Realism pays. Just ask Curalate CEO Apu Gupta.
“With Storably, we were an early stage company and we were going to need more money at some point,” Gupta said, talking about the earlier iteration of Curalate. “So we asked Josh [Kopelman], ‘What kind of numbers are you going to need to see from us to support us in our next round?’”
According to Gupta, it was a critical and defining question that he asked investor Josh Kopelman early on. The pair spoke during Philly Tech Week 2017 presented by Comcast at an event organized by PACT and the Penn Center for Innovation at Penn’s Pennovation Center.
Here’s what else we learned about choosing a startup idea and when to call it quits.
Startups have a couple of measures of success and failure and funding is definitely a big factor. “If you can’t pay the bills, you’re going to go out of business,” said Gupta. “You have to ask yourself if you’re building a business that will earn enough cash to stay in business. That’s all you need to figure out.”
According to Kopelman, managing partner at First Round Capital, with roughly 20 percent of companies that pitch to him, “It’s very clear when you look at the patient on the table, you know that the patient is dead. Stop trying to save it.”
The conventional wisdom in the world of tech startups is that one should follow investors’ advice because the money will follow after that. But that may be a myth after all. “There’s a 90 percent chance that any individual piece of advice is wrong,” said Kopelman. “You should be looking for patterns, expertise, history, credibility and make sure the VCs you talk to follow certain trends.”
An entrepreneur from the crowd asked Kopelman why he invested in Storably early on when it was clear it was a dud. “We didn’t back Apu because his crystal was the best, we backed him because he had the ability to change course, iterate and his prediction of the future was the best.” Collecting feedback from customers was also crucial in Gupta’s landing an investment, since it showed he was data-driven.
Gupta also touched on the mythologies surrounding overnight tech sensations. “The reality of it is, for most people, that you’ll be doing this for years before you have any kind of outcome,” said Gupta. “All too often, I see really young entrepreneurs that clearly have no passion. They are chasing the money.”
From both sides of the fence, entrepreneur and VC alike, Gupta and Kopelman agree on the fact that when you have an idea that occupies your mind 100 percent of the time, and it just won’t leave your head, that’s when you have something worth pursuing.