Startups – That Number Game They Play!

Dear Startups

While you are toiling day/night on your business (and trying to make inroads into customers), you certainly get to see heartaches like these

From Media/Bloggers : Company X raises $N+5 million dollar from an investor, Y [N is what you thought was a standard investment number].

Press Release: Company Z’s web traffic goes up by 20X, Sales Goes up to Y Crores.

Some of you called me recently to inquire about the potential of certain business opportunities and the context of our discussion was the huge $$$s of funding your competitor has raised.

So let me share a few perspective here.

Funding Amount

Probably the most apt exception of WYSIWYG model is the funding amount announced when a VC firm funds a startup.

Some of the VC firms have a minimal number that they invest at. What you need to understand is that funding happens in tranches and is performance based. So if you hear a funding amount of $N+5 of your competition [N is what you thought was a standard investment number], do not take it at its face value. Talk to your VC friends and get to know the real deal (fyi – sometimes these deals hurt back startups, as they are restricted to not talk to other investors and have to modify/adjust their business plans as per the current VC’s advice).

And for god sake, please do understand that funding is a milestone and no perfect correlation exists between funding and long term success (that’s the basis of UnPluGGd, our flagship event).

Numbers Game
Numbers Game

Traffic/Sales Etc Numbers

An interesting conversation happened recently, when a startup announced its traffic numbers and few bloggers covered it, without getting into the real depth of the numbers. Not that the startup was wrong, but a bit of analysis on incoming traffic/referral links/partnerships could have added more meat to the story.

Few startups take such stories on its face value and what really happens is that suddenly you start questioning the long term sustenance of your business (“we are at a fraction of their traffic – how can we beat them?”). And the worst impact of this is when you start investing your efforts in wrong areas (“we need to beat them in their game!”).

Always remember that the competition’s job is to distract you and sometimes, these number are part of the game.

Do take your competition seriously, but do not get trapped in their game.

Also Read: Entrepreneurial Lessons from Indian Traffic [Too Close To Beat] | Have you been ‘wiped’ out? Learning from Failures [Losing is winning]

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