Extended seed stages for funding are forcing founders to prove that the “dogs will eat the dog food.”

Welcome to the age of applied technology. This shift from developed technology is teaching us more than we ever could have imagined and even more than that, it is changing the way start-ups…well… start up.

Andrew Goldner, Founder and Managing Director of GrowthX, a seed-stage MicroVC fund and leading market development accelerator, believes that this shift is key to getting to the bottom of what it takes to get successfully funded in this new marketplace.

Technology Has Become Cheaper and Easier

Realizing your talent, what you can bring to the table, and how you intend to do that is no longer enough to get funding. “The actual availability of talent is so much more plentiful than it has been historically, that to differentiate yourself, you are expected to have gotten much further with much less,” according to Goldner. Whereas in the past seed rounds serve as the growth platform many startups have jumped off of, now these seed rounds are being used for testing of market proof and market fit instead. As John Livesay, host of The Successful Pitch Podcast succinctly sums it up, “Investors need to see the dogs eating the dog food.”

CREDIT: Courtesy of GrowthX

So What Does An Entrepreneur Need to Get Funding?

Venture capital, no matter what the stage, is nothing other than stack ranking. Your competition is not just the few you highlighted on your pitch deck. Every single company in the world seeking out capital and every potential start-up is placed in priority order based on a variety of factors, called stack ranking. In this age of applied technology, in addition to market proof, traction comes down to two very important things – traction milestones and product and team readiness.

Traction Milestones

Traction milestones are much different than they were five years ago. Understanding this before you attempt to raise seed money is imperative to your success. “If you’re a welterweight, you wouldn’t want to step into the ring with a heavyweight. So, if you’re thinking about raising capital, you need to be aware of the current traction milestones for each series to avoid accidentally stack ranking yourself right out of your chances for funding,” says Goldner.

Product and Team Readiness

The realities of product market readiness is something Silicon Valley and over-hyped tech start-ups seem to just be realizing, but something the consumer product world has known for quite some time, nothing happens until somebody sells something. No real funding will happen until somebody proves they can sell something. Proof market fit and readiness is required because, as I mentioned above, the talent and options are plentiful for investors so before you will ever see a penny, you will have to prove your product. Shifting the Product to Market fit into the earlier stages of seed money will require every start-up to bootstrap better.

The adolescence age of Silicon Valley seems to have grown into adulthood and the businesses, tech or not, are becoming smarter by the second. These changes mean you’ll have to grow a lot more with a lot less and make it look twice as good.

Read the original INC article published on June 22, 2016