Startup Funding: Expert Tips for Success

Startup Funding: Expert Tips for Success
Advice from seasoned entrepreneurs and experts is crucial in the early stages of any startup. Andrew Chau, Vice President of Strategy, Planning, and Analysis at Cross River, sat down with TechUnited:NJ’s Jasmine Hoffman to answer common questions startups ask on the path to growth.

What is the number one budgeting tip for early stage startups?
When it comes to budgeting your startup, remember that “everything must be paid twice,” advises Chau. All steps of building a business are a balance of spending both money and time. If you don’t have money early on, you need to spend more time taking on more tasks. For example, not everyone can afford advisors, consultants, and marketing directors on day one to aid crucial operations of the business.

The good news is that today, there are a lot more resources available that democratize entrepreneurship. For example, build an ecommerce website, you can head to websites like Shopify that walk you through every step of design and operations. There is also a wealth of free resources on YouTube and Skillshare that can be consulted along the way.

Remember to value your time and know your limits. Recognize the tipping point where you can outsource resources and free up more of your time. This includes making sure to value your own personal time. “As long as you can hedge your risk as much as possible, it won’t expose you to the detriment of your business,” says Chau.

How do you increase chances for funding if you are in a risky industry?
You need to be able to sell your value proposition to investors. For disruptive innovators, it’s important to be able to make your business model easy to understand. This will be the best motivating factor for potential investors who have no other previous models to base your potential success on.

If you’re one of the first players in your industry, you define what the market is. It’s more difficult to compare your valuation to previous players to explain your plan to investors, but you have the advantage of forging a new space in the market.

Always have your research ready. You need a one-pager to consolidate information and hold their attention span. Hook the reader with what is most important; for investors, it’s value propositions, annual recurring revenue, and growth rates.

How do Covid-19 and supply chain issues factor into the lending equation?
With current interest rates the lowest they have been in years, lending is cheap, and liquidity is rampant. “Because liquidity is so cheap and rates are very low, there is still very high demand for that money, just look at the recent rate of mortgage refinances” says Chau.

During the pandemic, many Fintech’s that were virtual by nature were able to flourish whilst the same could not be said about traditional brick and mortar businesses. Granted, many small businesses were able to receive help with PPP, it still required them to understand their value proposition and pivot to survive in the new norm.

The economy is already fighting high inflation, supply chain issues and worker shortages.  When the FOMC meets this March to decide on the anticipated rate adjustment, some companies will need to readjust their approach as it may become more expensive to do business.

How do you go about scaling your business in a sustainable way?
Having people on your team whose dedication to the core values of the company are the driving force of their motivation are essential to startup success. But as the demand for your business grows, stress on those key players grows. Teams will naturally grow along with them, which creates the common problem of gathering too many like-minded people on a fast-growing team. “You’re going to lack diversity of ideas…it builds silos in your company,” Andrew.

It’s important not to overlook this problem while scaling up. “Culture eats strategy for breakfast,” advises Chau. When there are ideological silos, not only is there a lack of diversity of ideas, but a potential for “shadow functions.” For example, if an Information Technology (IT) department cannot translate business requirements correctly, it may force other departments to bring it in house by hiring their own consultants. This is a bad allocation of resources and creates communication problems.

How can businesses bounce back from early failure?
Adversity should be expected on the road to success. What matters most is proving your resilience by recognizing the strengths of your business and having a flexible mindset for your company strategy.

For example, Cross River started in 2008, at the worst historical time when other traditional banks and branches were closing their doors. After opening to provide access to financial services to business and consumers in need, the firm did a self-evaluation of its own capabilities to reach consumers in a new way. Today, they deliver the infrastructure and technology that power well known Fintech’s such as Affirm, Stripe, and Coinbase. They realized their strength in technology and pivoted from being a small community small bank to delivering a full suite of fintech solutions to their partner’s end users.

In June of 2020 during the beginning of the pandemic, Cross River was composed of a team of under 400 people. In 2021, their team nearly doubled and is on pace to continue this explosive growth. With the right knowledge and mentorship, growth is always possible.

Thanks again to Cross River for powering this mentorship session. To connect with more startups in New Jersey, follow TechUnited:NJ on all platforms:


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