As I travel the Midwest, I've been noticing a trend when it comes to entrepreneurship; slow and steady growth as opposed to chasing the big exit. Part of it was born out of a scarcity of capital but the Midwest is catching up quickly as venture capital firms continue to look inward rather than the coasts for talent, intellectual property and opportunity.
Michigan-based SheFit was number 154 on this year's Inc 5000. They bootstrapped in the early years, choosing slow growth but the ability to curate and define their audience.
Be prepared to pivot.
After investing $400,000 of their own money, Sara and Bob Moylan were incrementally growing an adjustable sports bra business, SheFit. Competing with the likes of Nike, Under Armour and Lululemon is not easy but taking their time gave them an advantage.
They had time to fail, test, fail again and perfect the product. When they took it on Shark Tank in 2016, Daymond John showed interest but a deal didn't happen.
Almost all situations are not like Shark Tank. Most appearances in front of a VC, without investment, will not spike your sales from $220,000 in sales to $1.5 million even though you didn't take the money. It was a clever play to get visibility but still remain autonomous.
Don't try and get funded in the first year.
This sounds like absolutely insane advice for a startup but you need to do a couple things first. You need time to figure out exactly what your product or service is. Plus, you need to figure out who your ideal investor may be. Seven years in to my company and I still haven't taken investment. I do this assessment every year.
Granted I work in public relations and there's little overhead but there are always offers, opportunities and angles to expand and scale. I'm not resistant to money, I love money but I also have enough friends who are founders and grew too fast, too soon. If your company makes five times more but spends more to get there then now you just have more headaches, more moving parts, less control over the end product and less money.
Venture Captial (VC) money isn't bad, at all. But it doesn't mean instant success. And more importantly, it comes with its own obligations and challenges. When people invest in your company they are going to want a return.
Suddenly you're making decisions based solely on getting a return quickly. You've seen what that has done a large scale to companies like Blue Apron, Twitter or Snapchat-with their much criticized update this year.
Now, if you don't take the money it will be slower. If you're creating disruptive technology like Uber or Bird, you don't have time to wait and you need a strong legal team so your only option is to get funded and funded quickly.
But most other startups have some wiggle room when it comes to time.
Find an industry advisor instead.
There are two main reasons for this strategy. It will come with less strings than VC and this advisor-if properly motivated-should be able to help you grow while understanding your business.
Jeffry Aronsson, the former CEO of Marc Jacobs, Donna Karan and Oscar de la Renta. happens to be a native of Detroit and SheFit is based in Michigan. Geographic ties are a conversation starter but not enough to seal the deal. After Shark Tank, Sara Moylan of SheFit approached Aronsson for advice on how to keep growing.
"Validating the market first with friends, then Kickstarter, then landing Shark Tank, Sara is the real deal," said Aronnson. "Her brand proposition is rooted in an authentic story personal to the founder who, by addressing her own needs, addressed those of a massive audience."
Aronsson recognized a committed following for SheFit and was impressed enough to come on as an advisor. Aronsson's expertise and connections provide the final piece for a company looking to extract market share from large fitness competitors. Suddenly Moylan had an advisor, rather than an investor, to open doors and create opportunities.
"The longer an early stage company can refrain from selling off its equity, the longer it has to build value for giving up less in exchange for more," said Jeffry Aronnson, "While all money might look the same, all investors are not. In addition, special care must be taken to choose a compatible investor with shared values, objectives and outlooks for maximizing alignment."
SheFit is an amazing story. But it doesn't happen without a lot of patience. Every step in the entrepreneurial journey it's natural to stop, pause and either enjoy success or be slowed down by failure. The key is to make a long-term plan and stick to it, rather than chasing every single opportunity that comes your way.
Be patient. Build a foundation. Strike when ready.