Let’s get real: Your startup will probably fail

Startups come and go like rainy days. If you want yours to work, you need to get real about whether it’s even worth the effort. Here’s one way to do that.

Imagine your startup as a huge hexagon with six massive sides, each representing a crucial aspect of its work, concept or place on the market. For Show4me, our CEO Karen Chiftalaryan (incidentally, the author of said hexagon theory of fundraising) came up with six key aspects of the company’s work back when it was still a startup:

• legal
• market
• competition
• innovation
• value
• exit

Before I get into all of these, let’s understand two key things here — 1) you need to stay brutally honest with yourself throughout the whole evaluation process; this is not a school project where everyone is a winner and participation gets you at least some sort of price — you need to actually bring something to the table for your project to be worth your while, as well as attractive to investors. 2) understand that you alone cannot come up with all six sides of your startup’s own hexagon– ask friends, experts, anyone you can for their opinion on the crucial areas of the work of your startup that might need evaluating; take some time studying what your idea will require and constantly look for different angles you can look at your project to see if there are any critical flaws.

Now, back to our example — Show4me.

We are a network for musicians to run a full-cycle business. The key aspects for our business were the six sides of the hexagon outlined above.

We started with the legal side. What permits and regulations we’d have to take into account when building the business? Are there any that might prevent our idea from working at all?

We moved to learning more about the market—was there even a place for us there? We studied competition and tried to figure out if our product was of value to prospective consumers.

We also realized that being innovative was vitally important for our startup. If we would be doing something that somebody else has already done before, that would hinder our chances of being financially viable and being able to attract users, investments, as well as top professionals on the market.

Finally, we thought about an exit strategy, as it’s something all venture capital firms have from the very start and awkward silence in response to the respective question from any prospective investor would have been the worst reply.

Here at Show4me we use the hexagon theory for all aspects of management of the company and business development. So far, we have secured over $13M in investments. Read our detailed outline of using the theory in Show4me here.

Remember that the line between understanding how to evaluate your startup and not is thin.

You can consider just a couple of sides of your hexagon (your sides don’t have to be the same as ours) and forget to uncover the rest, and your startup might appear like a sure-fire success. But once you dig deeper and list all the other sides and get to analyzing them and their effect on your business model, you might learn that your initial evaluation was very flawed.

The more open-minded you are when performing your analysis and the more experts you involve, the better your chances are to create something that’s not only successful but works like a well-oiled machine.

This is what investors are looking for and this is something you should strive to invest your own time and expertise in.

Good luck

Source (rewritten exclusively for Medium)