STORY INLINE POST
Unicorn news is driving the hype on tech startups, leading people to ask a logical question: How do I launch my own startup? The answer is not quite simple and the challenges are breathtaking. One of the first barriers is how to know what information is correct. There is so much information about startups and there are so many different cases that the experience is similar to being in the middle of a labyrinth looking for an exit.
As in a labyrinth, the best way forward is to find someone who already got out of it. Finding a mentor will save you tons of hours and, moreover, will provide emotional support when the time comes. Believe me, you will need it.
But first you need to find a problem, your idea of what your company will be. Here is where the confusion starts. A lot of people go with their passion and that is amazing, but what if your passion is more of a hobby or something that doesn’t have a way to be profitable? What if you are not excellent in that passion? What if you don’t have a clear passion? I normally tell entrepreneurs that the most important thing is to find a problem worth solving. A lot of entrepreneurs bring a solution to something that is not really a problem and they already love the product, making it really hard to adjust it. So, fall in love with a problem and not the product or the first solution you find. Then check that the problem is in a market bigger than US$1 billion to be able to attract investment from VCs.
The second step is to understand how a new technology could radically lead to a better way to solve that problem. It could be using the same solution in a different industry in which you are more experienced: a marketplace for farm tractors or for suppliers of the soon-to-be-born marijuana market, for example. It could be a workflow solution for paperwork that you know hinders transactions, like Kavak did. They found a way to attract trust in a market that is full of horrible stories. What if there were a platform for ordering concrete mixers, avoiding all the waste when the order is wrong or the expected arrival time is missed. Note that I’m talking about traditional industries because there is so much to be done in these sectors and it is easier than in the crowded software or digital marketing verticals.
In the third step, you need to find the team to set up all of that. Normally, that starts with a tech person. The CTO is the basis for a tech startup and finding one will be really hard. There is a problem to be solved: who is developing a marketplace for technical or non-technical co-founders? In any case, besides the technical team, you will need an industry expert if you are not that person and someone to manage growth (depending on the startup it could be a growth marketer or sales development person).
Now, with all this, you can really find a mentor, which is the fourth step. Look for entrepreneurs who have already created a tech startup or at least someone who really knows how this world works. It’s not the same as being a successful businessperson in a traditional business. You need to demonstrate an amazing solution in a big market and a breathtaking team to get one of these mentors interested. Deals with mentors usually involve something in the way of advisory shares of the company and, in some cases, a monthly payment.
From that moment on you need to learn tons. So, the fifth step is to go to school on this. Y Combinator, the most famous accelerator in Silicon Valley, offers startupschool.org. It is an amazing repository of great information about launching a tech startup. Also, in Mexico you could apply to Mass Challenge, another accelerator, or talk to your mentor regarding other programs to which you could apply to get the right knowledge.
Sixth step: Build an MVP (minimum viable project). Whether a super-light version of the product you want to launch or a visual representation of how it will flow, having the product will show you more than anything else. Having to solve all the little issues in producing this version will bring to light all the things that are still needed and the bumps that could occur down the road. Furthermore, it will help with the next phase: raising money.
Last but not least in this seven-step model is fundraising. The venture capital world is the fuel for tech startups. None of this could happen if there were not a financial model to face such high risks, wait for tech innovation to develop and sustain exponential growth when it happens. Learning everything about this world is mandatory for a successful founder. I can’t synthesize all of the process to get money in a paragraph but following the steps above will give you the basics for VCs: having a big market, a great team and a product that is 10 times better than what exists today.
Mexico needs tech startups. Since 2000, there has been a drought of unicorns in the country that finished only this year. Countries like Argentina and Brazil have way more unicorns than Mexico. Entrepreneurs should seize this 2021 momentum in which Latin America is attracting more than US$9 billion in VC money not only for their own benefit but also for the creation of wealth and the opportunities our country definitely needs.