Four business shapes. Only one needs an investor!

She does not start at the pitch. She starts at demand. An MVP is enough, and [00:24:00] “you don't need a perfect product” - the test is whether you can sell it to family, friends and the circle around you. Not 100,000 euros of traction. Proof that demand exists at all.

Then comes the decision most founders skip. She names four shapes a business can take: a scale-up returning 10x to 30x to an investor, a family business built with a partner, a strategic business built to be acquired, or [00:26:00] “just a profitable small business that you can live off extremely well”. The shape decides whether an investor is needed at all. [00:26:00] “There's so many exciting businesses making million, two million, 10 million a year without a single investor on a cap table.”

Because the money is not free. Once it lands you report on it: return on investment, KPI reporting, regular board meetings, and preferential rights that can hand an investor a vote over decisions inside your own company [00:28:00]. Her word for the arrangement is marriage.

She is direct about where the pressure comes from. [00:27:00] “We are surrounded by social media successes, especially LinkedIn. Raised 100 million. Sold it for one billion. Raised 500K with no revenue.” What you do not see is the terms, or what the money cost.

Her own route included money that cost nothing. Of the three and a half rounds, the half was public grant funding [00:17:00]: “it's always the best money because there is no equity, no shares involved.”

None of this argues against raising. Her own business ran on three and a half rounds, and she is clear about what outside money is for: [00:23:00] “investors are needed in order to fight for… build the progress further. But at the beginning, you have all you need.” What changes is the order. Grants, accelerators, venture studios and paying customers come first, [00:25:00] “before wondering when is my next business angel around.” Raise when the cheaper money is spent and the round unlocks the next stage.

Write one sentence naming which of the four shapes you are building, and the revenue that shape needs in three years.

Then answer one question against it: can you reach that number without outside money?

If you can reach it without outside money, you have bought yourself the strongest position there is to raise from later. If you cannot, you now know exactly what the round is for, which is the first thing any investor will ask.

You’ve guessed it, I've been reading Start With Yourself by Emma Grede and absolutely loving it. Some of her ideas have gone viral for being controversial, but I actually agree with most of them. Bite me! or better yet, write to me. I'd love to hear what you think.

It's been very hot in London these past few months (though the weather is changing now), so I've been reading in the newly reopened Grosvenor Square Garden, during the heatwave it was seemingly the only shaded patch of unburnt grass left in the city.

It's also surrounded by cute coffee shops and matcha spots. My personal favourite: grab a protein shake from Elevate (next to the Selfridges Foodhall) and find yourself a soft patch of grass.