🚀 2023 Wrap-Up Bulletin: What we learned this year

Founders Factory Startup Bulletin #35

Welcome to the Founders Factory Startup Bulletin—“Created for founders, by founders”.

We bring you a round-up of startup and investment stories, key learnings from founders, and insights from the Founders Factory team.

Welcome to the 2922 new subscribers who joined us over the past year! Help us grow our 18,280-strong community of founders, investors, and startup enthusiasts by sharing this post:

How will 2023 be remembered in tech? 

We’ve seen an emerging technology that has become the number one headline of the year, transforming industries far and wide, talked about with the same potential and apprehension as nuclear weapons. At the same time, we’ve seen other ‘hype cycles’ decimated, industries rocked by uncertainty and a lack of investment, with widespread layoffs and insolvencies. 

So do the fundamentals of building businesses remain consistent? We look back on some of the best insights we’ve gathered from the best in the industry—unicorn founders, top VCs, and of course our own operations team—to ask what we’ve learned about venture building in 2023. 

Also in today’s Wrap Up Edition newsletter:

• Founders Factory: A Year in Numbers

• Best of the rest—2023 summaries & 2024 predictions

---

💡What we learned about venture building in 2023

This year, we sought advice from all corners, from our stellar Operations team to unicorn founders to top tier investors. Here are some of the most valuable things we learned…

On sourcing ideas…

• Look for problems in your everyday life. Ideas can come from anywhere—especially in the day-to-day problems you face. For Dronamics founders Svilen and Konstantin Rangelov, they were trying to work out how to get a piece of Konstantin’s favourite Bulgarian cheese to the other side of Europe. The answer? Long distance, autonomous cargo drones, as it turns out.  

• Don’t be afraid to explore ‘boring’ spaces. It’s easy in tech to chase the hype cycles. But often the best ideas come from boring spaces, or at least “spaces that might seem very boring but are solving important and scalable problems,” says venture designer Sam Rueesch.

• Success happens at turning points in technology. For Dronamics, they realised the time was right for ultra-efficient cargo drones as the cost of carbon fibre was dropping, while communications and satellite technology were accelerating in proficiency. The convergence of these three trends paved the way for success. As Sam Rueesch puts it, “change means opportunity”, whether that’s technological., regulatory, or market change

On designing great products…

• Make better decisions through prototyping and iterative learning. Product designer Isha Maggu says: “Design-centric companies are constantly learning, testing and iterating with users. It’s acknowledging that just because you have a product launched, it doesn’t mean you’re ‘done’.  Having regular design reviews, tests, and feedback sessions can enable informed iterations.”

• You don’t need to fully code your product from the off. Depending on the type of business you are building may mean you can get away with building a simple, no-code product that allows you to get your product into the hands of users and start to gather feedback, says Val Balace, product lead and venture builder.

• Pivoting is good, but also know when to stick to your guns. There are times to pivot, but there is also value in defining the core of your product and sticking to it. Dronamics founders Svilen and Konstantin say: “So while we’ve had to be flexible about the way we’ve been building, and the materials we’ve been using, we’ve never pivoted away from the original specification of the Black Swan—350 kg capacity and 2500 km range. The 350 kg capacity because this is the capacity of a small delivery van; the 2500 km range because this covers the whole of Europe in one flight, as well as the maximum distance from the midpoint of the US to all of the 48 mainland states, and the South China Sea.”

On finding product market fit…

• Monetisation is a great proxy for PMF. What’s the best way to know if there’s demand for your product? That people start paying for it. Cliff Obrecht, co-founder and COO of Canva, swears by this, a result of them having to monetise early on and being profitable for the majority of their lifespan. 

• Consider—are you a painkiller or a vitamin? Or in short, are you a nice-to-have or an essential? People will change their habits and pay for something that’s going to cure their headache; less likely if it might dubiously improve their health. Michael Acton Smith, co-founder of Calm, took this approach when introducing meditation and mindfulness to the masses.

On assembling your team

• The best thing you can do is to convince people who are better than you to join your team. Max Buchan, founder of Valarian, ranks this highest among his responsibilities as CEO, as it enables you to take on your responsibilities and elevate them to the next level

• If you’re looking for a co-founder, be sure to define your profile well. There’s many reasons to hire a co-founder—the right one, that is. This, according to Head of Talent Raluca Ciobancan, who explains the detailed process of defining the right profile of your potential business partner. This includes complementary skill sets, personality types, professional experience, and so on.

On fundraising

• Consider how to improve your clock speed. Tom Hulme, Head of Europe at GV, defines ‘clock speed’ as the rate at which you can deliver products, test, and iterate. For investors, this is about proving how quickly you can take on feedback and upgrade, something they’ll look for if they want to invest. 

• Early stage investors aren’t thinking about your product. Another Tom Hulme insight, and a surprising one at that. “The truth is, even if your company survives, there is an extremely low possibility that your product will end up resembling anything like it does at pre-seed.” Rather, investors are looking at you as a founder and how you are actually thinking about the problem.

• “Angels are advisors who are paying to be your advisor.” There are dozens of places to source capital from. Angels have the advantage of not just investing but also bringing strategic value-add—whether that’s network, experience, etc. If you’re able to be selective when raising, 

• Being outsiders can actually help. Canva’s Australian founders Melanie Perkins, Cliff Obrecht, and Cameron Adams didn’t fit the mould of your standard tech company, especially when it came to raising. IN many ways, this acted in their favour—”We had the best of both worlds: able to go visit Silicon Valley to raise, while also building in an environment that fostered sustainable growth.”

---

💥 Founders Factory: A year in numbers

43 new startups invested in through our Accelerator programme—including 15 startups that were built in and spun out of our Venture Studio

$900m, our all-time global fundraising total—with notable fundraises from Shop Circle ($120m), Dronamics ($40m), and Scan.com ($12m)

2 new international locations—Italy and the Bahamas (home of Blue Action Accelerator)

2 new corporate partners, both based in Italy—Fastweb, the leading telecommunications provider, and Mediobanca, one of Italy’s largest and oldest investment banks

2 bootcamp programmes launched this year—Planet Positive Lab, backing science-backed climate founders from the University of Oxford, and Children’s Health Impact Accelerator, backing founders in paediatric innovation 

---

📚 Best of the rest: 2023 summaries & 2024 predictions

• Momentum, Consolidation, and Breakout (Not Boring)

• AI, and everything else (Benedict Evans)

• Prof G Person of the Year (No Mercy, No Malice)

• 24 Predictions for 2024 (Digital Native)

---

This is our last newsletter of the year. We’ll be back after Christmas and New Year with more monthly learnings from founders and our Operations team. 

See you next year 👋

Interested in reading more of the same insights? Check out the Founders Factory blog, and previous newsletters