Invest in Experience or Potential? Our Take on Investing in First-Time Entrepreneurs
If you’re a first-time entrepreneur seeking investment from Victory Square Ventures, are you at a disadvantage? The short answer is yes.
From historical experience, the first idea that an entrepreneur has is an idea that they’re gravitated towards because of a challenge or personal struggle that they have first-hand experience with. Because the first startup idea you have is one that is closest to you, it is most likely a consumer problem in your day-to-day life.
You’ll find that the most successful startups are where entrepreneurs are solving problems or challenges in their professional landscape — which are more geared towards B2B. Not to say that B2C opportunities aren’t fruitful, they often fall in a one in a million chance of being successful, rather than a one in a hundred chance of success with a B2B product.
With a first time entrepreneur, you know as an investor that the entrepreneur typically does not have the network or access to resources, and the knowledge of the hardships and challenges that they will face ahead.
We always say that it is with the 2nd or 3rd startup that the entrepreneur has the greatest chance of success — and by 2nd or 3rd startup, I mean they’ve gone through the process of attempting to build a business. Whether they were successful and exited, established an ongoing business that requires low maintenance, or even just having built a startup that crashed and burned — they as founders went through the ups and downs that come with building a business. (Note that registering a domain name and failing to find a technical co-founder to build your idea doesn’t really count as your first startup).
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How can first-time entrepreneurs leverage their personal challenges to improve their chances of success in future startups?
In what ways might an investor’s support differ when investing in a first-time entrepreneur versus a more experienced founder?
What strategies can first-time entrepreneurs use to gain the network and resources necessary to succeed in their initial ventures?
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