How to Get all the Funding you require to get your product to market
What is a small Business Entrepreneur? Entrepreneur n. a business man or woman of positive disposition who attempts to make profit from opportunities by risk, initiative and guidance from 2smallbusiness.com
Defining Your Product or Service and Its Markets
Focus on a problem you have personal experience with – make sure that it is a “top three” customer worry
Avoid technology wanderlust – “if you build it, they will not come”
Look for market dislocations where new leadership can emerge
Defining Your product or Service and Its Markets
Attack large and growing markets (>$1Bn) Timing is critical – avoid: – Markets that are hyped – usually too late – Markets that are out of public favor (e.g. B2C) Make sure that you have first mover advantage – thoroughly and creatively research the competition Focus, focus, focus …. Differentiate, differentiate, differentiate ….
Building Your Team
Be honest/open about team’s holes internally and with financiers
Hire A+ team members – wait for right people – make sure you feel that you have the best CEO possible
Look for a mix of skills and backgrounds: – Combination of vision vs. operating skills – “mystic” vs. “mundane” – Startup vs. domain expertise – Mix of former companies
Building Your Team (Contd).
Focus early on engineering and sales/business development – midlevel talent OK if senior team profiles unclear Everyone should know how to sell Involve investors in key hiring decisions (e.g. V.P.s) Spread ownership fairly Avoid nepotism
Creating Leverage Through Partnerships Business development more critical now than
ever – sales leverage, time to market, etc.
Better to create a large footprint than extract
every last penny from a relationship
Timing of discussion is important for
credibility and lack of competitive repercussions
Creating Leverage Through Partnerships (Contd.) Make sure partnerships are breakeven within
a year Partnerships come in all forms (e.g. attorneys, accountants, PR firms, search firms, contractors, etc.) – focus on leaders Use partnerships to create barriers to entry
Developing Your Product/Service Time to market is important – develop a
demo/prototype quickly Limit yourself to 12 months to revenue Create frequent small product improvements – iteration better than “megareleases” Work with prospects/customers from the earliest possible point
Developing Your Product/Service
Buy rather than build at all costs Create a “whatever it takes” culture – deliver
on time
Always have a contingency plan
Keeping Customers in Mind
Create a customeroriented culture make sure everyone has customer contact
Develop a reference list as early as possible – focus on credible industry/sector leaders
Set customer expectations on deliverables appropriately
Make sure early users are ecstatic about product/service – support them feverishly
Managing Cash Obsessively manage your burn rate Use parttime CFO if needed Understand when to adjust spending – –
Advertising Headcount
Initiate new investor discussions at least four
months before running out of cash
Developing a Good Reporting Structure
Publicly report status on key metrics internally (e.g. customers, pipeline, site traffic, development milestones, etc.) Don’t fear investing in a good CFO – CFOs are needed earlier now than they were in the past Plan on monthly Board meetings for first 612 months – Control the agenda – Give management team members exposure/participation – Focus on one major strategic issue at the end of each meeting
Developing a Good Reporting Structure (Contd.) •
Communicate regularly between meetings with the Board and investor group (e.g. bi monthly emails, breakfasts, etc.)
Financing Tips
Early, raise only as much as you need to get to a major milestone (e.g. beta product, site launch, etc.) Later, raise as much as you can get/tolerate – helps brand company, displace competition, etc. Develop financing plan around sales/product/team milestones When choosing financing partners, marry for “love” not money Use financing process as a proxy for working relationship
Financing Tips (Contd.)
Tips on getting in the door and presenting – Research the firm/partner – Come in via referral – Deliver overall concept in first three minutes – Be in sell mode and create excitement (concise, hard hitting) – avoid “fireside chats” – Ten page summary and slides sufficient – provide complete CVs – Provide realworld examples – “virtual markets equals virtual $” – Plan on one hour
Business Angel vs. Venture Capital Angels –
Pros Usually provide up to $50K$250Kin early financing Are usually quick decision makers Are less valuation sensitive Typically allow the entrepreneur to be more independent
–
Cons Can create valuation dilemmas (e.g. down rounds later) Can be cumbersome to manage/administer Offer very limited operational expertise/contacts May drop out of later rounds
Business Angel vs. Venture Capital Venture Capital –
Pros Offer great expertise/contacts Help generate credibility/exposure for company Leverage efforts to secure future rounds of capital
–
Cons Are tougher on valuation/terms Scrutinize management performance more closely
Taking Advantage of Directors and Advisors
Treat them as extensions to management team – CEO’s responsibility to manage them Look for complementary skills and expertise VCs – Are a mile wide and an inch deep – Help in high level strategy and positioning – understand competitive landscape – Have experience with common operational challenges – Offer great contacts – business development, management team building – Can help guide financings
Taking Advantage of Directors and Advisors Outside Directors – –
Add credibility if they are industry luminaries Help with market/operational expertise
Create a balanced BoD – avoid single
investor representative
The Five D’s Define the market to your advantage Develop a great team Declare yourself the victor Deliver the product/service on time Defend your customer relationships viciously
Reasons to join hitsnclicks.com To get FREE marketing content To become a h@ppeneur To get these benefits To get discounts on our services To get FREE stat software