The Myth of "Stealth Mode" for Founders: A "Head of Investor Relations - VC's" Perspective

Opinions are my own (and our VC's), but might not be the same as others. I'm ok with that. If you are a founder seeking investment from us though, this is how we think....

In the world of startups, "stealth mode" has become a buzzword, with some advisors suggesting that seed founders label their ventures as "stealth" on social media profiles to engage potential investors. The premise is that this creates intrigue, potentially drawing more interest.

However, from my perspective as the head of investor relations, this strategy is flawed for several reasons.

While stealth mode might create initial intrigue, it often fails to build the trust and engagement necessary for long-term success.Building in public: not only fosters a supportive community but also enhances your personal brand and provides critical feedback.

Remember, your customers are your first and most important investors. Embrace transparency, and let your journey be a testament to your vision and capability.

The Investor's Perspective:

1. Time Constraints: Investors are inundated with pitches and opportunities. The last thing we want is to waste valuable time guessing what you're building. Clarity and transparency are key. If you can't clearly articulate your vision, it's unlikely you'll capture our interest or investment. (Yes, even if you think your startup is "groundbreaking"). That's a word used way too loosely...
2. Marketing and Sales Skills: Labeling your startup as "stealth" may suggest a lack of marketing acumen. Effective marketing and sales are crucial for gaining customers and driving growth. If you can't effectively market your idea to investors, how will you attract and retain customers? This raises a significant red flag for VC investors, as it implies potential challenges in achieving a return on investment (ROI).

Building in Public: A Better Strategy

An alternative approach, which I strongly advocate, is "building in public." This strategy involves sharing your journey openly, minus any confidential IP information. The last piece is for all the founders who are screaming at the screen "but what if they steal my idea"! Obviously there may be other factors involved, but if you are just building in stealth because someone told you it's great to engage investors, please rethink that strategy!

PS, the IDEA is NOT what makes you successful, the SUCCESSFUL EXECUTION of said idea IS what can make you successful...

Here's some tips why this approach is better:

1. Personal Brand Building: By building in public, you establish and grow your personal brand. This makes you more recognisable and trustworthy to both investors and customers.
2. Community Engagement: An open approach fosters a loyal community that feels genuinely involved in your story. This community can provide invaluable feedback and support.
3. Customer Loyalty: Engaging openly with your audience can result in long-term customer loyalty. Customers are, after all, your first and most crucial investors.
4. Feedback Loop: Sharing your journey allows you to receive and incorporate feedback in real-time, improving your product and strategy.

Ok, so you may be thinking this is all one-sided and building in stealth has no value.Wrong, it does have some value, you must decide which works best with what YOU are trying to do!

Pros and Cons of Building in Public vs. Stealth Mode:

Building in Public

Pros:

• Transparency: Builds trust with investors and customers.
• Engagement: Creates a loyal and supportive community.
• Brand Development: Enhances your personal and company brand.
• Feedback: Provides direct and immediate feedback to improve your product.

Cons:

• Exposure: Your ideas are out in the open, which can be risky if competitors are watching. (done right though eliminates a lot of that...)
• Criticism: Open feedback can sometimes be harsh and demotivating. (you need a thick skin for entrepreneurship anyway, so if you can't take constructive criticism you might not be cut out for this). There will also be bored trolls too so be prepared mentally.

Building in Stealth Mode

Pros:

• Confidentiality: Protects your ideas from competitors. (but nobody knows about it...)
• Control: Allows for controlled information release and development.

Cons:

• Lack of Engagement: Potential investors and customers are left guessing, which can be a turnoff.
• Marketing Hurdles: Demonstrates a potential lack of marketing and sales skills. (yes this is guessing, but what else do we have to go on..?)
• Missed Feedback: Loss of valuable feedback from potential users and customers.
• Trust Issues: Creates uncertainty and doubt about your business and its potential.

There are many more, but you get the gist? Otherwise we could be here all day ha!

Building in public is a powerful strategy that requires a multifaceted skill set.

Founders who master storytelling, communication, marketing/sales/PR, community building, technical skills, empathy, and leadership can effectively engage their audience, build trust, and create a loyal following that supports their vision and growth.

Thinking of building in public?You will need the below to execute it effectively: (do you have people in your foundational team that have these? If not, it's a GOOD IDEA to find them...)Building in public requires a range of skills to effectively engage and grow a supportive community.

1. Storytelling
   • Engaging Narratives: Founders must be able to craft and share compelling stories about their journey, vision, and mission. This helps in building an emotional connection with the audience.
   • Authenticity: Sharing genuine experiences, including successes and failures, helps to build trust and relatability.
   • Consistency: Regularly updating the audience with progress and milestones keeps the story alive and engaging.
2. Communication
   • Clarity: Clearly articulating ideas, plans, and updates is crucial for maintaining transparency.
   • Responsiveness: Actively engaging with the community by responding to comments, questions, and feedback demonstrates commitment and builds loyalty.
   • Adaptability: Being able to adjust communication styles for different platforms and audiences.
3. Marketing and Branding
   • Content Creation: Producing high-quality content (blogs, videos, podcasts, social media posts) that aligns with the brand and resonates with the audience.
   • Social Media Management: Effectively using social media platforms to share updates, engage with followers, and expand reach.
   • Brand Consistency: Maintaining a consistent brand voice and image across all channels.
4. Community Building
   • Engagement: Actively engaging with the community to foster a sense of belonging and loyalty.
   • Listening: Paying attention to the community's feedback and incorporating it into the product development process.
   • Networking: Building relationships with other founders, influencers, and industry experts to expand the community and gain valuable insights.
5. Technical Skills
   • Basic Design Skills: Creating visually appealing content that enhances storytelling and brand presentation.
   • Data Analysis: Using analytics to measure the impact of public-building efforts and to make informed decisions.
   • Project Management: Efficiently managing tasks and timelines to ensure regular and meaningful updates.
6. Empathy and Emotional Intelligence
   • Understanding Audience Needs: Empathising with the audience's needs, desires, and pain points to create content and products that truly resonate.
   • Handling Criticism: Managing and responding to criticism constructively and professionally.
7. Vision and Leadership
   • Inspiring Others: Sharing a clear and inspiring vision that motivates others to join and support the journey.
   • Transparency: Being open about challenges and decisions to build credibility and trust.

As a founder, you must build your foundation strong before trying to build the "house". HOW you do that is entirely up to you and your team. Weigh it up to align with YOUR vision!

REMEMBER: Opinions are my own (and our VC's), but might not be the same as others. I'm ok with that. If you are a founder seeking investment from us though, this is how we think.As always, thanks for reading!

We are actively seeking seed stage kick a$$ AI enabled SaaS/IOT (not wrappers) startups with strong foundational teams, building impactful real life solutions.