So, it’s your second startup…
Let’s start by playing a little word association game. Are you ready?
Okay, I say “serial” and you say…?
According to wordassociations.net, the most popular answers to the “serial” case are: monogamy, killer, and disease – none of which sound like much fun. Interestingly, little or no reference seems to be included for “entrepreneur.” But with associations like the ones just cited, perhaps this is good news.
Nevertheless, when a founding team decides to engage in a second startup, this establishes a clear pattern of so-called serial entrepreneurship. In this article, we choose to offer a bit of guidance for those of you living the subcase of a second startup. We hope to help you avoid the sophomore jinx.
Recall that first-time founders have the advantage of often not knowing what’s been deemed to be impossible. Like George Dantzig solving an open problem on the blackboard after arriving late for class, founders doing their first startup will cheerfully plunge into waters others consider shark-infested.
And what happens when you dive into shark-infested waters? Well, we know that when we visit places others warn us to avoid, we can often discover the most treasured new ideas and concepts – and it helps to have not been bitten before. Caution is no advantage here. It’s more often a deterrent.
This brings us to the serial entrepreneur taking the startup plunge for a second time. There are several factors that a venture-capital team such as ours at Ballistic Ventures will consider when reviewing the proposal and approach being taken by this type of repeat founder or founding team.
First, the results of the prior startup do matter.
If the founding team, for example, was instrumental in growing a company from seed funding to a massively successful exit, then this is a major factor in predicting the success of the second venture.
But prior success is not a requirement.
If the founding team, for instance, was part of an engagement with a less attractive exit, then we will be super interested to understand the actual learnings that came from that experience. And the shark-waters analogy cited earlier illustrates the point.
If the prior experience resulted in a founding team establishing utter clarity regarding some aspect of their previous failure, then this is a net positive. Everyone knows that more insight comes from failure than success. Just ask Thomas Edison.
Let’s say that the team learned the importance of hiring only the best engineering talent. This time around, they’ve included an HR expert with experience in this area. Their focus on engineering talent will now be a determined strength. Well – that is a great learning.
If, on the other hand, the prior experience created a tentativeness about plunging into risky areas, then we might be hesitant to invest.
Entrepreneurship requires courage, determination, and a willingness to defy the odds.
Second-time founders cannot lose this willingness. It is a requirement.
So, if you are putting together ideas for Round Two of your serial-entrepreneurship journey in cybersecurity, then be honest about your learnings from your previous company. You already know that investors like repeat performers, but please don’t take this for granted.
If your learnings are positive and practical – and your enthusiasm remains to dive into the pit, without having perfectly measured clarity as to its depth – then you can count your prior experience as being a major advantage in establishing a partnership with a firm such as Ballistic.
But if your learnings created any type of tentativeness, then regardless of what you’ve heard, read, or assumed about being a repeat-founding team, you would be better off forgetting that prior experience.
Founders must be fearless – and if your goal is to avoid mistakes, then you will have trouble.
As always, please let us know what you think. Our team here at Ballistic loves to engage your comments and suggestions.