5 min read
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Published on
May 9, 2024
David Stockton
Growth Playbook

The Two Rules of Venture: (1) Don’t Run Out of Money, (2) See Rule #1

You don't have to be the smartest person in the world, or even the room for that matter, to have a vision. The question is, can you sell it? You need genuine data points to tell an undeniable story that reads, “we see a better way, we’ve demonstrated there is a demand for our vision, and we’re going to realize this dream with or without outside capital.” Your ability to point to numbers that say “we are here,” and “people are listening to us,” is crucial. How do you get these numbers? Trial and error of course. This may look something like this: we are talking to our audience by doing XYZ (insert hypothesis driven outcome here), and our voice is the loudest, most disruptive yell. So loud in fact, that this perfect pure vision of ours has split from the boundaries of the mind and moved out into the world, forcefully creating a brand new market category. Hear our numbers roar.

Hey That’s Shiny!

Attraction at its most basic level is pretty simple: people like shiny things. Your goal should be to create something that makes your target audience, the consumer, a venture capitalist studio or an investor say, “hey that’s shiny.” To be frank, even investors don’t know what they want till they see it. They don’t immediately know who they want to back, especially after 199 meetings with 199 ideas. When you walk in as their 200th meeting, they should have to put sunglasses on because you're so damn bright. The point? We help you polish up the product with unmatched services: AKA, We make you shiny, that shine brings in money, and the two golden rules for startups are (1) don’t run out of money, and (2) see rule one.

Don’t Light Your Cash on Fire: Step Away from the Matches

A common sentiment in the startup world is you must watch your cash burn until your company is self-sustaining. To that — we say don’t light your cash on fire, step away from the matches and only use capital to fuel your vision. It’s all too common for founders to throw money at the resource they believe will spawn growth. Sometimes this pays off, most times it doesn’t. We know that most startups have limited resources in the early stages, but we also argue that running on the same traditional hamster wheel trying to generate growth till you run out of money should not be the norm. So how do you keep to the golden rule and not run out of money? Do you pivot in hopes that a risky opportunity will pay off or do you keep walking the razor-sharp line in hopes of reaching profitability? We say neither. We say get the resources you truly need to execute that beautiful vision in your head –- not just the resources you can afford. We say Sweat.

Survival of the Richest

In contrast to the traditional method of securing SAFE-style convertible debt from angel investors and subsequently allocating your dwindling resources to startup expenses with little reward, we help you finance your startup through a sophisticated sweat equity approach. You aren’t burning through money paying premium prices for less than premium work, all while toeing the line of certain failure. By sweating your services, you can reduce fundraising burdens and improve your use of capital, all while adding more value to your company.

Law firms, recruiting firms, marketing/PR agencies, and engineering and development teams contribute to your level of shine. They equip your startup with data-driven proof that your vision sells, is safely kept behind the bullet proof glass of legal protection, and is a tangible product — all while cutting through the noise so you can speak directly to your audience. The problem: they burn through your cash incredibly quickly. This seems like a catch-22 because despite the cost, these are all the resources you need to attract and survive. But why survive when you can scale? Sweat your legal, sweat your marketing, sweat your services. Sweat your success.

Starting to SWEAT

Engaging in various services through sweat equity investments means you don’t pay full price for their work in exchange for compensating the service provider in part with equity., which ensures they are invested in the success of your startup. It’s a win all around. You conserve cash (a nod to rule #1), all while accessing top-notch resources, and your equity partners providing a service are incentivized to drive your company to success (a nod to rule #2).

This game is about maximizing the amount of time you have to find a performant business model. This is the simple truth of venture — nobody starts with a product-market-fit, we all have to seek it, and if you are able to create more runway, while getting the talent that will help crack it, you have the best chance at fit before you break the two rules.

Let’s Talk About Lynx

It all comes down to this: engaging in sweat equity arrangements means you are unlocking the services you need to scale, create, dominate, while also not  burning through your limited cash. Our goal at Lynx is to streamline your sweat equity transactions, enabling you to source, structure, and engage these deals to drive your growth. Working for equity is by no means a new concept, but standardizing a framework for facilitating and structuring (regulating) such transactions has been lacking. This absence of structure has impeded the widespread adoption of this type of investment mechanism. So we set the standard. Like you, we’ve taken a beautiful idea and forced it into the world. Lynx is a platform that connects your startup with service providers willing to work for equity. Our method extends your startup’s runway, and aligns the interests of all parties involved, leading to you, being very, very shiny.

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