Why the best startup founders have an Original Thesis, and how to get it.

All founders have an idea. Better founders have a vision. The best founders have a thesis. This post will teach you about the concept of ‘Original Thesis’. It will show how the three most valuable companies from Accelerace benefitted from having one. Finally, it will be apparent why the post features a chimpanzee.

There are no holes in the market.

In 1759, Adam Smith coined a term that became a pillar of economic understanding. Smith understood the following: In a free market economy, people will find ways to serve the needs of others. He called it the invisible hand.

An economy has network effects, meaning that the strength of an economy is related to the number of participants. Today, infinitely more people are participating than in the days of Adam Smith. Thus, the invisible hand is equally more forceful.

Now, the invisible hand is sweeping with unprecedented force. If people taste bubble tea in Kuala Lumpur, a few weeks later, bubble tea pops up in Copenhagen. If people get medicine delivered by bike in Berlin, next month, the same is offered in Buenos Aires.

Today, the needs of people are satisfied before you can write a business plan. I suspect this makes you slightly uncomfortable. It means; there are “no holes in the market”. 

Startup founders who think they have spotted a large unmet need are simply deluding themselves. And if there is an unmet need, it is extremely short-lived because hordes of hopeful entrepreneurs are already on it. Thus, the “opportunity” is not compelling. Not to a VC anyway. 

After having accelerated 700 startups, we see the most successful companies did not have a large market. In fact, many did not have a market at all. Instead, these founders had something else. Something much more potent. An Original Thesis. 

The difference between Vision and Thesis.

Arguably, the three most successful companies from Accelerace are Trustpilot, Templafy and Labster. None of these founders thought they had spotted a “hole in the market”. 

Instead, Peter Holten Mühlmann, founder of Trustpilot, had an Original Thesis. In 2007, he surmised that in the (near) future, the internet would enable anyone could set up a webshop. Consequently, consumers would be flooded with the availability of new online shops. Peter further speculated that because web shops would be easy to set up, lots of fraudulent shops would appear. Peter believed that consumers would find it hard to navigate between good and bad shops. Consequently, they would need Trustpilot. A tool that would warn people about bad shops. 

When Peter pitched Trustpilot, he did not claim a big market. The facts were clear. Less than 2% of commerce was done online. In fact, the market was non-existing. Today, Trustpilot is valued at 1,3 billion dollars and traded on the London stock exchange.

If you had tried to identify the “hole in the market” for Trustpilot, you would come up short. No amount of market research, customer interview, focus groups, or Garter Reports would have identified the market for Trustpilot. Why? Because at the time, there was no problem. 

Peter Holten Mühlmann understood this. His claim was that this problem would arise in the (near) future. But more importantly, he could articulate why. And as we will learn later, this defines an Original Thesis.

When Christian and Henrik co-founded Templafy during our acceleration program in 2013, they too were seeing into the future. Below is a slide from their first pitch deck.

No alt text provided for this image

(slide from the Templafy 2013 seed round pitch deck above)

The slide paints a picture of a future when corporate employees are working in cloud-based programs and on mobile devices. This was not yet a reality, but the founders surmised that this future was nigh. They knew that some of the most innovative corporates were already planning to migrate to cloud versions of office programs. They also speculated that Microsoft and Google would not offer advanced template control when that happened. How did they know this? Because the founders were leading consultants within the field of template management. 

In other words, Christian and Henrik had an Original Thesis. Their thesis was that in the (near) future corporates would migrate to cloud-based programs and mobile devices. Furthermore, the leading providers would not offer advanced template management, and that would create a need for a separate tool. In addition, they surmised that Microsoft and Google would endorse Templafy because Templafy would be an important enabler for corporates to migrate to the cloud.

Christian and Henrik turned out to be correct. But again, if you had attempted to validate the market for Templafy in 2013, you would have failed. There was no market. Nor did the founders claim so. Instead, they argued the validity of their thesis. And because it was based on Original Insight, it was an Original Thesis.

The third example is Labster. In 2012, the Founder Mads Tvillinggaard Bonde surmised that in the (near) future, STEM degrees would increase in popularity due to scientific and technology-driven innovation. This would course the problem that the current university campuses would have little laboratory space for the growing number of STEM students. 

Simultaneously, advances in computing power, game engines, GPUs would make virtual labs good enough to replace physical labs. It would take many years before his thesis would be proven correct. But it ultimately did. And in early 2021, almost ten years after his Original Thesis was conceived, Andreessen Horowitz invested in Labster.

The truth is none of these founders claimed to have spotted a “hole in the market”, or a “business opportunity”. Instead, they had an Original Thesis. And so must you. But at this point you might wonder: how do you qualify a thesis? 

Describing the future in detail

Anyone can make guesses about the future. A lot of people say that China will replace the US as the global leader. But few people can tell you why they think so. And even fewer people can state original arguments.

An Original Thesis has two requirements. It is must Original. And it must be a Thesis. 

For something to qualify as a Thesis, it must include a time perspective. Most people can agree that one day, we will live in Virtual Reality. But that is not a Thesis. That is a vision. 

A Thesis about Virtual Reality must include when it will happen. Furthermore, it must identify the drivers behind the development. A Thesis would sound more like 5G will enable high enough bandwidth to stream 8K content to VR headsets. 8K resolutions will remove the grainy effect in VR, and streaming will make the headsets light enough to be comfortable for long periods of time. Tactile suits will develop due to advances in smart materials and will make the VR experience fully immersive. At the same time, the largest gaming studios will focus on VR releases due to premium price points on VR versions. This cocktail will take VR from a fun experience, into an alternate reality. 8K resolutions will be coming within three years, 5G and smart suits within two years. 

Put differently, something is a Thesis when you can describe your vision in detail and understand the drivers that will make your vision come true.

However, if you took my (mock) thesis from above and put it into a pitch deck, it would lack Originality. It is a thesis, but it would not be Original. Why does originality matter? Because ideally, you are the only person with this thesis. Because if you are non-consensus, then you will be free of competition. 

If Charles Darwin had been one out of thousand people who had the thesis about natural evolution, the Origin of Species would be a lot less special.

More importantly, originality gives you conviction. The brutality of startup journeys tests your conviction to the fullest. During hard times, conviction makes you persevere. And conviction makes you speak with enough passion to rally your troops. 

It took more than ten years before the Original Thesis of Charles Darwin was accepted by the scientific community. Ten years of mockery. But never doubt. 

Ten years is also the time it takes most startups to reach maturity. Perhaps not with mockery. But certainly, with doubt. That unless you have an Original Thesis. I know that our most successful founders would agree.

If you want to learn more from the best startups we have worked with, apply to Accelerace and Overkill Ventures. We invest in startups.

The fear all startup founders must overcome. Beachhead Phobia.

There is a fear that has no name. But most startup founders experience it.

Perhaps, it is the fear that kills most startups. And no, it is not the fear of failure. It is a fear much more visceral. I call it Beachhead Phobia.

The Beachhead 

In our acceleration program, we teach all founders the concept of the Beachhead. It is the most important tool for finding product-market fit. 

We teach our startups to focus all their resources on a single homogeneous segment that has a desperate need for their product. The desperation usually arises from the fact the segment is new and fast-growing. Consequently, the Beachhead has not yet found a solution that adequately solves their problem. This makes the Beachhead willing to test an early product from an unknown startup.

The beachhead is borrowed from military strategy. Here, invading forces must focus all their resources on a single spot on the beach to conquer enemy territory. 

All successful startups find a Beachhead. But before they do, startups typically begin with a very broad customer definition. Then they learn that customers are different and want different things. This eventually leads startups to focus on a Beachhead. Once, startups dominate the Beachhead, they slowly broaden their focus again. 

The puzzling thing is that even though all successful startups go through this process, all founders fight it. And after having accelerated startups for a decade, I see what is going on.

The fog of startup

When launching a startup, founders feel the intoxicating promise of infinite opportunity. The sense arises from the “fog-of-startup”. We want to be the next big startup success. But we are not completely sure how to get there. The space between the current situation and the future aspiration is the fog-of-startup. 

In the fog-of-startup, we expect advantageous things will happen. Perhaps, a famous VC will flood us with cash. Or a big company will start distributing our product. Or a celebrity will endorse us. But our biggest hope is that we will immediately get flooded by customers from around the globe. 

To keep this dream alive, we communicate in the biggest and broadest terms possible. We call our product the one-stop shop. Or the platform. Or the go-to software. We claim to be born global and be blitz scaling.

Accordingly, we launch and prepare champagne bottles. But instead of servers crashing due to insane customer demand. Things get murky. Some people sign up. But not nearly the numbers we hoped. The “fog of startup” has been lifted and it hid no miracles.

At this point, many founders make a fatal mistake. We surmise that we did not communicate to enough people. Not enough people understood the brilliance of our product. So, we respond by painting an even broader picture. We might state that our product is relevant for all industries or all consumers. Surely, this will make us seem bigger and relevant to more people. 

But it does not have the intended effect. The response turns even murkier.

At this point, we get worried. Maybe we did something wrong. So, we seek advice (and funding). At some point, we encounter people who know about startups. That could be investors, other founders, and advisors. These people will tell us to “focus”. But at first, this advice seems strange. 

Because we already focus all of our time on our startup. So, the advice seems patronizing and unnecessary. Sometimes, those providing the advice manage to convey that the focus is related to customers. But since launch, we have done little else than answering requests for features and bug reports from customers.

At some point, lucky founders encounter the concept of the Beachhead. The logic is clear. We must focus on a single homogenous segment to whom we can offer a perfect product. Once, we have conquered this Beachhead, we can focus on the next adjacent segment. 

In other words, we must abandon the one-stop shop for all companies. Instead, we must offer a unique product for a specific person, in a specific type of company, with a specific problem, to be used in a specific use case.

We get it. But then we feel it. The fear that has no name. So, I dubbed it Beachhead Phobia . 

Beachhead Phobia

Successful founders realize they must focus on a Beachhead. Still, most founders hesitate. The reason is the unpleasant sensation when contemplating the change. That sensation is Beachhead Phobia.

The sensation stems from the fact that the advice seemingly conflicts with several common beliefs.

The first belief is that VCs only invest in billion-dollar markets. Consequently, many founders articulate their market in the widest possible terms. Unfortunately, these founders confuse different time perspectives. When VCs talk about billion-dollar markets, they mean markets 10 years from now. But when we advise founders to focus on a Beachhead, we mean for the next six months.

The second belief is that “thinking small” means lowering our ambition and impact. Many founders are avid readers of books with titles like: The magic of thinking big. In addition, our personalities compel us to make a “dent in the universe”. 

Going from declaring that you serve all companies everywhere! to serving a small group of specific people in specific companies, simply feels unambitious. But again, we confuse time perspectives. Anyone who succeeds in anything big, first succeeds in something small. The Beachhead is just the first step.

The third belief is not a belief. It is a feeling. And for this reason, it is the strongest cause for Beachhead Phobia. It is the psychological truth that it feels much worse to be rejected by someone specific than to be ignored by a crowd. 

During our program, we ask founders to name and list the Beachhead. If a startup claims their Beachhead is HR managers in SMEs. Then we ask the founders to make a list with names of the exact HR managers they plan to sell to. And then create a “perfect” value proposition for these people.

Creating a specific value proposition to a specific person infinitely increases the chance of a positive response. Any woman using dating apps can attest to this. And so can you (even if you are not a women using dating apps).

The problem is that contacting a specific person with a tailored message feels wildly uncomfortable. Why? Because suddenly our actions are measurable, and rejection becomes impossible to ignore. 

In a nightclub, it feels much worse to approach a specific person and be rejected, than to be ignored on the dancefloor. 

On the dancefloor, we can convince ourselves that someone attractive will soon appear. But approaching a specific person with a personalized compliment and be rejected, ruins the night. 

But the best founders overcome Beachhead Phobia. They target the Beachhead, get rejected, learn from it, adjust their value proposition, and do it again. They feel visceral pain with every invalidation of their assumptions, but they never succumb to the fear. And neither will you.

You want to learn more about Beachhead, visit Accelerace and Overkill Ventures. We accelerate and invest in startups.

Momentum. The ultimate metric for pre-seed startups.

This is not a blog entry. Instead, it is a white paper I have produced in my line of work as General Partner at Accelerace Invest. But I post it here to log advances in my thinking.


Startups are defined by growth.  

Growth is critical because startups are founded, build, and invested in on the assumption of rapid growth. Few founders, founding employees, or investors would bet on a startup with poor prospects for growth. Nor would the same people bet on a startup with prospects for slow growth. 

To pre-seed investors, the potential for rapid growth is challenging to assess. Later stage investors enjoy the benefit of historical performance on actual growth. If a startup has grown rapidly over the past three years, it is reasonable to assume that the startup will continue its rapid growth. 

But if the startup is less than 12 months old, meaningful historical data is nonexistent. Growth has not yet set in. What can pre-seed investors do? 

Despite the lack of historical data, a startup should still be growing. However, instead of looking at the historical growth, pre-seed investors must look at the Momentum. Instead of asking: how fast has the startup grown? Pre-seed investors must ask: how fast is the startup growing? Or phrased differently: how strong is the Momentum of the startup?  

The answer would allow pre-seed investors to use Momentum as an indicator of future growth. Just like later-stage investor use past performance.  

Defining Momentum 

But to answer the question: how strong is the Momentum of the startup? we must first define Momentum.  

To pre-seed investors, Momentum is complex because in most cases financial metrics such as MRR, GMV, sales are absent. Instead, pre-seed investors must evaluate the accumulation of the resources that are foundational to financial growth. To use a race car analogy. Pre-seed investors must evaluate the making of the race car. Later stage investors can evaluate the lap times of the finished race car.  

The pre-seed investors must look at the bits and pieces of the car and evaluate their combined quality to assess the prospects of the car becoming a great race car. The better the different pieces, the better the faster the race car.  

Steve Blank argues that a startup is a temporary organization searching for a scalable business model. The search process is focused on obtaining insights and attract resources. Insights and resources are the bits and tools of the race car.  

It can be assumed that startups with great insight and strong resources have a higher likelihood of success in the future. Again, the better the bits and pieces, the better the car will perform. 

Or put simply, startups that have accumulated the most insight and resources are in a better position to generate growth in the future. Consequently, the accumulation of resources could be a good indicator of future performance.  

But what are the resources that define a pre-seed startup? 

A startup accumulates resources on four key dimensions. Those are TeamTechnologyCustomer insight, and Customer commitments. We will do brief reasoning to these four dimensions below: 

The team is the driving force behind the startup. Naturally, high quality teams outperform low-quality teams. Consequently, a key dimension of Momentum is improvements to the team. The critical part of the team consists of founders and founding employees. Founders participated in the founding of the startup, while founding employees joined later. Both are critical to the startup and own shares in the entity. Often founding employees are more senior than the founders and are defined by “paying” big opportunity costs when joining the startup. (Danish examples are Jesper Lindhardt in Trustpilot, Mette Lykke in Toogoodtogo, and Thor Angelo in Mymonii). Because of the critical nature of these founders and founding employees, the evaluation of Momentum should concentrate on the expansion of this group. Consequently, a startup that manages to attract the best people should increase the chance of success. 

The Technology is the basis of the value proposition. Most startups build their product on technology, and any advancement in the technology should improve the value proposition. Consequently, a key dimension of Momentum is technology. A startup that rapidly advances its technology should increase the chance of success. 

The Customer insight is another basis of the value proposition. Customer insight is the information founders use to turn their technology into a product. Obtaining customer insight is a key activity for startups, and deeper understanding improves the value proposition. Consequently, a key dimension of Momentum is customer insight. A startup that deepens their level of insight should increase the chance of success. 

The Customer commitments are de-risking the venture. If customers commit to pilot projects, payments, and contracts, the startup obtains proof of business points that can be leveraged when raising funding and attracting team members. Consequently, a key dimension of Momentum is customer commitments. A startup that amasses customer commitments should increase the chance of success. 

Now that we understand what defines Momentum for pre-seed startups, we can almost answer the question: how strong is the Momentum of the startup? 

However, we still need to define strong. Strength describes the efficiency of the progress. A startup might accumulate resources on the TeamTechnologyCustomer insight, and Customer commitments dimensions, but the price of this accumulation matters. The price is the constraint and consists of time and money

Momentum only makes sense if it is related to the time and money that has been available to the startup.  

If a startup has spent three years and 5 million to develop an app that has 10 pilot customers, one would evaluate the startup negatively, because the Momentum is unsatisfactory in relation to the time and money spent.  

Contrast the above scenarios to a startup that has developed the same app, but only have 2 pilot customers. If this has been achieved in two weeks and 10K, the Momentum would be relatively stronger. 

The examples above illustrate the power of evaluating progress relative to the time and moneyOnly by relating the progress to the constraints, we get a picture of the Momentum.  

To stay in our race car analogy, Momentum in relation to the constraint gives us a performance indicator equivalent to km/h1 for cars. Km/h enables us to compare the efficiency of various cars. 

Progress per Time or Progress per Money are the two most important Momentum metrics and they enable us to compare the efficiency of various startups. A metric that could be highly indicative of future growth.  

Standardizing progress to understand Momentum

To measure Momentum, we must standardize the progress a startup has made. To this end, we propose to use standardized levels for each of the dimensions of progress (TeamTechnologyCustomer insight, and Customer commitment)

The proposed levels can be seen below: 

The team can be classified depending on the completeness and experience of the team and its team members. We propose the following six levels: 

Level 0 team Single, first-time founder, no industry insight. The startup is the typical “Startup Weekend” project. One person who has recently conceived a vague business idea in an industry the person does not know from the inside.  
Level 1 team Incomplete, first-time team, no industry insight. The startup has a team. Often the lead founder has convinced a friend to join the project, but they lack real startup experience, and many critical skills are not possessed within the founder team. Also, they do not know the industry from the inside.  
Level 2 team Complete, first-time team, no industry insight. The startup has a complete team meaning that all critical skills are held in the founder team, but they lack real startup experience and industry insight. 
Level 3 team Complete founder team, one person with some startup experience, and related industry insight. The startup has a complete team meaning that all critical skills are held in the founder team. One of the persons has founded or been a founding employee in a startup before. Also, one of the persons has worked in a related but not the same industry. 
Level 4 team Complete founder team, one person with some startup experience, and same industry insight. The startup has a complete team meaning that all critical skills are held in the founder team. One of the persons has founded or been a founding employee in a startup before. Also, one of the persons has worked in the same industry.  
Level 5 team Complete founder team, all persons with significant startup experience, and same industry insight. The startup has a complete team meaning that all critical skills are held in the founder team. All team members have been founders or founding employees in successful startups before. Also, one of the persons has worked in the same industry.  

The team will advance as the startup develops. Often a single founder will bring in co-founders. Also, founding employees with significant startup experience tends to join in the early stages. Any advancement from one stage to another is progress on this dimension. Efficient startups will advance through the stages using less time and money than non-efficient startups. 

The technology can be classified according to commonly understood industry taxonomy. We propose the following six defined levels of technology

Level 0 technology Idea The technology is articulated in writing and verbally. Perhaps the founders have made a slide or document describing the idea. The idea is still rather general and lacks details and specifics.  
Level 1 technology Concept The technology has been sketched out and it can be described in specifics. There are drawings, models, and roadmaps that detail the idea. Typically, the founders have a full slide deck at this point. Often, they have a video using animations and renderings. It is also the stage that is typical for crowdfunding campaigns.  
Level 2 technology Prototype The technology has been created to a level where it can be tested for proof of technology. The key components of the product exist and can be interacted with.  This is often the stage for crowdfunding campaigns. Apps are often in TestFlight mode.  
Level 3 technology MVP The technology has been packaged into a minimal product that can be used by users. It includes the key feature(s) and is complete enough for the beachhead to start gaining value. This is often the stage that select pilot users and pilot customers are testing the product. 
Level 4 technology Version 1 The technology has been shipped as the first full-fledged product that the startup expects the customers to pay full price for.  It is complete enough for the beachhead to put into production and use daily. 
Level 5 technology Version 2 The technology has had its first major upgrade. The technology has stood the test of time and use, and the second generation of the product rebuilt to meet the requests of the customers of the first version and to add new features to start venturing outside the beachhead.  

The technology will advance as the startup develops. The startup overcomes technical hurdles and weeds out bugs. In the process, the technology matures and becomes a full product. Any advancement from one stage to another is progress on this dimension. Efficient startups will advance through the stages using less time and money than non-efficient startups.  

The Customer insight can be classified using the proprietary Original Insight tool developed by Accelerace2. It is a self-assessment tool provided to founders to help them clarify how well they understand their customers. The tool quantifies the level of customer insight. We propose the following six defined levels of customer insight

Level 0 Insight 10 – 30 points. The founders have no insight and only a vague and over-simplistic idea about their customers. 
Level 1 Insight 30 – 50 points. The founders have little insight and only a vague and over-simplistic idea about their customers. 
Level 2 Insight 50 – 70 points. The founders have some insight, and but still only general ideas about their customers. 
Level 3 Insight 70 – 90 points. The founders some insight and can describe their customers in detail.  
Level 4 Insight 90 – 110 points. The founders have the same level of insight as their customers. Perhaps the founders use to hold that job position themselves. 
Level 5 Insight 110 – 130 points. The founders have deep insight and know the customers better than they know themselves. The founders can be considered expert to a level that a scientist would be an expert in their respective field. 

The level of insight will advance as the startup develops. Typically, pre-seed startups are operating in the range between level 1 to level 3, to begin with. As the startup performs more customer interviews and get feedback from pilots, they advance their level of customer insight. Any advancement from one stage to another is progress on this dimension. Efficient startups will advance through the stages using less time and money than non-efficient startups. 

The Customer commitments can be classified according to commonly understood industry taxonomy. We propose the following six defined levels of commitment levels

Level 0 commitment Interest The startup has talked to customers and can anecdotally talk about customers who have expressed interest. 
Level 1 commitment LoI The startup has a signed letter of intent from a relevant customer. For consumer startups, people have signed up on a waitlist. 
Level 2 commitment PoC The startup has a signed agreement of doing a proof of concept with customers. For consumer startups, people have signed up on a waitlist. 
Level 3 commitment Pilot The startup has a signed agreement of doing a pilot to prove an articulated business outcome for the customer. For consumer startups, people are using the beta version. 
Level 4 commitment Customers The startup has paying customer that is using the product in “production”.   
Level 5 commitment Returning customer The startup has several customers that have renewed or in other ways shown that they are planning to remain customers for a significant time. 

The level of customer commitments will advance as the startup develops. As the startup begins to prove the value of their product, the commitments increase. Any advancement from one stage to another is progress on this dimension. Efficient startups will advance through the stages using less time and money than non-efficient startups. 

Now that we have defined standardized progress, we can measure progress along these four dimensions. In other words, turning progress into two Momentum metrics. Once progress has been converted to a number, we can divide this number with the constraints. Either time or money. This gives us the ultimate metrics for pre-seed investors: Progress per Time and Progress per Money

Calculating Progress per Time (PpT) 

How much progress does a startup produce per unit of time?  

Below we will lay out the mathematical model for calculating PpT. 

Conceptual equation detail level 1 

Conceptual equation detail level 2 

The PpT model in use 

Example: Imagine a startup that during a period of 10 months has progressed one level on the team dimension. This gives the startup 1 point in our equation. On the technology dimension they have progressed three levels giving them 3 points. On the customer insight dimension, they have progressed two levels giving them 2 points. Finally, they have progressed customer commitments with four levels giving them 4 points. Mathematically the equation will be populated as follows: 

Example level 1 

Example level 2 

Example level 3 

Example level 4 

Calculating Progress per Money (PpM)  

How much progress does a startup produce per unit of money?  

Below we will lay out the mathematical model for calculating PpM. 

Conceptual equation detail level 1 

Conceptual equation detail level 2 

Conceptual equation detail level 3 

The PpM model in use 

Example: Imagine a startup that has spent 1 million DKK and progressed one level on the team dimension. This gives the startup 1 point in our equation. On the technology dimension, they have progressed three levels giving them 3 points. On the customer insight dimension, they have progressed two levels giving them 2 points. Finally, they have progressed customer commitments with four levels giving them 4 points. Mathematically the equation will be populated as follows: 

Example level 1 

Example level 2 

Example level 3 

Example level 4 

Limitations of the model 

Naturally, there are limitations to the PpT and PpM model. The most important are: 

  1. Team progress does not take the quality of the individuals into account beyond requiring the team expansion to be of “critical” people. This means that two startups can score equally many points even though one startup has attracted a Nobel prize laureate and the other a merely skilled industry professional. 
  1. The technology dimension does not take the difficulty of the science into account. This means that two startups can score equally many points even though one startup has made a scientific breakthrough and the other had mere launched their app. 
  1. The customer commitments do not take the difficulty of customers into account. This means that two startups can score equally many points even though one startup sold to SMBs and one has sold multi-year recurring enterprise contracts. 

Some of the limitations can be dealt with by comparing startups within the same category. Thus comparing, enterprise software startups to other enterprise software startups. And consumer apps to other consumer apps. Few investors have big enough portfolios to enable a sub-segmentation. But if possible, it would be advisable.  

On a more generalized notion, the model does not account for all the factors that affect the likelihood of success. From experience, we know that team dynamics, the growth of the market, timing, competition, and other factors play a significant role in the life of a startup. The model only quantifies Momentum. To most, Momentum is just one of many elements investors assess when making investment decisions.  


First, Momentum allows us to compare companies that have had different amounts of time and money available to them. In other words, the efficiency of which they create progress. This matters greatly because as pre-seed investors we are investing small tickets and the efficiency of the companies is critical. Also, in the absence of historical financial metrics, Momentum is perhaps the most objective metric for progress at the pre-seed stage and can arguably be a reliable indicator for the future. Having Momentum available, a pre-seed investor can use these metrics to aid them in the decision making when evaluating various investment opportunities.  

Second, the model provides input to the classic problem of making follow on investment decisions. Investors are often victims of the sunk cost fallacy. Often, the urge to support portfolio companies that are in urgent need of money to survive is strong. While this can be the right decision, often it is not. Momentum will provide data about how efficiently the portfolio company is spending the money and time provided with the investment. Startups with high Momentum scores suggest that the money are well spent, and that further investments are advisable.    

About the authors 

Peter Torstensen and David Ventzel are partners at Accelerace. Accelerace is a startup accelerator and pre-seed investor placed in Copenhagen Denmark. Accelerace was founded in 2009 and have accelerated more than 700 startups to date. 

The authors have been aided by their colleagues Claus Kristensen and Mads Løntoft in the conceptual development of the framework.  


If you are interested in the model and collaborating further development of the framework, then contact the authors on David Ventzel: dav@accelerace.io or Peter Torstensen: pto@accelerace.io 

True startup founders have more activities than plans

On January 4, 2005, the BBC aired a strange program that would impact the dreams and aspirations of our generation.

The opening scene features four men and a woman sitting in an empty warehouse. They wear suits and serious looks. They are meant to intimidate. Not like gangsters. But like ruthless titans of industry ready to place judgment upon the business ideas of lesser men and women.

Dragons Den aired during the startup depression following the dot-com crash. But the timing proofed impeccably. Just six months earlier a little-known social network called Facebook had launched. Just two months later Y-combinator ran their first batch. The next year Spotify and Twitter were founded.

The second wave of internet startups did what dot-com could not. But more importantly, they created a new ideal. That of the tech-savvy startup founder.

The pervasive idealization of the startup founder has created a startup tsunami of un-imaginary proportions. As a startup accelerator, we are frontline to feel the effects.

We see more startups than ever. But do we also see more startup founders than ever?

In the early days of Accelerace, many of the founders that came to us needed help in describing what they did. They had gotten an idea and had started executing it. But they lacked the vocabulary and structure to communicate their business to other people. Namely investors. One such person was Peter Holten Mühlmann from Trustpilot. He had built a website where people wrote reviews of webshops. But he needed help to formulate the logic of his (what seemed to many at the time) questionable business.

Back then, industry terminology such as customer discovery, hypothesis testing, conversion rates, CAC to LTV ratio, virality, monetization, etc. was still in the making. Accelerators played a role in disseminating the latest theories and vocabulary to these people with activities they were unable to describe.

But something else was at play. Before the startup founder was idealized, the people who did startups were the people who could not help it. They had conceived of an idea that hunted them to the extent they absolutely had to pursue it. Regardless of warnings from friends and family.

So, they did. And at some point, they needed investors. But the investors asked them questions they struggled to answer. These were the people who came to Accelerace.

These people still come to us. But slowly, another type of people started showing up. And in increasing numbers. These people are the opposite. They have near perfect descriptions of what they want to do. But they are short in activities. And they come to us to get help realizing their plans.

The problem is that startup accelerators are not good at helping such people. Placing such a team in an accelerator is frustrating because these founders enjoy talking about their plans. And because the mentors are good at exactly that, the entire program is spent on enthusiastically making more plans, while nothing real happens.

I have come to the opinion that true startup founders can be spotted by having more activities than plans. And if you are one, you would benefit tremendously from being in a quality acceleration program.

Check out Accelerace and Overkill Ventures. We help pre-seed startups obtain product-market-fit.

My 2021 Investment thesis

The obvious focus for investing in the coming year is anything that supports living and working at home. I never enjoyed investing in the obvious.

I view the world through the lenses of technology accessibility. Once the technology becomes accessible enough for founders to take advantage of, startups are created.

Luckily, running startup accelerators means you get a firsthand glimpse into exactly that. What are the nascent technologies founders are playing around with? And what can they do with it?

Reflecting on the past year, I have seen two sparks that are worth watching in 2021. 

Blockchain pitches that are not about coins. 

Blockchain has long been a theme for me. However, every year disappoints. The people who insisted on paying with bitcoins have vanished. And the first widespread consumer adopted blockchain app remains elusive.

Still, this year was the first time the pitch decks did not centralize around a token and used complicated blockchain language. Instead, the focus was on the customer’s needs. This development has been long awaited. I see it as a strong indicator that blockchain is maturing as an infrastructure. Consequently, we should see a lot more startups leveraging blockchain technology in 2021. 

Protein extraction from low impact plants.

In 2019, researchers from DTU in Copenhagen extracted protein from plain grass. Protein extraction from plants is nothing new. However, the plant matter. The most common plant-based protein is soya. The problem with soya is its relatively large environmental impact.  

But grass is not growing where protein is needed the most. But the extraction technology pioneered by the researchers at DTU could be applied for other types of plants. Among them the cheap and plentiful casava. This year, we saw just such a startup in our program. This could be a sign of a tsunami of protein extraction from local plants. The benefits are potentially both in terms of costs and the environment. And cheap and nutritious protein could underpin a new generation of functional foods. Perhaps already in 2021.

Happy new year, everyone.

Why Founding Employees are the most overlooked ingredient for startup success

In 2007, a young student from Aarhus Denmark embarked on a doomed mission. But a couple of years later, fate would change the odds against him. Today, he is among the most celebrated Danish founders of our generation.

Peter Holten Mühlmann had noticed a problem. The internet lowered the barrier for commerce. New webshops were constantly popping up. But fraud and bad service followed.

Peter envisioned a software that could help shoppers navigate the mushrooming e-commerce landscape. Like an antivirus program warning you against shops that could not be trusted. He called it Trustpilot.

However, the software needed data. And the most reliable data would be experiences from shoppers. In other words, reviews.

To collect data about webshops, Peter set up a website where people could report bad shopping experiences. Surprisingly, people did. The site found a beachhead among market mavens. The sort of people who find meaning in passing warnings and endorsements to other people. 

Peter started realizing that the reviews might be the product. Consequently, he abandoned the “antivirus” approach and turned Trustpilot into a destination for consumer reviews.

However, a problem arose. How would he make money on this website? Advertising seemed the logical approach, but Trustpilot was not a destination people hung out. Advertising would not be a good way to capitalize, he surmised.

And then it dawned on him. The businesses being reviewed were the customers. Good reviews were gold, and bad reviews were poison. Using good reviews in marketing was worth money. So was the ability to respond to bad reviews.

Trustpilot became a tool to manage reviews. However, this created a new problem for Peter. One that seemingly doomed his startup.

Peter had no experience in selling software to small businesses. Nor did his CTO. The task was daunting, and thousands of startups had shipwrecked on this challenge. 

At the time, software was seldomly sold to small businesses. Only enterprises could afford the high prices needed to cover expensive salespeople in suits doing presentations. 

The pivot meant that the founder team was utterly unqualified to execute the business model. In truth, this is quite common. Founders rarely limit their ideas to their current abilities.

Nonetheless, competence matters. Investors call it founder-market-fit. Investors evaluate how well the founder teams’ current competencies fit the challenges dictated by the market the startup is going after. Founder-market-fit defines whether the founders master the critical disciplines required to win. 

Critical Disciplines. How to win Tour de France

Cycling is a sport. And cyclists are athletes. Consequently, one would imagine that the best athlete would win the most prestigious races. Intriguingly, things are not that simple. 

The world championships in cycling is held every year. And the rainbow-striped winner jersey is a childhood dream for all cyclists. Still, the title of world champion is rivaled by another triumph. Winning Tour De France.

One would think that the same athlete would be a likely winner of both Tour de France and the World Championship. But as many know, that is seldom the case. In fact, this has not happened in more than 30 years.

The thing is that cycling includes different types of races. The World Championship is a one-day event. Tour de France lasts 23 days. Also, the route of the World Championship avoids the highest mountains. Tour de France includes snow-filled alpine peaks. Furthermore, Tour de France has a time trial.

The differences between the two races require riders to master different disciplines. In other words, the critical disciplines of winning the World Championships and Tour de France are different.

Throughout the history of Tour de France, the winners have been marked by mastering both time trials and mountain climbing. In contrast, world champions have been marked by break-away and sprinting abilities. 

The point is that cycling is a sport, but the different races require different critical disciplines for winning them. And trying to win Tour de France without mastering time trials and mountain climbing is a doomed mission. Just like trying to win the market for review management software without mastering small business sales. 

The importance of the Founding Employee

When Peter Holten Mühlmann pivoted to selling to small businesses, he needed someone with a rare competence. Then fate intervened. In 2010, Peter was introduced to someone who could give Trustpilot a winning chance.

Jesper Lindhardt was talented and successful. He had risen through the ranks of Navision, Realtime, SAP, Omniture, and Adobe. Most importantly, his focus was on small business sales. In other words, Jesper had spent 15 years honing the exact critical discipline needed by Trustpilot.

At this point, fate had played its part. Instead, true founder skill took center stage. Somehow, Peter convinced Jesper to abandon his meteoric career, leave Adobe, and join a completely unknown startup to become a founding employee.

Founding employees are probably the most underrated ingredient for startup success. A look at the most successful Danish startups founded by inexperienced founder teams illuminates the importance of this rare breed. 

The founders of Coinify, OrderYoYo, Templafy, TooGoodtoGo, and Planday all attracted one or more founding employees who brought their experience and competence to the startup during infancy. These people mastered the critical disciplines of the business model and gave the startup a winning chance.

After having spent almost ten years as a startup investor, I am continuously puzzled by startup teams that do not master the critical disciplines of their business model. Luckily, certain doom can be avoided. Because true founder skill is the ability to attract resources. And no resource is more important than the founding employee. If you are lucky to meet Peter Holten Mühlmann, he tells you the same.

Why we chop onions with knives and why it matters to startup founders

Consider the problem of common onions. Most people face these bulbs daily because common onions are part of most dishes. The problem is that they are tricky to cut into the neat small squares made by chefs. It requires multiple difficult cuts on several dimensions of the onion. And the risk of getting hurt is significant. But perhaps the worst part of cutting onions is the gas they release. It hurts and makes you cry.

For most people, cutting a single onion requires between 2 – 5 minutes and causes physical pain. Not to mention the embarrassment of crying in front of children.

But there is a better way. Imagine a machine that can cut an onion in 10 seconds with absolutely zero physical irritation. That would be a game-changer. And it is called a blender.

The blender was invented in 1922. While the blender chops onions remarkably faster than the knife skills of most people allow, few people use a blender for chopping onions. And the reason is obvious. Rarely do one just chop onions.

The efficiency of processes
Onions are an essential part of most dishes. But they are a part, only. The thing is that cooking is a process. Put differently, cooking requires multiple steps. And the efficiency of a process is a function of the smoothness of the transitions between the various steps in the process. Some say that a good process flow.

Many aspiring startup founders are equipped with some technology and on the lookout for problems to solve. Sometimes, these founders identify some inefficiency that seems ripe for fixing. Something that their technology could solve. But if the founders are outsiders, they risk identifying a problem that only exists in isolation. Like someone with little experience in cooking looking at people chopping onions

These founders build a product to solve the problem. But they build the equivalent of an onion chopping machine. VCs call it: a feature not a product.
The problem is that the product does not solve the problem. Because the problem is to cook the dish. And the onion is just a part of this process. Even though a blender improves the step of chopping onions, it introduces friction in between the steps.

Instead of smoothly going from cutting meat and smashing garlic into onion chopping, one must open the cupboard, remove the toaster that is in the way, take out the blender, find the blender lid, plug it into the power socket, chop the onions, clean the blender, put it back into the cupboard behind the toaster. The friction is simply too great to justify the saved tears and extra knife movements.

A great example of such a product came from Accelerace alumni startup Pixelz. Initially, the company was called ‘Remove the Background’. As the name abundantly indicated, the company offered background removal from product photos.

But the founders soon realized that webshops do much more than just remove the background. Surely, that was one of the more unpleasant tasks. But it was only a part of a process of general photo editing. The process also includes retouching, color matching, depth correction, and collage creation.

Sending the photos to Pixelz for just background removal and then waiting for them to come back to continue the editing was like sending onions to chopping mid cooking and waiting for them to come back before one can resume the dish making.

Luckily, the founders were quick at realizing their lacking product-market-fit and adjusted their product to solve the entire problem. That of photo editing. Consequently, they renamed to Pixelz and currently serves the world’s biggest apparel brands.

But how do founders avoid making an onion chopper?
Founders must understand how their customers do their work today. And not just on a conceptual basis. They must understand the minutest detail of their workflow. That includes what tools they use, how long time they spend at the various steps, and who else is involved. Furthermore, they must understand how the customer perceives each step. Which parts do they enjoy and what parts do they dislike. Only by understanding the details of the workflow, can founders define the endpoints of the process and design a product that offers a radically more enjoyable process.

Conclusions made
• Onion chopping is unformattable.
• Onion chopping is only part of the process of creating a dish.
• The efficiency of a process is a function of the smoothness of the transitions between each step.
• The use of a blender to chop onions introduces friction and delay in the process.
• Successful founders understand the processes of their customers and design products that improve the process and not just a step in the process.

If you want to learn more about how to do startups right, then join Accelerace or Overkill Ventures where I serve as General Partner .

Why time is not money, and how founders should spend their time

Some say time is money. It is not. Money is time. And when startup founders run out of money, they run out of time. 

Time is Opportunity. And startups are defined by Opportunity. When Opportunity disappears, so does the startup. But every day the startup lives, Opportunity lives on.

But what exactly is Opportunity?

Opportunity is the freedom to perform actions of your choosing. Some actions will make great use of the time. And some actions will be a waste of the same time. 

Imagine being given chips to a casino valid for one night. One could spend the night posing in the bathroom mirror. Or one could spend the night playing the blackjack table. Or perhaps seducing the waiter.

The chips provide Opportunity. But the value of Opportunity is defined by the actions of the player. 

Great startup founders understand the value of Opportunity. And when startups fail, it is often because the founders wasted Opportunity. Like posing in the bathroom mirror rather than laying down chips on the blackjack table.

In the context of early-stage startups, one use of time is more valuable than anything else. To obtain original insight. Insight about future customers, the psychological makeup of their users, and their future needs.

When Templafy entered Accelerace in 2013, the founders had spent the past year obtaining original insight. And it was this insight that led to the product-market-fit that made them the global leader within template management SaaS. 

The founders knew that enterprises were considering switching from desktop-based Microsoft office to cloud-based versions such as Google Docs and MS 365. But at a more granular level, they knew that this change would leave the brand manager with no chance of controlling templates across the organization. At even further insightfulness, they understood that brand managers hate to police their colleagues about the correct use of templates. In effect, the founders had obtained insight into the very psychological makeup of their customers. 

At the same time, the Templafy founders had refrained from other things. When they entered Accelerace, they did not have a pitch deck. They had no incorporated entity. They had no brand t-shirts. They had not been to a single startup conference. They had no website. Eventually, they did turn their attention to these things. But they understood how to spend their time.

When startup founders allocate time, many look to successful startups for clues. And today many new SaaS startups would look at Templafy. But that would be a mistake. Today, Templafy knows its customers to the minutest and most intimate degree. Put differently, they already have original insight. This means that they can focus on other and more visible things. Such as experimenting with pricing models, doing content marketing, and employee branding. 

Mistakenly, many founders think such action courses success. They do not. Such actions amplify success. Instead, success is coursed by having original insight and then acting on it. But obtaining original insight requires the founders to focus their time on this activity.

How? By living with your customer. To see what their day is like. To understand which pages that open upon the start of their browser. To understand what the agenda in internal meetings are like. Understand what decision they can make, and which require approval. To understand their fears and their pride. Joys and sorrows. To understand what will happen to them in two, five, and seven years. And then understand how you can play a role in shaping this future.

Spend your time wisely, it may cost you Life.

If you want mentorship in spending your time right, then apply to our acceleration programs Accelerace and Overkill.

The true reason startups fail, and how to avoid it

In 2006, two different startups set sail to change ticketing for events. One became a global leader. The other failed miserably. I know because I was the founder of one of them.

In the early years, the differences between the startups were marginal. Both saw an opportunity to provide an alternative to Ticketmaster. Ticketmaster had no self-service platform. The internet empowered events to manage their own ticket sales. Both startups recognized this opportunity.

However, there was a small difference. And it turned out to be the difference between a billion-dollar market cap and folding after two years.

My startup went after venues with lots of ticket sales. Like concert halls, arenas, and nightclubs. We got lots of meetings and even some pilots. Everyone expressed interest.

The other startup went after customers that did not sell many tickets. Those were meetup organizers. A new type of event enabled by social media.

We made fun of the other startup at our board meetings. They had no market. But the joke was on me. Because my startup failed. And the other startup was Eventbrite.

The difference between interest and desperation

We pitched venues. They were interested in seeing what we had to offer.

However, venues used Ticketmaster. Ticketmaster did all the work for them, and sometimes even guaranteed a minimum ticket sale. We did none of that.

Still, that did not prevent the venues from meeting with us. Even being polite and saying that they might try it.

The truth is that customers have a myriad of reasons that deter them from buying something. They have no need. They have a good alternative. They have existing relations with a competitor. They can only buy within certain periods. They have bad experiences with similar products. They only feel safe buying something proven. The list is endless.

Because there are so many reasons not to buy something, the customer must have a very strong need to buy. Something close to desperation. Clearly, venues were not desperate for another ticketing solution.

Eventbrite did not go after venues. Instead, they talked to meetups. None had cared to serve meetups before. Consequently, they had no alternative, no existing vendor relations. Nor high requirements. But they were desperate. At least enough to give Eventbrite a shot.

The true reason startups fail

When startups fail, it is simply because they spend their entire runway speaking to customers who will never buy the product. That is it.

Instead, failing startups chase after the interested people that always surrounds anything new. And try to convert ‘customers who will never buy’ by improving marketing, sales tactics, and pricing. But none of that helps because the customer will never buy.

Signs that customers are merely ‘interested’ is that they are already served by competition or alternatives. At meetings they ask about you, your vision, and your product roadmap.

Inversely, startups succeed when they identify customers who are desperate. Because only desperate people will buy a first version product from a new unknown company.

Signs that customers are desperate are if they have hacked together their own solutions, or using ill-fitted tools meant for a different purpose. At meetings, they ask how your product can be implemented, when they can get it, and how they can get support.

At Accelerace and Overkill Ventures we call this desperate group the Beachhead. It is a small group of customers who always serve as the earliest adopter and reference group for later customers.

Today, Eventbrite serves more than meetups. But in the beginning, this tiny desperate group was their Beachhead. My startups chased venues for two years that would never buy.

We confused interest with desperation. And so, do many startups founders. Consequently, most startups fail. There you have it. That is the true reason startups fail.

Why the world of startups is the wickedest place of them all

Covid-19 is taking its toll on many startups. Many founders were already struggling to get their businesses off the ground before the virus hit. To them a natural catastrophe just hit. Opinion leaders are busy being optimistic and “glass half full”. But that does not acknowledge the devastating and brutal reality for the individual founders affected. Let alone, what it can feel like emotionally. Overcoming some of the darkest periods of my own startup journey, I wrote this poem (if it can be called that). I am not sure it helps startups founders in their suffering, but at least it can help portrait how founders can feel like.

Two worlds exist. One of causality and one of probability. In the world of causality, action creates reaction. In the world of probability, action creates opportunity.

The world of causality is kind. Like a garden. The world of probability is wicked. Like an ocean.

The world of causality rewards us for effort, and never fails to do so. It is the world we were taught as kids. Practice, and you will learn, our guardians proclaimed. And so, we did.

We learned to walk, ride a bike, and read through pure effort, and the kind laws of causality rewarded us. Over time, we built self-confidence through the law of causality. We learned that if we wanted, we could make it happen.

But beyond the borders of our familiar garden of causality, lies the wicked sea of probability. It is the world our parents did not dare to mention. For they too feared it.

The sea of probability is a place where nothing is certain. Throw a rock in water, and sometimes it sinks, sometimes it floats. The rules are in constant flux, and the motions unpredictable as the waves.

The world of probability does not reward effort. Instead, it rewards resilience. Resilience is different from effort because resilience assumes defeat. Effort does not.

Resilience is the capacity to sustain unjust defeat. To throw a line into the sea a thousand times and not catching anything. Seeing the person next to you catch something on their first attempt. And get up the next day to do a thousand throws with unchanged enthusiasm.

The world of startups is that place. I know because I was floating in the middle of it.

The unfairness and uncertainty of the wickedness depleted the self-confidence I once had. And I found myself naked in the darkness of the sea screaming for meaning. But my cry went unheard, and the pain of inexplicable abandonment consumed me.

At that moment, I resurrected. I realized that my suffering stemmed from desperately holding on to the kindness of the garden. I had to embrace the wickedness. To make it my world and rebuild myself as a master of its seas.