A lot of startups are facing a conundrum today when it comes to securing funding and raising capital: how can they start building a startup when they don’t fit perfectly into a single vertical? It can create some friction when pitching to investors and convincing them that your company and business plans are worth their investment.
For the team at EVgo, an infrastructure company that was focused on technology, tech investors viewed them as too boring, and infrastructure companies viewed them as too high a risk in the long term. Sound familiar?
On this episode of CFO Weekly, we sat down with Olga Shevorenkova, Chief Financial Officer at EVgo, a builder, owner, & operator of fast-charging infrastructure for electric vehicles. They’ve gone from a startup with a few potential customers to the largest U.S. public fast-charging network for electric vehicles today. And Olga has a few pieces of advice for small businesses in a similar situation as she was just a few years ago.
Raising Capital as a New Startup
So what do you do as a CFO looking to raise capital, and take your company from launching a startup to a successfully established company? What are the pitfalls, and what should you avoid? What should you be focusing on to better allocate venture capital?
Olga had a lot of great things to say about her experiences raising capital for EVgo, her advice for companies that don’t fit into a single vertical industry, customers acquisition, what it takes to make it to the fifth year as a startup, and advice for CFOs looking to move their companies from startups to established businesses.
Her main takeaways here are to never give up on finding your match for a perfect investor while building the right team, creating repeatable processes and harnessing technology. You can focus on the first early adopter of your new product or service next.
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What if You Don’t Neatly Fit a Single Vertical Industry?
While there are a lot of companies out there with the right business idea and/or target market, particularly startups, that fit into a single vertical industry, there are a large number that don’t. They may span the technology & consumer space, or they’ve got one foot in infrastructure, and one foot in tech.
Either way, it can be difficult to navigate raising funds for these companies, but Olga’s advice was simple and to the point: “Try to take as many meetings as you can. You never know when someone’s going to fall in love with your company. You’re always looking for that perfect fit," Shevorenkova said.
First, at the early stages, try to take as many meetings as you can. It can often feel like the next meeting will be a waste of time, but you never know who is going to fall in love with your startup business. You never know if the relationship will work out. It may not happen right now, but you could be laying the groundwork for the future.
Second, always have robust data points at your fingertips. Go into meetings with as much confidence as you can muster, and if/when they don’t fully understand your business, you can be ready to respond immediately with real numbers.
Third, know your audience. It always helps to adjust the pitch depending on what your investor has invested in previously. Do thorough research on who you’re meeting with by using any search engine of your preference and their social media profiles, and try to anticipate their concerns before they raise them. Don’t wait for them to ask questions, proactively address their concerns step by step in your pitch.
Finally, keep looking for your soulmate investor. Choose a partner that you can trust in the long run, and who’s going to be in your corner no matter what. It’s worth the time and the energy to invest in finding that perfect match. And once you’ve found that perfect match, you can start to look forward to moving from a startup to a successfully established business.
Moving From Startup to An Established Business - Building a Startup
While only 1 in 10 startups make it to their fifth year, if you’re one of the ones that do, you’ll have your work cut out for you as you attempt to steer your team through the startup waters and into the open sea of well-established companies. But how do you make that journey? You've started a business, now you must fully commit to achieve and innovate your business model.
First, make sure you have the right team. The right team is a group of people who are self-motivated, who care about the work, and who want to create their jobs from the ground up. They’re not concerned with “we’ve always done it this way” or “someone told me this is how it’s done.” They’re not afraid to challenge the status quo. They’re excited about building a professional organization and share your startup idea.
"The right team starts with the CEO, and includes everyone. The team is the whole team, not just the executive team," Shevorenkova said.
Second, focus on processes. While it may not be the most exciting part of the work, it’s what distinguishes a young startup from a mature company. Processes answer the question of “What if we were a 10,000 employee company and I didn’t know everyone personally? How would this get done, and who would make sure it was right?”
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And finally, don't be afraid to use software to automate your business. There is so much organizational software available, and excel is going to be scalable for a large company. You need databases and robust software solutions to help run your organization.
The journey from building a startup to a mature company isn’t an easy one, but it’s one that many companies have gone through and with enough commitment and tenacity, you can make that journey with your organization as well. And let this serve as a blueprint to help guide you after you create a startup. Good luck!
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If your business is growing and you're looking to hire while you scale, we can help. Contact us to find out how outsourcing helps startups as they grow.