Excitement Renewed: Phase 5 of the Start-Up Journey

From the Anatomy of a Start-Up: Emotions Edition Series

Once a start-up gets past the hurdles of raising funding, hiring initial employees, iterating on early product versions and incorporating user feedback — the team is finally ready to acquire their first paying customers. Securing first paying customers can often take much longer than originally anticipated which can be a point of frustration for the founding team. But this process can provide important early insights that can determine which features should be highlighted, the sales process, and even the long term business model. Since acquiring that very first paying customer is a major milestone in the life of a start-up, it’s a moment certainly worthy of celebration. In my start-up days, I was known to frame the receipt of that first payment.

A paying customer is an objective validation that your product has value. For the founding team, excitement builds knowing that if one customer is willing to pay for the product, it’s just a matter of time until more are drawn in.

After a day of celebration or at least a toast or two (and we sincerely recommend founders’ take the time to do this) — the business focus can begin to expand from product development to finding and acquiring additional customers.

Of course, customer feedback and feature requests must continue to guide product management and the development process as relentless focus on meeting the needs of customers is a good strategy for success and will help drive business growth for the foreseeable future.

Having first paying customers is definitely an exciting stage in the startup journey, as what started out as an idea (or “imaginary friend” as we like to say) has been brought to life and is now a friend that customers are willing to invest in. What was once an imaginary friend can sometimes feel like a child growing up — an idea that has now, with lots of time, focus and care, been nurtured and developed into becoming an entity all its own to be shared with the rest of the world. This can be a very satisfying feeling for sure — it is a creative work that has come to life!

While it’s important to acknowledge the important milestone of securing the first paid customers, usually this marks the beginning of the next major phase of the startup’s evolution: building a thriving business with repeat customers. In addition to growing sales and the continuous development of new features, the founders must now turn their attention to enhancing the initial go-to-market strategy. This may include: building out the brand, developing a sales process, engaging with potential partners, and, of course, creating a plan for raising additional funding.

One of the best times to attract seed investments is after initial customer traction and product validation is achieved. At Inspiration Ventures, in addition to the size of the potential market being addressed, we often evaluate start-ups not only for the size of the market being served but also based on the value the product is delivering to customers.

As mentioned earlier, paying customers are strong validation of a product’s value. And to that end, it’s very important that those first customers are well taken care of since they may often be asked to become references for seed investors. Attracting initial paying customers is certainly a time of excitement that should be cherished and enjoyed. Now with the right strategy, team, target market, and additional funding, it is just a matter of time until even more paying customers get to experience all that value you’ve been creating.