💥 2021 Wrap-Up: Learnings of the year, avoiding predictions & more
Founders Factory Startup Bulletin #6
👋 Welcome to the Founders Factory Startup Bulletin. Each month, we bring you a round-up of startup and investment stories, key learnings from founders, and insights from the Founders Factory team.
In a sense, entrepreneurs and investors have to be able to predict the future. They have to make an assumption about the way the world is going to look in months and years to come, and make decisions which reflect that.
Yet the same conversation happens at the end of every calendar year, around the time when every news outlet, VC, etc, makes predictions for the following year—”How on earth could we have predicted that?”
For this 2021 Wrap-Up, we’ll dodge the tricky predictions and instead reflect on what we’ve learned in the past year. From unicorn founders to fundraising experts, we’re lucky to share top insights on what it’s like to build a company. For entrepreneurs looking to predict the future in 2022, hopefully much of this remains relevant.
Here’s what you can read about in this month’s newsletter:
What we learned about venture building in 2021
Founders Factory—a year in numbers
The best of the rest—aggregating 2021 reflections and 2022 predictions
💡What we learned about venture building in 2021…
Over the past year, we’ve accumulated advice across our blog from unicorn founders, early stage entrepreneurs, and experts from our Operations team. Here are some of the top things we’ve learned this year…
On starting a business…
Choose an area where you have expertise. You’ll have a huge competitive advantage if you’re an expert in the sector you’re targeting. Richard Dana, ex-Founders Factory CFO, compares the confidence his experience in finance gave him when building family lending platform Tembo
But being an outsider may also be an asset. MADE.com founder Ning Li explains how, while it may mean you make certain mistakes, a lack of experience can mean you’re “not afraid to change the rules of the game”
On building your product…
Don’t stay tied to your hypothesis. Avoid being fixed to the first solution you come up with. OLIO founder Tessa Clarke had the idea for the food sharing app early on, but she still invested a lot in researching, validating, and testing the hypothesis. “We asked ourselves, ‘What are all the other ways this problem could be solved?’”
You should listen to your customers’ complaints, but not their solutions. When testing your product, pay attention to the feedback you’re getting. But be aware, Pleo founder Jeppe Rindom told us, that the customer doesn’t have as clear an insight as you do—so stick with your own
You can achieve a lot by getting your product into market. D2C health startup Honest Health can testify to this. Having barely raised capital, and bootstrapped the business, they saw a surge in users after COVID triggered a boom in the telehealth market. Earlier this year, they sold their business to telehealth giant Hims & Hers.
Impact is something you have to research and strategise. If you’re building impact into your venture, there are a number of steps to take
Deeply research the problem
Clearly identify and outline your mission and values
Know what your expertise is, and be aware of your limitations
Make sure it’s accessible
Pay attention to language and messaging
Build with a critical mindset
On fundraising…
Optimise for cash in the bank. This is the number one rule for startups raising capital. For this, you can’t be TOO selective about who you accept capital from, don’t worry too much about your holding becoming diluted, and ultimately, don’t wait around too long to close the deal
Equity crowdfunding is about more than just raising capital. Crowdfunding is a great alternative for startups, and can be a really strong way of building your community, capturing the imagination of new investors, as well as deepening your relationship with existing customers. “You’re more likely to get backing if you’re crowdfunding for the right reasons, and not just the need for capital,” writes Darren Mulvihill, FF head of venture fundraising
Speaking to investors requires certain soft skills. Pitching isn’t just about perfecting your slides and financial models. Skills and characteristics you’ll need include authenticity, passion and confidence, and an ability to adjust your tone
On culture…
Distributed working is a superpower for founders. The flexible working debate rages on. Phil Libin, former CEO of Evernote, believes it's actually an asset to founders: opening up access to better talent, saving time on commuting and travel, etc. “Think about all the things we can do now that we couldn't do before. If we work out what these superpowers are, then that gives us the ‘why’ —the reason to stay distributed—and from there you can problem solve the ‘how’,” Phil says.
On success…
Tie impact to the metrics you use to measure your success. If you’re serious about the impact you have as a startup, you should attach KPIs to the mission and goals for your business. Also be prepared to constantly capture, monitor, and review data to closely keep track of how your business is performing
Be prepared to fail. Most founders need to accept that there’s a high chance of their startup failing. Being prepared for this doesn’t just mean accepting it, but putting infrastructures and safety measures in place (for your business, employees, and yourself) for when things do go wrong. Read about our CCO Damian Routley’s experience of when his first company failed
💥 Founders Factory: A year in numbers
36 Startups we supported this year—including 25 in our Accelerator programme, and 11 in our Venture Studio
2 Exits. Mens telehealth startup Honest Health were acquired by Hims & Hers (read their story here), while podcast platform Entale, built in our venture studio in 2017, were acquired by Daily Mail and General Trust
3 New partnerships launched. This included our sustainability seed programme with G-Force, our psychedelics accelerator and venture studio with Woven Science, and our Mission Studio with Nesta. Aviva also committed a further £10m to build fintech companies with us.
71% Our Diversity VC certification score (against an industry benchmark of 55%). This is based on how we perform against their stated D&I criteria and best practices. You can read our recent DEI Commitments Review for 2021.
9 Factory Fireside chats hosted, including conversations with MADE.com founder Ning Li, OLIO founder Tessa Clarke, Pleo founder Jeppe Rindom, as well as our very own Founders Factory founders Brent Hoberman and Henry Lane Fox
$600m our all-time fundraising total across our global portfolio. This was bolstered in 2021 by huge fundraises by Admix ($25m), Vidsy ($16.5m), and Trusted Housesitters ($10m).
1 Robot kitchen launched. Venture studio startup Karakuri installed their Semblr robot in the canteen at Ocado’s headquarters
📚 Best of the rest
2021 summaries & 2022 predictions
The Best is Still Yet to Come (Not Boring)
Best Books of 2021: Technology (Financial Times)
8 Venture Capital and Technology Trends to Watch in 2022 (Forbes)
21 Really Good Things That Happened in 2021 (Mashable)
Fjord Trends 2022: The new fabric of life (Accenture)
What’s not going to change (Fintech Takes)
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, as well as a few new surprises to come…
See you next month 👋
What did you think of this month’s newsletter? Let us know what we can do better.
Very useful guidance. Thanks. One thing... "Be prepared to fail" makes it seem as if the founder will fail. It's important to keep a distance between oneself and one's projects. It's the project that fails, never the founder, as your guidance rightly goes on to suggest.