March 10, 2022 | 5 minutes read

10 Commandments for Pre-Seed and Early-Stage Founders

  • #Tips
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  • #Pre-Seed
Avi Eyal
Managing Partner, Entrée Capital

We’ve compiled a set of commandments to help pre-seed and early-stage founders make better decisions. Here’s what you need to know:

🤯 Thou Shalt Think Big

We don’t mean valuations.
Instead, think in terms of years and outcomes. 

  • In 1-2 years, what does your company do? How is it helping customers?
  • In 3-5 years, what will your company do? How will it help customers?
  • What’s the long-term big hairy audacious goal (BHAG)?

The outcomes should lead to positive disruption in your chosen industry. That said, don’t worry about more than seven years out—the world will be too different in 8-10 years to think about right now.

📈 Thou Shalt Target a Good Market

“Good” means three specific things:

  1. Big or growing rapidly: The pie needs to be big enough that you can grab a slice even when incumbents are hungry.
  2. Changing dynamics: Customers looking for a change (or the market changing around them) is your entry point. Embrace it.
  3. Strong competitive opportunities: Ideally, either a lazy incumbent or chaos with no clear leader.

Within this “good” market you also need to identify your ideal customer so you know who you’re targeting.

🙊 Thou Shalt Make No Assumptions

You will never know everything. But not being able to know everything is definitely not justification for making assumptions over everything either.

What you need to do is to find data – to the extent that you can – for every assumption you make. Over time, you’ll build up a sense of the market and data sources required to validate assumptions quickly. This will feel like a painful slog in the beginning. Do it anyway. 

🔥 Thou Shalt Seek Validation

Product validation must come from market-relevant people.
These folks are different depending on your sub-stage within the “early stage” umbrella:

  • Pre-product: Talk to subject matter experts and design partners. 
  • MVP in market: Talk to potential buyers.
  • Macro: Talk to founders in your market (or adjacent markets) to figure out trends so you don’t get caught out long term.

Engaging with so-called competitors could also lead to interesting outcomes. For example, Elon Musk’s and Peter Thiel’s PayPal. The two merged when both realized they would die if they kept competing, and were far stronger for it.

Thou Shalt Focus Short-Term

This commandment is a reminder that you need consistent wins to build momentum.

There are legitimate reasons for startups to not take on a customer (when they make too many demands or won’t get value from your product) or an investor (values or skill misalignment). But that will always be the exception. Get short-term wins so you can buy the time you need to think long-term and motivate your team.

✅ Thou Shalt Know Your 3 W’s

A deep understanding of your who, what, and when’s in the pre-seed and early stages is vital.

Be action-oriented and know exactly who is responsible for what task and by when they should do it. Know it, follow up on it, but don’t just hoard this knowledge – teach your managers and employees to manage themselves this way too.

💰 Thou Shalt Choose Investors Wisely

What you really need from an early stage investor is: 

  • A trench buddy: You need someone who’s been there before, can guide you, and can offer those comforting words of support only someone in the know can utter.
  • Signaling: A good investor opens doors for you. Make sure you know which doors yours can open.
  • A plan for the future: A pre-seed and seed round is supposed to prepare you for Series A and beyond. Think about investors in that regard—will they help you grow to the next level, will they continue to invest, and what is their track record of success… especially when the chips are down!

💁 Thou Shalt Choose Team Members Even More Wisely

You’ll need three kinds of team members on this journey.

  1. Co-founders: You need for-your-business perfect fits. That means you get along (really well!), have alignment on vision, and they have skills you don’t.
  2. Core team: These early employees need to have domain expertise in their work. Beyond that, make sure you get along with them and respect each other. Bonus points if they can uniquely help the business, such as having a good personal brand or a network that is relevant.
  3. Supporting team: You need people outside the company you can turn to for help. This could be founders in similar industries, well-networked individuals, or been-there mentors. If they can join as angel investors, that adds a lot of value. Always be careful of advisors as very few have a long-term effect. 

📝 Thou Shalt Plan for the Day After a Fundraise

You need to know what happens the day after the wire comes through. 

Team: Think about the next 2-8 employees—what roles and how will you source individuals?
KPIs: What do you need to hit to move to the next phase of growth?

Know these plans before you start fundraising. It strengthens your pitch and means you hit the ground running.

🗺️ Thou Shalt Be Relentless 

Stop at nothing in pursuit of your goals.

People: Reach out to those you think can be helpful and ask.
Action: If the door is closed, try a window.
Creativity: Be open to new ways to achieve things (see: Thou Shalt Seek Validation).

And remember….Commandments Change With Growth

A lot of these commandments don’t apply – or don’t apply as strongly – as you grow. But they are essential to get you to the point where they don’t matter, so don’t be fooled into thinking because they won’t matter in the future that they don’t matter now. 

The road will be bumpy. Keep driving anyway. And above all, good luck. 

We’re here if you need us.