Been there, done that – Chris Vargas & hands-on startup advice20.12.2018
Not many people have as much experience from both sides of the table – as an investor and as an entrepreneur – than Chris Vargas. That’s why were very excited when we he agreed to share some of his knowledge on the first-ever Startup Mentoring Corner at Tribe Tampere as well as in Tampere Slush Party.
The CV of Chris Vargas spans over some three decades, including things like six successful capital raises and 18 angel investments, to name but a few. But everyone has started at one point, so we asked Vargas what kind of advice he would have hoped was available when he first started.
“The most important advice is: have a go-to-market strategy”, Chris replies. “My first startup was 20 years ago, but there is still the same problem. So, know who your customers are, how to approach them, how to scale. Building a team is not as difficult. If I’ve had mentors in the past, that would have been helpful to know.”
For a Nordic startup, going after the bigger international markets is often a necessity of life. To reach the bigger markets, Chris has a clear 3-step strategy.
“First, identify the customers you can win internationally”, he says. “Following that, hire the right team for the task. Then, when you have the potential market and the team, find the right investors. Follow that order: find customers, key hires, find investors. It’s the same advice, whether you come from Finland or Germany or wherever.”
Finding international investors
Chris Vargas has some practical tips for companies seeking international funding. “Create a list of ten companies in your space, one round ahead of you, and find out who invested in them”, he says. “Crunchbase is very useful in that. I also recommend attending an accelerator and using angel investor lists.”
For convincing funders, Chris has a rule he calls 1x 10x 100x. “It’s a simple question: what is 1x thing we do 10x better, cheaper or faster than the others, giving you a chance to make 100x ROI.”
Typical startup mistakes?
Vargas recognizes some typical misconceptions by startups. “Nordic startups spend far too much time on their product”, he says. “Seven out of ten slides in their pitch deck are about the product. Focus on other things, like go-to-market plan, your customers, your team.”
Where to invest?
From an investor point of view, Chris relies on two methods for recognizing a viable startup: internal and external proof.
“As an investor, you often find an idea you like right away. Good idea, good market, you can already see in your head how it will grow”, Chris explains. “That’s internal – your gut feeling, a kind of pattern recognition.”
But some startups don’t create that gut feeling. If you are skeptical, Vargas recommends
going after external validation.
“See if there is a market evidence to back them up”, he advices. “If they have the customers, a monthly growth rate of 10–20%, the channels etc. then it’s a good company. But there must be either of the two or you will pass.”
According to Vargas, the internal good feeling and market evidence are the two right reasons to invest. “The wrong reasons are for example following others or doing a favor for a friend”, he says firmly.
The Tampere Startup Mentoring Corner as well as the Tampere Slush Party were organized in part by 6Aika – Ecosystems of Growth, a joint project by six biggest cities in Finland: Helsinki, Espoo, Tampere, Vantaa, Turku and Oulu. The funding comes from the European Regional Development Fund (ERDF) and Helsinki-Uusimaa Regional council. The activities in Tampere are partly funded by Tampere city region economic development company Tredea Oy (Business Tampere) and the city of Tampere.
More on the video
Hear Chris Vargas’ views on Finnish startup scene and many other things on a video interview hot from Tampere Slush Party.