funding your startup
DESCRIPTION
On April 7, 2009, Bill Hunt gave his overview on the keys to success in funding and answered questions to a standing room only full house of 200 entrepreneurs at the Silicon Valley NewTech meetup (http://forum.newtechmeetup.org/pages/about/). William Hunt Partners (http://whuntpartners.com/) provides business planning, strategy and fund raising services to technology companies who offer software, information or service products. As entrepreneurs, they have built multiple companies from an idea to $100m+ acquisitions. Bill Hunt's presentation is the first edition of a new quarterly "Expert Talk" feature at the meetup. For the past three years, the meetup has been formatted around 3 to 4 quick live demos of services that are generally in alpha or beta, followed by a lightning round of Q&A. Afterwards, general announcements are shared. Then, the audience gets on their feet, with ample time to chat face-to-face with the presenters, as well as with each other, about business, technical, and organizational concerns. Thanks, Vinnie Lauria for hosting Silicon Valley NewTech Meetup, and Rich Reader for taping the talk.TRANSCRIPT
What If I Don't Need Investment?You’re NOT doing it without
investment. Instead, you are choosing to be your own investor.
Investment principles exist, just as architecture/coding/etc principles exist.
Be a good investor and evaluate your business like an investor would.
Make changes based on this, or even scrap the idea and pick a better one if it doesn’t make sense from an investment perspective.
Get an IntroFind someone who can
introduce you to the Angel or VC
Have an elevator pitch prepared; you never know when you’ll have a 2 minute opportunity to pitch a potential investor.
Go to events you know VCs will be at. Give them the elevator pitch.
Know What The Investor WantsWhat deal sizes do they do?What markets do they focus
on?Do they have a competitive
portfolio company?Do they have
complimentary portfolio companies?
Do they lead rounds?Do they have money?
Look like the sort of company they invest in
The Problem You're SolvingWhat is the problem that
exists?How bad is the pain?Focus on an individual.
Is this a problem for CEOs?For CIOs?For Product Managers? etc.
Whose problem is this? I.e. who will buy your product?
Sell Aspirin, not Vitamins.
Your Unique SolutionWhat is your solution to this
problem?Focus on the problem that
you solve.
Do a demoIf possible, demo your
product, or do a walkthrough in mock-ups.
Market SizeHow many customers will pay
for a solution like this?Ideal answer will come from a
third-party, such as an analyst.
If necessary, do the math yourself, based on the number of potential customers x how many would actually buy.
Make sure your financials (later) align with this. Don’t assume you can sell >50% of this market.
Market ValidationQuote from potential customer(s)Ideal quote sounds like this:
“If only I had the XYZ widget, I would buy 50 today. I need a solution to W, and XYZ has
the best/only way to solve it.”
MonetizationIt has to make money.Advertising is not looked at
favorably.
TeamDescribe each of the team
membersWhy is each member
fantastic for building this company?
Have you worked together before?
A team of one is bad. Support and Peer-pressure among founders keeps things strong.
CompetitionWhat other solutions exist?No competition is bad. This implies
that the problem you’re solving isn’t real.
Too much competition is bad. Means the space is too crowded. (although if you have serious differentiation, you can cut through competition).
Common slide shows matrix with competitors along left and features along top. Checks for each feature, with your company having all checks.
DifferentiationWhy are you better?Be tough for others to duplicate:
patents that you have filedexisting market penetrationman-years of effort required
Focus patent efforts on paths that your competition will have to cross.
Go To Market PlanHow will you get your offering to your
customers?What channels will you use?How much will you charge?Where/how will you market to customers?
FinancialsChart of projected Revenue/Costs/ProfitQuarterly for first year. Yearly for next 2
yearsDon’t be too aggressive:
Your company won’t smell right; will make VC believe you are naive.
VCs have a fantastic memory for these sorts of things, and later if you don’t meet up to your projections, you’ll be in trouble.
Listen during the presentationWatch body language.Note concerns, and do
your best to address in the presentation. If you can’t, get back to them later with better answers.
Adjust pitch on the fly if necessary.
Be confidentInvestor wants to see you as
someone that can be counted on to manage a lot of their money. Be strong.
Run the meeting. If they ask about something that’s in your presentation later, give them a brief answer and say “I’ll cover that in a couple of slides.”
Keep it Simple10 – 15 slides maximumDon’t pour every detail into the
presentation.Focus on what’s important. If
there is interest, there will be follow-up meetings to address details.
Presentation should be for 30 mins max, so you have another 30 mins for Q&A
The goal of the first meeting is to get a second meeting.
Have backup slidesKeep other slides in case
you need them.Being able to answer
questions with backup slides makes you look prepared.
Get FeedbackFind out what their process is
and what the next steps are.Find out what they liked and
didn’t like.Internalize feedback to
strengthen your company.Adjust your presentation to
the next Investor accordingly.
Interview the InvestorMake sure the investor adds
value to your company.Talk to CEOs of other
companies that they have invested in.
Be sure they don’t show up at board meetings to watch their money. They should provide business advice, customers, partners, and acquisition partners
