5 Reasons Customers Matter When You're Raising Capital

1. Reasons
Customers
Matter
When You’re
Raising
Capital
Featured in The Metropreneur, September 2014
By Tom Walker

2. -Yogi Berra
it’ll go.
You don’t have
to swing hard
to hit a home run.
If you got the timing,

3. A lot of things—
sometimes including
the sun and the moon—
have to line up just right
for a startup to attract
investment capital.

4. The product has to work.
The founding team has to be high-quality,
flexible, tenacious, and coachable.
The company has to solve a big problem
for a large market as evidenced by early
adopters with some revenue.
Investors have to see and believe that
the company can make money when
operations and sales scale up.

5. When you have the timing, as Yogi says,
you don’t have to swing too hard.
But if your timing needs a little work,
there’s no better way to improve your
startup’s odds of accomplishing critical
milestones than by engaging with
customers.

6. Customers will tell you if your
concept makes sense and if
your product works or not.
It’s never too early to engage a
potential customer—even if your
prototype is made out of cardboard
and glue. Start by describing the
business problem you think your
technology can solve; don’t start by
talking about the technology. Then
listen, listen, and listen some more.

7. Customers stress test
any organization
Customers have timetables,
deadlines, and expectations.
With a customer to answer to,
you’ll discover whether or not
you’re good at building
relationships. Having customers
is the only way to learn how to
develop the trust and confidence
that allow young companies and
their customers to weather
growing pains.

8. You don’t know as much as
you think about the problems
customers are trying to solve
Looking at a problem or challenge
from the customer’s perspective
rather than through the lens of the
solution you are trying to build will
put a different spin on things.
Hopefully, wearing the customers’
glasses will stop you from building a
product no one wants to buy.

9. Early customers can serve
as referrals for the future
customers you hope to gain.
There’s a certain loyalty that often
takes hold between startups and
their early adopters; building
something together can create a
lasting esprit. Have you ever been
someone’s first customer?

10. Customers pay the bills.
There is nothing like revenue from
early adopters to put a sparkle in
potential investors’ eyes. Or if your
solution isn’t revenue ready, perhaps
your technology is so promising that a
potential customer would help fund
development, supply materials, or
give you some engineering or
machine time. There’s no stronger
indicator that your company’s value
proposition makes financial and
economic sense than when a
customer puts some skin in the game.

11. We hear over and over from our client
companies that many of the most
rewarding relationships they have are with
their early customers.
And we hear from investors that startups
with client relationships have an advantage
over those that don’t.

12. As Yogi says,
“If you have
the timing,
it’ll go.”