Where Do You Get Your Validation From? A Reflection for Every Entrepreneur
Have you recently paused to ask, "Why am I doing this?" As investors at Crescent Ridge, this isn't just a casual question; it's central to our philosophy. We spend a considerable amount of time exploring the motivations behind the entrepreneurs we consider for investment. This part of the diligence is crucial, as it directly correlates with a company’s chances for success, resilience amid challenges, and the ability to foster a strong organizational culture.
Consider two extremes: One entrepreneur might be all about status, fame, and money, willing to bulldoze through anything to achieve these goals. On the other end, picture a yogi who values inner peace, personal alignment and is unattached to the capitalist society's definition of success. At Crescent Ridge, we appreciate entrepreneurs who are in the middle of the spectrum but lean a bit more towards the yogi side. They possess a strong sense of purpose, an inner compass, and also seek the right kind of external validation—all without losing sight of profitability.
What’s the Right Type of External Validation in Our View?
Getting featured in TechCrunch or Forbes for a funding round with a very high valuation but limited "real enterprise value"— is the type of "hype" that in our view, is the "wrong" type of external validation that entrepreneurs should strive for. On the other hand, the right type of external validation might look like the pride you feel when a customer sends a heartfelt thank-you note for solving their problem or when your company finally hits profitable growth. The magic formula for success lies in recognizing which external affirmations are worthwhile and blending them with a strong sense of self-worth.
The Importance of Discerning the Right Type of Validation for Underrepresented Founders
We often work with entrepreneurs who, due to very deep, complex societal issues and biases, face greater challenges when seeking venture capital. For these founders, the need to discern the right type of validation is particularly important. We remind them that, as the saying goes, "Don't sell sand in the desert." If traditional VCs are not recognizing your value, focus instead on indicators of success that come directly from your business—like rising sales or satisfied customers. While it's disheartening that less than 2% of VC funding goes to women, it's worth asking: Why seek validation from a group that historically undervalues you? Better to play a game you can win and if you raise capital, get it from your customers or from investors who value you.
Building Internal Validation
If you believe you could use a bit more internal validation, here are some ways to build it:
- Find an Accountability Partner: Seek someone who challenges your perspective rather than merely validating it. Life is nuanced, and appreciating different viewpoints is necessary to succeed. Many entrepreneurs, especially the very narcissistic ones and with a fixed mindset, fail at this.
- Acknowledge Your Progress: Pause and celebrate the milestones in your journey. Self-recognition is the cornerstone of a robust internal validation system.
- Define Your Values: Know what you stand for. Your values will guide you when you encounter challenging decisions, giving you greater confidence.
- Be Honest About Trade-offs: Understand the sacrifices needed to achieve your goals. Authenticity is a key element of internal validation.
- Take Responsibility: Accept the life circumstances you can't change and focus on what you can.
- Embrace Discomfort: Challenges foster growth. Don’t shy away from stepping outside your comfort zone.
- Invest in Self-Reflection: Regular introspection provides valuable insights into your motivations and areas where you can improve.
Closing Thought
Striking the right balance between internal and external validation is a key factor in how we identify promising entrepreneurs at Crescent Ridge. While external affirmations have their place, they should never overshadow your own sense of self-worth. Remember to periodically ask yourself, "Where am I seeking validation and who am I seeking it from?" Your response to this question can be a revealing compass, guiding you on your path to entrepreneurial success.
Allison and Maria
