Effectively and concisely communicating what your startup does is a surprisingly difficult problem. We struggled with it when we started our first company and see founders face the same challenges when applying to Iterative.
It’s challenging in large part because you’re not sure what the other person is looking for, whether it’s explaining your startup to users, investors or prospective hires.
To make it easier, we thought it’d be helpful to go through some of the questions in our application form and explain why we ask them and what we’re looking for.
There are 26 questions in the form - we break down 13 of them below as they require more thought and context to answer.
Company Description. Briefly describe your company. Should be 50 words or fewer.
We ask this question so we can quickly understand what the company does at a glance.
It’s also an indication of how deeply the founder has thought about what their company does. We find that if it’s very broad or full of jargon, they probably haven’t thought that deeply about what they’re doing. On the flip side, descriptions that are concise and specific tend to indicate that founders have thought deeply about what they’re doing.
Tip: If you find yourself with broad answers that are full of jargon, I’d encourage you to try and explain your company in as plainly as possible. Often the best explanations are those that anyone can understand regardless of what field they work in.
What need or opportunity are you addressing? Describe the problem your company solves in 200 words or fewer.
To Iterative, the problem that you’re trying to solve is the most important thing about your startup. It dictates your market size, what your product does, whether you’re the right people to work on it, etc.
We’re looking for startups solving important problems (see this post). The most important problems are those that many people have and that each person feels acutely. They are the problems that if solved have the largest impact and as a result, have the largest market size.
Most startups describe their problem by talking about their solution or an outcome they want. Neither of these is actually a problem. For example, if you say you want to “help SMEs in Indonesia” — that’s not actually a problem. That’s a thing you want to have happen, not a problem. Instead, you want to think about things like, are they losing out on sales because they can’t take online orders? Are they unable to pay taxes because they don’t have good enough accounting records of their transactions?
Tip: If you’re having a hard time writing a concise and simple answer, try to explain it to someone who doesn’t work in tech. Parents are often good people to practice with. Can you get your parents to understand the problem you’re solving?
How have you validated this need? Include any concrete user studies that give you confidence this problem is large and real.
We’re looking for evidence that the problem you’re working on is important and that people want what you’re building.
The most valuable evidence is lots of people using your product and you’re growing quickly. If you don’t have that, it’s still valuable to have a small number of people who use your product or have signed up for it. The least valuable evidence is if you’ve done surveys. We just don’t believe that people actually behave like they say they will in surveys.
Tip: If you have no evidence, I highly recommend you get some. See this on how to validate your idea. You can typically get some evidence in under a week for virtually no cost.
How big is this problem? Describe how your company becomes a $100M revenue business.
This is the market size question just phrased differently. We phrase it differently because we think of the market as a by-product of the problem. So really, how big the market for your product is, is a question of how big of a problem it is (see this for more details).
There are lots of ways to answer this question (the most common is calculating TAM either bottoms up or top down) but typically you’re making one of the following cases.
- Large Existing Market – There is a large existing market you can win
- Small, High Growth Market – There is a market that is going to grow significantly over the next few years and you will be poised to capture most of it
You can still do the classic TAM thing but remember to make the case for one of the above.
What’s your unique insight, approach or advantage? Describe what you know about the problem, solution or target audience that very few other people know or believe.
Personally, this is my favourite part of applications to read. Unfortunately, it’s also part of the application with the consistently weakest answers.
We ask this question to see what the founders know or believe that we don’t know or believe. We believe that all startups represent a contrarian view (often many). A startup’s success depends on whether that contrarian view is correct and the magnitude of the success is proportional to how contrarian the view is. If you know or believe something fundamental about the world that nobody else does and you’re right, that’s a very big deal.
As an example, the unique insight or approach that Uber had was (1) people are willing to get into cars with strangers, (2) by allowing strangers to drive cars, there would be 100x more people available to give rides which would make it significantly more convenient for people looking for rides and (3) the fact that phones now had GPS would make all of this possible.
What do your users do now without your product? Describe how what they do now is better or worse than what you’re doing - it could be another startup, spreadsheets, or even manual processes.
This is our version of the competition question. We ask it in this way because, for a lot of startups, their competition is not another startup but a manual process or a spreadsheet. Just because you make a product for something, it doesn’t necessarily mean that everyone will stop using a spreadsheet and use your product. There are always switching costs. People get used to doing something a certain way and they won’t switch unless the new way is 10x better. Knowing what people do now without your product helps us figure that out.
If you’re building a tool that helps offline SMEs track transactions, explain what the business owner does after each transaction. Do they have a physical transaction notebook that they write in after each transaction? Do they try and remember transactions and write them in the notebook when they can?
Like with all answers, explain this as simply and concisely as possible. In almost all cases, it’s not that complicated.
How far along are you? This typically includes metrics like the number of users, monthly growth rate, revenue, etc.
Startups face different problems at different stages. We find knowing a startup's metrics gives us a better indication of their stage than the amount fundraised. It also gives us a clearer sense of the type of problems the startup is facing and we can start thinking about how we can help them.
You don’t have to impress us with all the metrics you track. Pick the 3 to 5 metrics you think are most important to your business and give us those numbers on a monthly or weekly basis for the last few periods. It’s important that you give us more than one period because we care about trajectory more than the current level (see this).
Note: This is similar to the validation question but we’re explicitly asking for metrics.
How long have you been working on this and what have you learned about this need? Describe what you have learned about the problem, the people who have that problem and your solution since starting to work on your startup. The more non-intuitive the better.
We ask this question to gauge how good are the founders at learning from their users.
A strong indicator of whether a startup is going to be successful is how quickly can the founders learn about their users and do they learn things that are non-obvious. If they can do both of those things, they’re probably going to be in good shape. On the flip side, if you’ve been working on a problem for a while (more than a year) and you know as much about the problem as I do (as someone who hasn’t worked on the problem) then you’re probably in trouble.
Most of the high-quality answers to this question have to do with users. It’s often an observation about the type of people who have this problem, a non-obvious insight into how they want it to be solved or how solving it in some new way will yield a 10x better solution.
Note: This is not a question about what you’ve learned about startups. It’s about the problem and the users you’re building for. A lot of people end up sharing about their startup experience which is nice but not what the question is about.
If you have co-founders, what is something non-work related you all enjoy doing together? This could be anything (activities, interests, etc.). Include how often you do it together.
Although we invest in the startup, often the startup is basically just the founders. This question gives us some colour on the type of people we’re investing in. There’s no right answer. Just be honest and have some fun with it.
For each of your cofounders, please provide their name, email, title, commitment (full-time/ part-time) and public profiles (LinkedIn) and how much of the company they own. If you haven’t figured out how much of the company each of you owns, we’d highly recommend having that conversation as soon as possible.
This is mainly so we can look at who the co-founders are and how much each person owns. We do prefer to see a relatively even split between co-founders.
Have you raised any money previously? How much money have you raised in USD? Put $0 if you have not raised any money previously.
This is just so we’re aware. It doesn’t have a significant impact on our admissions process. We’ve invested in companies that haven’t raised any money and those that have raised over a million.
If you're raising money now, how much are you looking for? You don't have to be raising right now to apply to Iterative. If you're planning on raising money in the next 6 months, let us know how much you'd be looking for. All figures in USD, please.
This is just so we’re aware. It doesn’t have a significant impact on our admissions process.
Is there anything else we should know about the company? This includes if you have an existing term sheet, abnormal structure, previous material noncompetes or intellectual property agreements, code-base not owned by the founders, pending lawsuits, cofounders that have left, etc.
There’s a lot that can happen with startups. This is a catch-all question so founders can tell us early if there are any special circumstances that we should be aware of. To my knowledge, there hasn’t been anything anyone has put that caused us to reject their application out of hand. We have however rejected applications because they didn’t disclose something and we found out later. My advice here is, to be honest and transparent.
We hope this is helpful, makes applying to Iterative easier and increases your chances of receiving an investment from us. If you're a founder and working on something, apply here.