market, but I really care about the team because that’s what I’m stuck with.”
Leyden agreed: “I think the team is so important. We go into this knowing lots of things are going to change, but the team is the one thing that will last. Get us excited and we will want to work with you.”
Kelleher added: “Ultimately, [we’re looking for] teams that can keep going when they’re getting knocked back. We talk about resilience, but we want to see them keep going back for more and more. Iterating and being able to keep doing that and taking the knocks and learning from it.”
Disclosure: SOSV is an investor in Silicon Republic