The founders of Blink Fusion share a common passion for the incredible value small businesses provide to the lives of founders, the people they employ and the customers they serve. We have been drawn together in an effort to contribute to the success of many startups, in particular tech startups in underserved communities. As founders, we have experience working for numerous startups, including founding a few of our own, and are well-placed to understand some of the biggest challenges that startups face. Out of this experience and desire to help inexperienced startups succeed came BlinkFusion and what we call ‘actvesting’.
Our vision pulls together highly talented, experienced, hands-on people from tech, marketing, legal and business development to invest their time into a company in dedicated chunks, which we call the surge. During the surge we work shoulder-to-shoulder with the founder to develop the business roadmap and deliver the technology vision on a scalable platform to begin realizing revenue.
Problems for Startups
Some of the biggest problems for tech startups have not changed over the last many decades. The classic problem is an out of the box thinker has a great idea with great potential but cannot get it developed. Recruiting senior marketing, sales and product development talent is expensive and difficult for those breaking into the industry. With large tech companies such as Amazon increasing compensation and offering stock options, small startups have difficulty recruiting the tech staff they need to get off the group. When this happens, founders often get scrappy, delivering with minimal resources and making expedient decisions that never scale resulting in loads of technical debt. Bootstrapping with additional co-founders is an option but often results in diluted equity splits with no guarantees of performance, commitment, or closing the personnel gap.
Sometimes, a friends and family fundraising effort will enable founders to hire a team of consultants to help with early stage development. However, the fundamental misalignment between consultant and founder rarely results in value delivery and sustainable burn rate.
These conditions often relegate the founder’s dream into a permanent focus on fundraising instead of product and business development. The interrupted dream relies on co-founders, underpaid employees, and misaligned consultants. If additional fundraising is available, it often comes with dilution and investors seeking short term gain rather than long term company success.
The founder gets in a grind, becomes fatigued, and wonders why they ever started in the first place. As it becomes more difficult to attract talent and acquire capital, it’s no wonder organizations such as Failory report that roughly 90% of startups fail. We invite founders to vicariously live through our many mistakes, avoid unnecessary growing pains to accelerate your success and win.
The Impact of Early Expedience
The scrappy early decisions that seemed practical at the time often are the primary source of the demise in a painful slow 3-5 year burnout. Low quality technology work will eventually have to be overhauled to support company growth. While I have a number of more “colorful” terms for this, for the moment let's call this the Minimum Viable Fail or MV-FAIL. MV-FAIL’s have been the demise of many tech startups. To address the growth impediments caused by the MV-FAIL usually goes something like this:
Additional fund raising is required substantially diluting the original founders. The recruitment of a staff with much improved tech skills is both time consuming and expensive; not to mention the inevitable conflict that will arise between the team that built the MV-FAIL and the new players intent on delivering a high quality, scalable MVP. This is a high risk period of time that few startups emerge from. The dream almost never survives. Fixing all those early mistakes consumes the funds, postpones market opportunities and most often results in the original founders selling their idea to someone better suited financially or dropping their dream altogether.
The Impact of Early Expedience: A Case Study
This leads us to a case study of a minor player in the cloud hosting space. While the company survived and now thrives, none of the original founders survived to see this happen. I think it’s safe to say the original dream did not survive either.
This cloud hosting company started with three founders: CEO, CTO and CPO. They delivered an MVP that proved to have enough potential to secure $35M in Series A funding to build a team and scale. Amazing success story? The original product was built using Perl and delivered in a single, huge file proving to be an unwieldy MV-FAIL. The $35M was enough to recruit more talented developers who immediately recognized the need to modify the architecture for quality and scale. The internal conflicts around technology direction resulted in no new features for 18 months, burning through the $35M and departure of the CTO. Another big raise was required to deliver resulting in excessive dilution. The founding CPO left due to experience and contention. Finally, a new CEO was hired to move forward with the new product line.
The company survived but none of the original founders did. The founders and early investor’s equity has been thoroughly diluted. While this could be considered a success story in that the company now thrives, I wonder how many dreams NEVER get out of the gate or simply collapse midstream at varying stages.
Is there an investor model that can improve the odds of success while maintaining absolute alignment with the founder? Actvesting seeks to give founders and investors the best of both worlds while encouraging startup growth and success.
Introducing Actvesting (Action Oriented Investing)
Actvestors are a special type of advisor, senior leader, entrepreneur and investor that work hands on with companies for a dedicated period of time to deliver the technical solution, train staff and develop a comprehensive strategy that fuses business and technology to help reduce the risk of failure and increase agility at scale.
Imagine for a moment: you are an entrepreneur and future founder looking for cash investment. But instead, you find people that believe in you and your idea with such passion they are willing to join you as a hands-on dedicated producer. Imagine that all those producers are senior level talent in their respective fields and highly cross functional. If you can imagine the potential of that, you can understand actvesting. Think “Shark Tank”, except the investors actually join your company in a full time, dedicated capacity for a period of time bringing all facets of marketing, user experience, technology and business development.
That is where we come in! Blink Fusion is an association of actvestors bringing together highly skilled, experienced professionals dedicated to investing their time and talents into your startup. The key is to build out initial ideas with senior talent to set up for the future. It’s critical to have both startup and enterprise technology experience early on to consider scale, security and quality. In order to find the best market fit, achieve fast delivery and address time to market factors, this experienced team works together to achieve these goals.
Perhaps above all else, the team must avoid the pesky MV-FAIL.
At the heart of this model is a high performing team with special attributes, the HiPER TEAM. Through a combination of innate agility, savvy engineering and cloud native, the HiPER TEAM rapidly delivers a high quality, scalable platform.
The actvestors are available for highly dedicated bursts that invest in the buisness’s long-term vision. The surge usually results in a revenue generating business. Finally, we use our experience to train and transition to your full time staff. We often transition to junior level team members for cost effective sustainment of the business and we shift to an advisory role.
The Impact of Actvesting: Benefits to Founders
A high quality product developed from the beginning through market fit experiments has a great chance to accelerate the success of your startup.
The HiPER TEAM’s careful attention to user experience, scalability and engineering practices provide a platform to compete, grow, pivot and win. Transitioning the experience of the HiPER TEAM to a full time staff sets up the startup for battle, providing discipline and critical thinking skills to continuously problem solve the unknowns that lie ahead.
By avoiding the inevitable conflicts and dilution caused by being forced to rebuild the MV-FAIL, the founder can focus on realizing the dream instead of being converted into a full time fundraiser, delegating the dream to others. The founders maintain control of their initial ideas while funding runways are extended and valuation improved.
The tech startup is positioned to win at all levels of the business. No doubt, a lot of hard work remains but the odds have been dramatically improved.
The Impact of Actvesting: Cash Investors
Traditional funding for early stage startups recommend attracting cash investors using the following model:
Friends and Family - $50k to $250k
Angel Investors - $100k - $500k
VC’s - > $1m
Many concerns of cash investors are alleviated when an Actvestment team is part of the package. They are comforted in knowing that the cash runway is maximized along with the odds for success. Recently we have partnered with Angels who have made their cash contributions contingent upon participation alongside an Actvestment team. Angels recognize the challenges of early stage startups, founder chemistry, and MV-FAILs. Angels also understand how these can be eliminated to reduce overall investor risk.
The Actvestment and Slicing Pie models have proven to be a powerful combination for Angels. In future blog posts, we will discuss the details around dynamic equity splits of the Slicing Pie model.
The Impact of Actvesting: The Actvestor
Perhaps the idea of using your talents to invest in startups to earn equity in companies with great potential is attractive to you. Can you risk 50%-90% of your market rate to align with the founders dream putting yourself in position to participate in the upside?
Actvestors are highly cross-functional contributors participating in surges as part of HiPER TEAMs to ramp up early stage startups. As such, we get to see many business opportunities, many dreams and many problems requiring innovative solutions. The variety is exciting, the energy contagious and results fulfilling. We join founders in jumping headfirst into the “vulnerability pool” using our skills, experience and commitment to emerge on the other side in a position of strength.
Actvestors spend a lot of time widening and deepening existing skills because cross functional people make up cross functional teams. We agonize over the thought that by missing a new technology or business concept could cost our founders an advantage. Continuous learning is a source of great value to remain razor sharp while also keeping us humble by forcing us to recognize all that we do not know. Remaining humble improves our teamwork, respecting and recognizing each other's strengths and weaknesses going into one new, challenging and risky situation after another.
If this environment resonates and excites you, consider joining the Actvesting movement!
Written by: Mark Thias
Mark is a Founder, Software Engineer and Agile Coach with 30+ years in software development and consulting. Mark is currently working to create and incubate early stage startups.
Edited by: Clint Bennett
Clint is a graduate student at the University of Georgia with experience in writing and editing. He is excited to work in the startup industry with underprivileged communities.
References and Other Interesting Reads:
MOYER, MIKE. The Slicing Pie Handbook: Perfectly Fair Equity Splits for Bootstrapped Startups. Lake Forest: Lake Shark Ventures, LLC., 2016
WILLIS, TYLER. What are operator angels and why are they suddenly everywhere? (blog). April
25, 2021. https://tinyurl.com/8exa65zd