Don't Ask for Series A Until Your Product is Magical

Entrepreneurs often ask me: 

"When should I raise Series A? How do I know my company is ready? How much traction do we need to have before we approach NSI?"

I find that question very hard to answer. Each business is unique so there are obviously many factors one must consider. However, the hard truth is that venture capitalists meet hundreds, sometimes thousands of companies a year and we can only invest in a handful.

In many cases, it's a fait accompli. Sometimes, the product needs more work or the metrics need more time to play out. Sometimes, it's too early to feel if the company going to make an impact in the market. In a world where time is extremely limited, we often must make a quick, occasionally unfair, judgement. We must wait for more evidence. Wait for more data points. And as the team will attest to, especially for this partner of NSI Ventures, it’s hard. It’s hard to be data driven. It’s hard to be clinical about the process.

And I hate this part of the VC process.

Because, entrepreneurship is not clinical. I believe that decisions ultimately emotional. We make decisions in life because we are moved by our emotions. We buy products because we love them. We pay for insurance because we fear for the consequences. We complain because something feels unfair.

Our brains have been programmed to respond to our emotions. We cannot survive in the wild if we consider every possibility, every logical road, every choice in a decision tree. We can pretend we’re rational, but we’re slaves to our emotions. When we abdicate decisions to logic, then we eschew everything that it means to be human.

So if you want to pique interest from investors in the startup world you need to create a product that is magical. I'm not talking about an app with pretty animations or a nice UI. I mean that the core value of the product must elicit an emotional response like "OMG, this thing is like freaking magical.”

It should make the us think

Wow I can just press a button and an ojek appears?
Holy cow I get to check out 50 people with the swipe of a thumb?
I can book my restaurant at 2 am in the morning when the place is closed?
Wait, I can see my loved ones on a screen when they are 3,000 miles away?

Every business has risks. It has some concerning metrics or faces some seemingly unbeatable incumbents. However, we can look past those concerns when a product captures that surprise, amazement, wonderment and excitement. Throw in some equal measures of "how the heck did they do that" and "omg I need to tell my friends about this.” Achieve that feeling. Build something that elicits a real emotional response. Invent something that is truly magical. Then come talk to us about Series A.

Until that time, you haven’t earned that massive marketing campaign. You haven’t earned that new user discount. You haven’t earned that regional expansion. You’ll waste time and money solving the wrong problem.

You still need to invest sleepless nights tweaking the core user experience until it’s great. You need to endure the heart wrenching moments of doubt from early investors, friends and loved ones while you find product-market fit.

Keep grinding towards that moment. When you get there, take a breather. Take a day off. Go to the beach. Smile. Relax. Know you have achieved something which is very rare in our business.

And after you’ve caught your breath, please give us a call. We would love to talk to you. Because we will then give you the funding to drive the business forward. We will work with you to move the momentum faster. We will build a board, a company, get a head of sales, recruit talented Engineers, attract more spectacular people to your cause, and together build a fantastic company.

Because this is what we are here for - to make more magic happen in the world.

- Hian

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