Scottish Tech Army founder has good advice for tough times

As Neil Sedaka almost sang about, starting up is hard to do. It is a perilous time and many small firms fall by the wayside, either through lack of funds, problems with the product, or a failure of the business model. Getting good advice is crucial and today at the Tech Trailblazers Awards we’re fortunate to have Alistair Forbes to share some his wisdom with us.

Alistair is is a global technology entrepreneur and executive, angel investor, and business mentor who left the corporate world behind to work in startup companies and never looked back. Having been a research scientist and with the bulk of his career being in software, Alistair is most recently known for founding the Scottish Tech Army, a not-for-profit organisation that is mobilising the Scottish tech community to rapidly deliver solutions to the problems caused by the coronavirus pandemic.

Take my advice

As an investor and mentor, Alistair has plenty of experience when it comes to startups. Here are some of his hints and tips to navigate the rocky road ahead.

• Take advantage of your early stages – issues are easy to identify and deal with when you’re small.
• Be aware that job roles can be ambiguous and fluid when you’re starting out. Having a small headcount often means individuals will have to become adept at a range of skills, which suits some people but not others.
• Hire a good team – investors back teams, not products.
• Don’t assume that you need to aim for and obtain VC funding, it’s not a suitable path for all startups, but capital can make things go faster. Beware the danger of getting hooked on the crack cocaine of funding.
• Hiring new staff can be a challenge and mistakes can happen, don’t be shy about letting someone go who isn’t right for the company. In particular be careful with sales people who might be adept at selling themselves but not at selling the product.
• Make sure you have a market, investors will want to know you’ve got a target market – always remember you can start in a small market and then plan to move into a bigger one.
• Crystallise your uniqueness – make sure you know what’s different about your product. Carry out a competitive analysis because you need to show understanding of the market. It will be embarrassing in front of investors if you claim to have no competitors and they quickly find one using Google.

As your company grows, Alistair recommends that you consider hiring a “grown-up” to run things. You will need the expertise to deal with issues such as how to run multiple remote offices and creating a company identity. It’s also important to keep an eye on the money. If there is a danger of running out of funds then you shouldn’t stick to a failing plan, react quickly.

The future is looking bright

On the surface, it might appear as though COVID-19 has spoilt things for everyone, but actually the opportunities for startups are still there and in some ways this is a good time to look for investment. Alistair says that there is a huge amount of investment available, largely because the property market is stagnant, the stock market is down, and savings interest is at zero. So investing in startups has increased in response to this, as investors try to get meaningful returns on their money.

He also reports on how there’s been a shift in the market sentiment in the last six to nine months, away from the “growth at all costs” for investors. However, there has also been a move towards larger deals, leaving the earlier stages less funded. Alistair’s advice to maximise your chance at getting funding is to approach investors like getting a job, research why you should get the funding and explain why you think you’re a good fit for the investor. Make sure that you check other the projects that they’re interested in. They might be on the lookout for something that they don’t already have in their portfolio or they clearly like a particular market segment, in which case if you’re not in that segment then they won’t consider you.

These coronavirus times are uniquely challenging in some ways but some golden rules still apply. A startup needs to be agile and a good entrepreneur needs to be able to refocus their strategies, pivot in the face of the problems that lockdown can pose. Alistair recommends that your messaging to investors should be more around saving costs, rather than making money. There are opportunities for firms who can come up with cost-saving products, because potential customers are all likely to be under financial pressure at the moment.

Ultimately, startups can be ideally placed to solve novel problems and the pandemic has suddenly spawned a whole raft of new issues to deal with, such as the massive migration to remote and home working. The opportunity is there, but pay attention to the advice and remember what Neil Sedaka almost sang about.