such markets as defense and intelligence, education, healthcare and its backend services, virtual reality, transportation, manufacturing, and food production and distribution.
Some other takeaways Suster offered:
—In terms of accessing capital, the most important part for entrepreneurs is finding an initial “anchor investor” that’s committed to your cause, wants to mentor, and can help startup founders secure additional investors. Investors are lemmings and they’ll follow a lead even if it takes them over the edge of a cliff, Suster said. But it all starts with one.
—A decade or two ago, Suster said, entrepreneurs could raise money with a good PowerPoint presentations. Nowadays, it’s crucial for a startup to show that it is building its business on three pillars—a well-developed and viable product, a strong team, and robust engineering capabilities. These three pillars must remain in-house, Suster said.
—A startup team must operate with a sense of urgency, by under-promising and over-delivering. The team must show tangible progress, for example, by shipping product.
—Startup founders should start building their relationships and networks early, and regularly cultivate them. “When we
first meet, you’re just a ‘dot’ to me”—a data point, Suster said. Over time, though, Suster said he can begin to see a pattern in the way entrepreneurs operate, and get to know them better. It’s much easier to invest when you understand someone’s character, he added.
—While there might be safety in numbers, Suster said he tends to prefer to invest in companies with a single founder rather than two or more co-founders. It helps to protect the cap table if you have one founder with a 40 percent ownership stake instead of two founders who own close to two-thirds of the company, he said.
Take the entrepreneurial leap on your own, and then hire your co-founders, Suster said. Entrepreneurs obviously should treat these hires with the usual co-founders’ privileges, but you can resolve a dispute amicably and quickly if you fall out of love. He estimated that 80 percent of the startup heartache he sees is founder-to-founder related, and not issues with VCs.
—Short people shouldn’t hire other short people. In other words, don’t hire people who are just like you. Know your skills and gaps, and recruit people whose talents complement yours. Be thoughtful about how you hire and build your team.
—Finally, stay lean for as long as you can. Sometimes it’s better to go slow and not ramp costs until you can afford it, literally.
