What I Wish I Knew When I Started A Company: 4 Insights For Founders From A VC

By Rob Biederman

Starting a company is equal parts thrilling and daunting.

As someone who has navigated the complex landscape of entrepreneurship and raised $125 million from top venture investors to build my company, I often reflect on the lessons I’ve learned along the way.

I now run my own venture capital firm, Asymmetric Capital Partners, where we’ve made 83 investments in early-stage companies.

Reflecting on my own founder experience as well as lessons learned from watching Asymmetric’s founding teams, here are four insights I wish I’d known when I embarked on this path, and that I believe are essential considerations for founders today.

No. 1: Be thoughtful about capital allocation

Money makes the world go round, especially in the startup universe. It’s like fuel for your rocket ship. Too little and you won’t even leave the ground; too much and you might burn out before reaching orbit — or not own very much of the rocket ship when you actually achieve escape velocity.

Raising capital is one of the most pivotal aspects of building a startup. It’s crucial to secure enough funding to drive your vision forward and provide a runway that won’t stress your execution capabilities.

But raising too large a round at too high a valuation can have negative consequences that founders often overlook, including unnecessary dilution of your ownership stake and the negative signal risk of an excessively high bar to overcome when raising a subsequent round.

Adequate capital allocation allows for flexibility and resilience, giving you the breathing room to iterate on your product and strategy without the constant pressure of imminent financial constraints.

Pace and timing of deployment is also a critical consideration.

No. 2: Conduct experiments at a manageable scale

Experimentation is the cornerstone of innovation, but it’s important to do it in a measured way that doesn’t cause too much internal turbulence or drain your budget.

You don’t need to hire an army of salespeople to test a new market. Start small, be nimble. Instead of launching massive go-to-market strategies or hiring hundreds of employees right out of the gate, focus on smaller, more controlled experiments.

Start by hiring one or two key individuals who can help validate your hypotheses. This approach minimizes risk and allows you to pivot quickly based on the insights gained from these initial efforts.

Remember, it’s easier to steer a kayak than a cruise ship.

No. 3: Focus intensely on product-market fit

You can have the most compelling product in the world, but if it doesn’t solve a real problem for real customers, you’re not going to make it.

Understanding and achieving product-market fit is the most critical milestone for any startup. It’s not just about listening to what your customers say, but also about analyzing their behaviors to understand their true needs.

Many founders highlight early positive feedback from customers in their pitches, but it’s essential to ensure that these customers fall within your ideal customer profile and that they have a compelling economic reason to use your product consistently.

Superficial validation can be misleading. Deep, analytical understanding is key.

Don’t just settle for applause; ensure the people clapping will stick around for the encore (and love it enough to take a price increase down the road).

No. 4: Build a thoughtful early team and be realistic about long-term hiring

The people needs of a startup in its infancy are completely different from those of a more established company.

It’s important to recognize these differences and hire the right people for each phase of growth. In the early stages, you need generalists who can wear multiple hats. Some of them will adapt as the company evolves and continue to be a good fit for the organization; some will not. While it’s tempting to try to hire long-term senior executives from the start, it’s often unrealistic and impractical.

Understand that your first head of sales or marketing might not be with you for the long haul, and that’s okay. Anticipate the need to upgrade and specialize your team as your company scales, and don’t hesitate to make changes when necessary. Think of it like dating: your high school sweetheart might not be the one you marry, and that’s totally fine.

Bringing it all together

Two consistent threads make their way through these lessons.

First, thoughtful planning and strategic decision-making are crucial in the early stages of building a company.

Second, flexibility is necessary given the constantly shifting landscape of running an early-stage business.

Starting a company is an extraordinary journey, filled with many challenges and triumphs. Embrace these lessons, reflect on your own learnings, and remain focused on your vision.

The path to success isn’t linear, but with the right strategies in place, you can get there a little bit faster and save yourself some major headaches along the way.

Rob Biederman is the managing partner of Asymmetric Capital Partners, where he invests in and advises early-stage companies. Prior to that he was co-founder and co-CEO of Catalant Technologies, and now serves as chairman of the board. He started his career at Goldman Sachs and was a private equity investor at Bain Capital before attending Harvard Business School, where he founded Catalant. His experience as an entrepreneur and investor provides him with unique insights into the challenges and opportunities faced by startups today.

Illustration: Dom Guzman