Not much has changed in VC land this summer. There’s still uncertainty about the macro-environment, inflation rates, and tariffs. While we’ve seen some movement in the IPO market, it’s not opening up by any means. AI continues to be the rage among VCs, with most rounds being hyped to valuation levels well beyond what makes logical sense.

So without any new / interesting trends to report on this month, I’ll share a more personal take in this edition…this one is for all you founders out there :)

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I presented to a group of founders last week and shared my candid thoughts on a number of items. Several attendees reached out to tell me they were completely rethinking their strategies after hearing my thoughts. The secret is to ask the right questions. Without further adieu, here are the five questions I'd ask any founder at the beginning of their journey:

1. What do you truly LOVE? Only start a business you are actually passionate about. The idea of brainstorming a bunch of problems across a variety of industries and then doing customer research to figure out the "best" one is just not a good idea. Startups are for 10 years, so make sure you LOVE something. Having previous experience in the field is critical - not just because you have the lived experience but because you have a relevant network already built. And networks are where sales happen.

2. What are your specific goals? Define them with metrics from day one. Is it a specific number of people you want to reach? Revenue you want to make? Do you want to be a category defining company? Profitable within three years? And most importantly, what is your "number"? This is the amount of money you would need sitting in your bank account to stop relying on a paycheck (which means you can live off the interest you make from the principal). Most founders are going to have a number somewhere north of $3 million, with the actual number depending on lifestyle, responsibilities, etc. Now figure out how much you'd need to make in profits annually and/or sell your business for to make that number personally. Model it out so you truly understand what it takes to get there. This is probably the most important math you’ll do as a founder because it sets the stage for how much value you need to create with your business.

3. Is VC even a route you want to pursue? When you look at the data, most companies should NOT raise venture capital. Perhaps one angel round gets you to $1M in annual revenue and from there you can use profits to get to $5M annually. Then, you sell for $20M and because you own 80% of the company, you just hit your "number". This route actually makes more sense for many founders because the majority of exits are sub $100M. And when you take VC capital, it's expected you will go big ($1B+) or go home so you have to keep raising money and spending money and giving away ownership along the way. Dynamics are very different when you take angel capital or debt versus VC / growth capital. Make sure you understand the difference in those paths before going down one.

4. Are you using rules of thumb for revenue traction? You should definitely use them to your benefit. Can you hit $2M of annual revenue within 24 months? Can you hit $5M of annual revenue within 12 months of that? If you go the VC route, is it possible to achieve $100M in annual revenue within six or seven years of inception? These are the trajectories you want to be on if possible. Most founders come out of the gate too slowly and struggle to find product market fit in time to create a viable business. If your trajectory is too slow, I would rethink messaging and/or product ASAP. This takes us back to number 1 and the importance of being passionate about what you’re building - it's the passion that keeps us engaged when we are doing everything we can to find that sweet spot where sales take off.

5. How much money do you actually need to raise? In short, don’t raise too much money. Capital efficiency is the name of the game, even for most VC backed founders. Why raise $5M if you can do what you need to do with $500K? Maintain control and flexibility by staying lean and raising within your means.

Figuring out how to grow your startup revenues quickly (#4) while being smart with your money (#5) is the key to generating value and ultimately achieving your personal goals (#2). ✨🔥✨