Show4me’s CEO Karen Chiftalaryan uses his own hexagon theory of fundraising to evaluate all processes in Show4me. Karen came up with the theory based on his own experience as an investment banker. Let’s take a closer look at the core principles of the theory.
Before we get into the theory itself, let’s note the single most important prerequisite to using the theory right and getting positive results with its help:
When evaluating your startup, it’s important to be honest with yourself.
It’s easy to get seduced by the brilliance of one or two aspects of your startup, like how unusual the approach you are employing is or how elegant the solution to the users’ problem. But it’s crucial to be able to bring yourself to consider all sides of the hexagon in order to be able to estimate the whole picture and see the weaknesses of your project along with its strengths.
The difference between understanding how to use the Hexagon theory and not is simple. Say, you look at one side of the hexagon, then another one. So far, your startup looks good and worthy of investors’ time and money. But if you stop here and fail to consider the rest of the hexagon, your project might be doomed to fail from the start and you don’t even know it.
Understand that you may very well not have enough knowledge and/or insight to be able to pick all the sides of the hexagon for your company specifically. Ask experts or other outside parties to help you select the key areas for evaluation of your business and make them your sides of the hexagon. Add both general business aspects and industry-specific for your niche market.
Sides of the hexagon
Legal aspects of a project can make or break it. Sometimes an idea behind your startup is great, the team and execution are impeccable, but all the permits, taxes, and fees might eat up way too much time, resources and money for the project to even be worth it at all. Regulatory bodies or legal restrictions can create insurmountable obstacles for your company to enter the market.
Considering all the legal challenges your startup might face is an important chunk of work you need to do to ensure your dream project is reality-proof.
Study the market to find out if there is space for another player – is there enough volume on the market for your startup or has the niche already been filled?
Sure, you can sell a bit of product or service by creating hype or having an excellent sales strategy, but ask yourself – do you want to make fast money with no perspective or are you ready to work longer and harder to get more in the end and leave a legacy.
The third side of the hexagon is competition. One of the worst mistakes you can make when building your startup is underestimating your competitors.
Learn them, study their business model, know exactly what they are offering to what part of the target audience, and how you can be better. Unless you know exactly what it is that you are offering that’s better than the competition, you are going to have a hard time both building your business and securing investors’ support.
Any market is driven by innovation. Your project needs to offer some kind of innovation to help push the market further. So consider this side of the hexagon before moving with your project to potential investors.
So many creative ideas and solutions have been done before one way or the other that you need to study the market really diligently to be sure what you are offering really is innovative.
The next side of the hexagon is value. It’s not that hard to come up with a cool, easily hypable idea of a startup, but you are only going to succeed if you are bringing real value to your end-users. Make sure that’s what you are doing.
Bring the real value to your users and you will succeed.
All venture capital companies think of their exit at the very start. This is how investors think, which is why you need to have a ready exit strategy developed at the very start of your path. You might not end up where you set off to go, but having a roadmap is still an important part of any project to help guide it.
And don’t forget – you are the first investor in your project. You are spending your time, effort and life creating it, so be fair and tireless in evaluating it.
Hexagon theory & Show4me
Show4me management uses his hexagon theory in their everyday planning and decision-making. Company CEO and Co-founder Karen Chiftalaryan shares:
We, at Show4me, are using the hexagon in all directions – marketing, management, development, market entrance, everything.
Remember that all sides of the hexagon listed above are for reference only – you’ll have to develop your own hexagon for your startup and study all aspects of your business activity to be able to come up with the six top areas where you’ll start your evaluation journey.
This does not mean though that you stop there. Each major area will lead you to smaller aspects of your startup and obstacles or challenges it might face on the market or within itself as an organization. You’ll have to pursue all the leads to get a complete picture.