why many entrepreneurs "miss the vc boat" and what to do about it - supernova 2008
DESCRIPTION
I am going to do this quick 10 minute presentation at Supernova 2008 on Wednesday, June 18, 2008 in San Francisco. Here is the presentation via SlideShare. I'll blog the details of what's behind the slides at a later date... The point of this presentation is that over the last few months I've seen many early stage companies making the same mistakes, and these are mistakes that I don't typically see covered in the blogosphere. So, I wanted to move the ball forward and share a few tricks/techniques that I think nearly any early stage company can use immediately.TRANSCRIPT
Copyright © 2008 by Steve Barsh. All Rights Reserved.
A Few Quick Observations on Why Many
Entrepreneurs Keep “Missing the VC Boat”
& What To Do About It
Steve Barshwww.stevebarsh.com [email protected] +1.215.888.2101 twitter: sbarsh
Copyright © 2008 by Steve Barsh. All Rights Reserved.
Raising Capital Too Early“Premature Pitching”
Too early? Too many assumptions Chasing money rather than “de-risking”
Wasting time, energy & focus Business is based on 3 – 7 key assumptions = risks
(see CBE blog post) Spend more time
Refining extremely compelling value proposition(see “Stop Coding, Start Marketing” blog post)
“De-risking” the business model, e.g., Market demand Differentiators Pricing
2 stevebarsh.com
Copyright © 2008 by Steve Barsh. All Rights Reserved.
Out-of-Box Ideas for “De-Risking”
Using Very Little Cash!
Testing via cost-per-click advertising Market demand is there (may have to use A/B Testing) The right price (test multiple price points) Positioning works / key messages (try variations) Differentiation resonates with target market (is there
“lift?”)
SWAT team / “Rent-A-Coder” product development approach Build a “good enough” version -- get it in the hands of real
users Get “in market” to get feedback, results, adoption Start collecting relevant metrics as soon as possible
Your OOB ideas / experiments? NITMOI.
stevebarsh.com3
Copyright © 2008 by Steve Barsh. All Rights Reserved.
Most Entrepreneurs Don’t Seem To Know The Implications Of The VC
“Magic Ratios”
VC wants 7 – 10x in 3 – 5 years purchasing 30 - 40% @ early stage
Example Entrepreneur wants to raise $2 million for their Series A VC buys 40% and may assume they only own 20% at exit
Implication for entrepreneurs?
Just pegged exit @ $100+ million ($2 million @ 10x = $20 million, which is 20% of $100 million)
So entrepreneur needs to show a path to… Traffic / customers / users (and what’s the value of each?) Revenue (companies in that space acquired for what
multiple?) Profits (companies in that space acquired for what multiple?)4 stevebarsh.com
Copyright © 2008 by Steve Barsh. All Rights Reserved.
A Few Quick Observations on Why Many
Entrepreneurs Keep “Missing the VC Boat”
& What To Do About It
Steve Barshwww.stevebarsh.com [email protected] +1.215.888.2101 twitter: sbarsh