The traditional way of building a startup is the ‘garage’ way. In a nutshell, two or three friends go to a garage and start building a prototype sometimes with money from family and friends, and then later with the support of incubators and accelerators. Once the prototype has some traction and the startup has some clients and revenue,angels will be open to investing.
Further down the road, the startup may also be able to attract venture capital. There are certainly many different pathways for startups and angels, but this is the archetypical way.
However, this archetype is far from perfect. As I said in my earlier article, 92 per cent of startups fail in their first three years. The motivation to reduce this failure rate has spurred us at Nova to create something completely unique. Something that’s been designed to specifically address and nullify the biggest reasons for startup failure.
An unexpected challenge in creating a unique startup model, however, is that it can sometimes be difficult to articulate to potential partners (co-founders).
“Are you an incubator?” Erm. not really. “Ah, okay, so you’re an Accelerator.” Again, not quite, no. “An investment fund? Mentorship programme!?” Well, sort of, yes, but not exactly.
Whilst all of the previously mentioned programmes are widely used and understood by those in the tech startup space, we believe that those alone do not negate the risks for startup founders. So, not wanting to totally align ourselves with any of these terms, we created what we’re calling a co-foundery startup model.
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Something that combines elements of all of those, plus some additional features, in a manner that reduces the risk for both founder and investor.
The key differences that we’ve built into the co-foundery model to reduce startup risk are as follows:
Start early
In the co-foundery model, we specifically look to partner with startups at an early stage, often when founders have not much more than a good idea and a strong understanding of the problem their startup is trying to solve. This is because startups at this stage offer us the opportunity to mentor and build relationships with founders from their inception.
Here we can impart proven processes and methodologies early enough in their formation to avoid the common mistakes that lead to failure.
Our process always starts with mentorship from our experienced startup mentor team. This is completely free and is specifically geared toward developing startups by clarifying their business model, their unique value proposition, gaining a deeper understanding of the problem they’re attempting to solve.
We ensure that founders and their startups are ‘venture ready’ before putting them forward to pitch for their first investment.
No financial investment from founders
Typical investors don’t like to invest in startups early as it’s too risky. They want to know that you have a product, that you have a team and that you have customers. This can prove a catch-22 as founders don’t have any money to achieve these things.
Traditionally, most then resort to loans, personal savings, bootstrapping and generally incurring a lot of personal risk (and the associated stress) themselves.
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If you are ‘lucky enough’ to get investment early from a traditional source (i.e. angels), they’ll be wanting you to put some of your own cash in and work full time on it to ensure they’re getting a return as quickly as possible. In the early stages of a startup’s life, this adds unnecessary pressure that negatively affects key decision making.
This is why in the co-foundery model we ask for zero financial input from founders. We believe that if founders have the motivation to start a startup to change their life and display the qualities and traits of a successful founder, this is enough. Furthermore, our previous investments prove this motivation is enough to make it work.
Experienced startup team
Two of the most common reasons for startup failure are hiring poorly and choosing the wrong cofounder. The co-foundery approach negates these by providing a proven and experienced startup team and co-founder from day one, without founders having to find or employ anyone.
The co-foundery teams are built specific to the startup, from a pool of 150+ employees covering marketing, sales, finance, designers, developers, consultants and so much more. They bring with them a vast depth of experience working on tech startups ready to be deployed on yours.
Additional benefits of having a team that works on tech startups day in day out are:
- The team doesn’t make the same mistakes that typical startups would
- Having a team with a track record of startup success makes it easier to access investment as and when required
Shared risk
This is not an agency for hire approach, there are tons of tech and software development businesses who will work on your startup, build the product and as long as they’re getting paid, they’re not particularly vested in whether what they’re building fails or succeeds.
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This is set up differently, we don’t just want to build the idea and walk away. Instead, we partner with and are co-founders of our startups (hence the name co-foundery). We take equity rather than a standard rate per day for our services, this means that we’re as motivated as the founders for the startup to succeed, this is our startup too.
So, do all of these unique characteristics make the cofoundery model more effective? Our startup success rate is showing that starting a startup with this model your startup is over five times as likely to succeed.
At Nova, we are currently expanding the successful co-foundery model to Asia. We are looking for working professionals in Southeast Asia to co-found startups with us. If you are interested in our venture building philosophy, and the co-foundery approach sounds appealing, please apply to our Southeast Asia programme.
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