Most Founders Have Fundraising Backward. Here's the Formula. | Techstars

By Steve Walsh, Techstars Mentor-in-Residence and Founder of Hands On Angel LLC
Why chasing investors before proving your business is one of the biggest mistakes early-stage founders make.
I've had thousands of conversations with founders over the years.
And I keep seeing the same mistake.
Founders want to raise money before they've proven they have a business worth investing in.
They've got an idea.
A pitch deck with a hockey-stick revenue projection.
And they're ready to start emailing investors.
There's just one problem.
They're trying to skip the hardest part.
Building a business.
I've watched founders spend months chasing investors when they should have been talking to customers, testing their product, and figuring out how to generate revenue.
So I want to share a framework I use when working with early-stage founders.
I call it the Founder Formula.
And it's pretty damn simple.
IDEA → BUILD → GROW → RAISE
Let's break them down.
I don't care how revolutionary you think your startup idea is.
And neither does the market.
What matters is whether you're solving a real problem for real people.
I've met founders who have spent six months designing their brand, building a website, and creating a pitch deck without having a meaningful conversation with a potential customer.
Before you build anything complicated, go find five people who have the problem you're trying to solve.
Ask them what they're doing today.
Find out what frustrates them.
Understand how much the problem costs them.
And, most importantly, figure out whether they'd actually pay for a better solution.
Your friends telling you it's a great idea isn't validation.
A thousand likes on LinkedIn isn't validation.
Evidence that customers want your solution is validation.
Your job in the IDEA stage isn't to prove you're a genius.
It's to prove there's a problem worth solving.
Here's another mistake I see constantly.
Founders try to build five products at once.
They've got an app, a marketplace, an AI feature, a subscription model, and three different customer segments.
And they wonder why they're not making progress.
Because they're trying to do too much.
When you're early, focus is everything.
One customer segment.
Build the simplest version of your product that can deliver value.
Then get it into customers' hands.