Silicon Valley is home to some of the most successful start-ups in the world.
As the Middle East tries to establish itself as a hub for innovative ideas and promising start-ups, knowing what pays off in a thriving entrepreneurial ecosystem is one of the ingredients to success.
At a start-up event held yesterday, Nima Adelkhani, founder of Progress in Technology Middle East (PITME) Labs, shared best practices from the Valley and shed light on some of the mistakes prevalent in this region’s entrepreneurial ecosystem.
An entrepreneur from Silicon Valley, Adelkhani recently launched PITME Labs to help regional start-ups get further acceleration in and have access to resources from the Valley. Following are his tips on how to build a successful start-up:
9-5 timings are for employees. As start-up owners, you need to prepare yourselves for long hours and full commitment. One of the reasons some Silicon Valley entrepreneurs are successful is because “they dreamed really big, then worked 22 hours a day and executed it,” said Adelkhani. “You can’t change the world or build a hyper growth start-up [working] 8 hours a day. It is not humanly possible.”
Building a business is a 10-year commitment, he added. “It used to be five years, but now it is 10. If you’re not in it 175 million percent and willing to give 15-19 hours a day, for 10 years, you are officially wasting your time.”
Before you can ask investors for funding, it is essential to form a bond with them. This bond can be formed over five to six interactions and between three to six months, said Adelkhani. Instead of asking for money upfront, entrepreneurs should develop a relationship which can involve keeping potential investors updated about the product’s development or connecting with other people within their network. The relationship “is based on human interaction, them liking you, understanding the product, [knowing if they can] bring value efficiently,” as well as being able to “optimise their own time and bring value to their network,” he added.
Surround yourself with smarter people
Try to have advisors or mentors on board, as that will not only translate into useful guidance for the business, but also help you make a better impression on potential investors: “In order for you to get to that point of raising money, you need to have people with credibility, relationships, traction and experience to have a vested interest in you – meaning that they have put their name and reputation on the line by allowing you to officially call them an advisor, angel or partner.”
Building such relationships can be slightly difficult in the Middle East and start-ups should be careful about whom they take on board, he advised. For instance, some regional investors tend to ask for “a board seat for a $100,000 investment” and those are the types start-ups should avoid, he added. “Anybody who says that doesn’t understand what a start-up is and what it means to be an advisor or a board member, because there are people [in the Valley] who invest $20-$100 million and still don’t get a board seat.”
“Make sure that you like the person, build a relationship and hold them accountable,” he said.
Whether it is one of your advisors or an investor you’re pitching the business to, make sure you take advantage of their feedback. Investors meet hundreds of start-ups – some of whom may even have the same idea as yours, said Adelkhani. The insights and suggestions they share based on their market experience can prove invaluable to your business.
Keep up with technology
Having accelerated some regional start-ups through the PITME programme, Adelkhani has come to notice that some entrepreneurs here are still not at pace with technological advancements: “Teams here are at 1.7 and [in Silicon Valley] we are now at Web 3.0. Web 3.0 is about user interface (UI), user experience design (UX), shared economies, blending business models and different practices into one, and packaging it really well. Here, people are still talking about banner ads and really outdated [systems].”
Be great at one thing
Before you start thinking of multiple revenue models, master at least one, he said. When asked about how many revenue models you have, “the second you don’t say ‘one,’ you lose credibility, because it is extremely hard to do one thing right, and when you are doing four different things, you are not focused,” he explained. “Don’t try to do too much. Do one thing really well and then build on that. Once you have something mastered, then you can add a second one.”
This also highlights the importance of keeping it simple – whether it is in driving your business forward or when pitching to an investor.
Have a story
“Half of the start-ups are not reinventing the wheel,” says Adelkhani. “There is no intellectual property or something they have invented. It is just packaging something and having a good story to tell, and having people believe that you believe.”
So if you want people to buy into your idea, tell them why it is important to you and how you expect it to create value and opportunities.
Be smart with your funds
A common practice among start-ups while pitching to investors is saying that a proportion of their funds will be allocated to marketing. Adelkhani advises against that. What marketing often means in this case is that “you are going to run Facebook ads and use Google Ad Words,” he said. “No investor with any clue of what they are doing wants to give you money to give to Facebook or Google. The key to success is building a product and figuring out how to transfer the burden of distribution: How do you get users with no marketing budget?”