Archive for Featured

May
8

Entrepreneur Empowerment Series

by nick

To all Entrepreneurs,

Creating a successful business model and business plan can be quite challenging.

Do you want to learn how to increase your clients and revenue or increase product sales?

Does your cash flow end before the end of the month?

 

 

It can also be fun!

 

The Entrepreneur Empowerment Series.

These workshops provide professional training to entrepreneurs and business owners.

The workshops cover:

  • The important factors to develop and validate an effective business model
  • Marketing strategies and business plans that will create the revenue you are looking for

The most recent workshop was very successful with participants going out and validating their key assumptions and tuning up their core product lines. With this information, they adjusted their business model to increase revenue.  The startups focused on their pitch to obtain funding.

Here is what participants are saying about the workshops:

The way Nick tied the details of each subject to each of our projects made it more personal and effective.  I have an ongoing business and Nick’s workshop helped me create a more powerful vision and see how to validate my business model. I am more focused and have much more confidence talking to investors now.  I would recommend Nick’s workshop to anyone that aspires to have their own business regardless of what stage of the process they are in.

Sebastian N

Nick’s class was fun and felt like individual coaching. He tied each part of the class to our business, while creating every opportunity to clarify our understanding. He really cares about each person’s goals and needs. It made it personable and effective for me to see how to validate my business model. 

Suelyn

I attended 7 Easy Steps to Developing a Successful Business Model and the class ROCKed! 

It was well worth the time and effort and was a true bargain for all of the amazing insight, the hands-on approach and the way Nick really cares about each of his students. BUT, the truth is in the effectiveness and the measured results. My original song I composed and sang, “On Angels’ Wings”, was gathering dust for years, but due to the gentle but consistent reminders and guidance of Nick, I worked hard to get it up on Youtube.

Today, I just looked and there are over 20,000 views of the song Nick so kindly encouraged me to share with the world!  This is amazing. I am so elated, not for just me but for the tangible joy I know the music and the message have been spreading. Wow. I feel proud and grateful for my decision to attend Nick Bassill’s amazing, fun but demanding workshop on business Model Preparation. 

From the Desk of…..  STERLING EDWARD, Esq. 

I have attached a link to Eventbrite which has a listing of the next workshops.

http://www.eventbrite.com/org/3145402766?s=14627169

The upcoming interactive workshop, Power and Heart for Effective Pitches, will be this coming Wednesday night, May 15th.

Clarify your business model, increase your revenues and get comfortable with your pitch.

The next full day class is the Vision & Business Model Development and Validation on May 25th. The Eventbrite listings have a complete description of each class.

I look forward to being of service to many of you in the pursuit of your dreams and a successful business. If you have any questions, please email me.

Nick

 

 

 

0 Categories : Featured
Apr
26

Milken Institute Global Conference Launches

by nick

Thought leaders, politicians and power brokers will all meet up in Beverly Hills next week at the Milken Institute Global Conference for discussions on how to make a positive impact in the world. What will they recommend to help create jobs, help startups and revivie the economy? Stay tuned and we will let you know.

0 Categories : Featured, Uncategorized
Apr
1

Create Your Successful Business Model

by nick

New workshop for entrepreneurs and business owners to develop and improve their business model. The purpose of the business model is to check out your assumptions as quickly as possible to ensure you are on the best path to success.

For those serious about a Startup or working on their current business, an intensive workshop to develop your business model and business plan will help get the job done and create a successful outcome. Los Angeles Workshop available at Kleverdog Academie starting on April 14th. For full details  and to register Click Here.

If you want to raise funding from a VC or angel investor, you need to understand your Business Model and be able to talk about the tests you have done. What is an investor looking for? A tested, proven business model. It shows you have found a workable platform that can be built and that you can scale to a much larger business.

What is a startup: In today’s world it is a team in search of a business can be profitable and that is scalable.

What assumptions have you made about your business? Are they true? How true? The purpose of the Business Model is to check out your assumptions as quickly as possible to ensure you are on the best path to success. Spending a lot of time and money on activities that will not work, or barely work, is unproductive and costly. There is a better way.

The Business Model describes the flow between 

the key components of your company.
Unless you have tested and proven each point
it is your best estimate or guess
to each of the questions. Not fact.

Your Business Model is constantly changing. The Business Plan is more static and fixed in place. It is your marching orders and plan. So before nailing that down, write your business model.

It is a lot like Panning For Gold. You sift through all the extra stuff in the pan and you are left with the gold. How do you tell if it’s real? Test it – bite it, or measure it.

That’s what we do with Business Model building. We take all your ideas, your assumptions, help you clarify them and then sift through all the stuff to get to your most valuable ideas.

For a new startup, this is the Minimum Viable Product, and for a small business owner his core product or service.
In this interactive and fun 2-Day workshop, you will: 

  1. Create and refine your own Vision and Value Proposition.
  2. Define your Target Market, Customer Segments and Distribution Channels and how you will Communicate and Work with your customers.
  3. Lay out how you will generate Revenue Streams and determine your Costs, Key Resources, Activities and Partnerships required to make your business a success.
  4. Create a Validation Plan to contact outside resources to validate your first assumptions of your Business Model.
  5. Go out and talk with your potential customers, vendors and partners to get their feedback and Validate your Business Model assumptions.
  6. Revise your Business Model to make it in alignment with your customer feedback and what adjustments you will need to make to create a successful business.
  7. Take an inventory of your personal resources, develop an estimate of funding needed and a pitch to talk with potential investors.
Day One – April 13, 2013
9am – 12noon
Develop the theoretical business model. You will work on your vision and fill in the blanks for each of 9 categories.
Lunch Break
1pm – 4pm
Develop methods of testing each item you have developed and create an action plan to go out and verify and validate your assumptions.
Nick will be available for a one-on-one consultation in the week between the two workshop days to help you with your specific questions and issues. After you reserve for the event, you will be contacted to schedule your appointment. 
Day Two – April 27, 2013
9am – 12noon
Review and revise your Business Model based on the assumptions you have received in the field.
Lunch Break
1pm – 4pm
Make a personal resource assessment, estimate funding needed and develop a pitch for presenting to potential investors.
Join us and get your business model clear and ready to present to investors. Register Here.
About the Instructor
Nick Bassill is an American inventor, innovative thinker and entrepreneur who over the past thirty years has built a number of successful businesses and been instrumental in the formation of several new industries.
He is the founder and managing director of Launch America, which is a grass roots movement to revive the American Dream, and to create employment and economic growth through the formation of hundreds of thousands of business startups with private funding and mentoring. Launch America was established to provide much needed assistance to entrepreneurs and small businesses in the area of the establishment and funding their startups.
His book, Launch America! Reviving the American Dream, outlines his bold plan to create thousands of new businesses and new jobs all across the country.

Parking and Getting Here
Bamboo Plaza is immediately north of us (parking lot entrance on Bernard Street) and offers all-day parking for $6.60. Metered street parking is also available on Hill and Broadway Streets. Or, take the train! — the Chinatown Gold Line station is just two blocks away.

Kleverdog Academie is located on a small street between Hill and Broadway; just a couple doors down from Phoenix Bakery on Broadway. Look for the bright red door with the 418 address. Lost? Call us at 323-924-8463

 

0 Categories : Featured
Mar
3

Building Your Mimimum Viable Product – Resources for the Non-Techical Founder

by nick

Startups take heart! There is help out there to get you up and going.  provides a wealth of information that all startups need to know. Developing you Minimum Viable Product, Defining your Metrics to test if you are on a good track, Finding Developers and deciding on the best way to proceed is all part of this story.  What’s really great is that Tony provides many links to more of the details that you may need. You can drill down and get the help you need.

Wednesday, February 13, 2013 Building Your MVP as a Non-Technical Founder

I did a presentation this week at Coloft that looked at how Non-Technical Founders can go about getting their MVP built.  It had a passionate group of 50 people attending.  I promised to do this post as a follow-up to the session to provide additional links and information.  It should also give a sense of what I covered to people who were not there.

Here is the outline of the talk and some links from prior posts that talk to the issues that I discussed in the talk.

Purpose of an MVP and Defining the Right MVP

I’ve really not talked as much about this in my blog even though its hugely important.  I generally hear the following as reasons for founders building their MVP:

  • I need it to get investors interested (NOT VALID)
  • I need it to see how early customers use it to get feedback (RARELY VALID)
  • I need it to test/prove aspects of the product such as (VALID)
    • Cost of Customer Acquisition
    • Conversion Rates / Pricing
    • Viral Coefficient

My claim is that the first bullet, although extremely common, is a misguided reason to build the MVP.  Investors my tell you that, but what they can look at your product on paper and tell what it does and they will understand if it can be built.  Once you build it, they will now ask you about the key metrics that they need proven in order to see if you really are a good investment.

The second bullet, getting feedback from customers is most often not valid either.  Again, putting something down on paper (wireframes, graphic comps) and getting feedback from potential users can tell you most of what you would learn from a working MVP.  There are a few cases where you somewhat need to see the system operating to have a sense of the value.  Examples might be a recommendation engine, search engine, matching engine or something with a complex interface.  Even with these, you will have paper-tested your MVP, but the reality is that customers will not be able to assess the value to them until they actually use it.

The real reason to build an MVP is to do early tests of key Startup Metrics for the business.  To prove/disprove a hypothesis.  One of the questions in the session was “How do you know what to put in your MVP?”  Once you have the metrics defined, it focuses your effort.

Ways to Make Your MVP More Minimum

We spent quite a bit of time talking about a complexity scale and the kinds of resources you can viably use at different levels of complexity.

image

Simple MVPs get built with less the 3 Programmer Months worth of effort (that’s 3 months a single programmer working full-time).  More complex MVPs are going to be 12+ Programmer months.  There are some MVPs that are unavoidably complex.  eHarmony for me fell into that camp.  We needed the matching algorithm.  Many MVPs can be made to be very simple.

  • Paper Prototype or a Smoke and Mirrors Prototype – you can just build something on paper or even just one that you can click through and get a lot of the feedback you need.
  • Fake Site – you can have what looks to be a real site, even take “orders” but not actually have anything able to run it.
  • Leverage Existing Platforms or Third Party Products – you want to test your social network, grab Drupal and whip something together, or even just use a hosted service.
  • WordPress – we spent quite a bit of time talking about how you could do a lot with WordPress to provide simple forms of lots of functionality.  WordPress is pretty easy to hack.  And the back-end is something that a non-technical founder can manage.  We end up using WordPress a lot as the marketing front-end of our web sites.

The bottom line is that you should first look to make your Minimum as Minimum as possible.

Here are some important and relevant posts that relate to the topic of defining the right MVP.  The “Questions” post is probably the most important.

What Do you Need to Get Your MVP Built

From the graphic above, you can see the kind of resource you might need to be able to build your MVP.  If you are on the lower complexity end, the key is defining small chunks of work that can be done quickly by a developer.  If you do not break it down into small pieces, its hard to make progress with part-time resources, freelancers, etc.

Founder / Developer Gap

I’ve spent a lot of time on the Startup Founder Developer Gap and knowing what you need in terms of a Startup CTO or Developer.

In this talk, we spent most of our time on Technical Advisors: Every Web/Mobile Startup Must Have One and how they should be helping you:

  • Specify the right things to be built.
  • Third party products are used appropriately.
  • Structure development contracts appropriately or directing the in-house team appropriately.
  • Plan for past the initial MVP.
  • Review the code being built.

Finding and Selecting a Technical Cofounder / Developers

Development Challenges

Technology Choices

Choosing a Programming Language and Framework for Your Startup

Finally, if you made it this far, then take a look at: Free Startup CTO Consulting Sessions.  I’m always happy to try to help startups figure out how to go after creating their MVP.

Posted by at 7:34 AM   

- See more at: http://www.socalcto.com/2013/02/building-your-mvp-as-non-technical.html#sthash.f7keNF3u.dpuf

0 Categories : Featured
Mar
1

Most new U.S. businesses founded by people 40 and older – survey

by nick
Sarah McBride,  Reuters, February 28, 2013
The word “startup” might convey a technology-oriented company founded by a 20-something, but the reality is very different, according to a report from the Kauffman Foundation and the online service LegalZoom.
Most new businesses are founded by people aged 40 and older, and consulting is the single biggest business category, according to the report issued on Thursday, which was based on a survey of new business owners.”Most of the startups are not the kind of startups spawned in Silicon Valley,” said Dane Stangler, director of research and policy at the Kauffman Foundation, a Kansas City, Missouri- based organization that promotes entrepreneurship. “I don’t want to use the word mundane, but they’re run of the mill.”

Entrepreneurs between the ages of 30-39 and between the ages of 40-49 founded around a quarter each of the new companies, the survey shows. Entrepreneurs age 50-59 founded just over one-fifth, and those age 18-29 just under one fifth. Age 60 or more represented the balance.

While the image of the founder who dropped out of college looms large in the popular imagination – think Mark Zuckerberg of Facebook or Bill Gates of Microsoft – 37 percent of founders of new companies hold at least a bachelor’s degree, with another 25 percent holding a master’s or PhD, the survey shows.

About 70 percent of the new businesses reported no employees other than the owner. Of those that have more than five employees, the most common business activities are food and beverage services; business services; consulting; and entertainment, the report says.

More than four-fifths of the businesses said their revenues fell below $50,000. About 8 percent said their revenues totaled more than $100,000 and 1 percent said more than $1 million.

Some two-thirds of respondents used their own money to start their businesses, 10 percent used credit cards, and six percent borrowed against retirement savings. While raising money from outside investors is the norm in Silicon Valley, just 6 percent of survey participants said they went that route.

About 60 percent said they spent more than six months working on their business idea before starting their entity. But 9 percent said they spent less than a month.

The survey was based on 1,431 business owners who used LegalZoom to form their companies in 2012. It did not include any businesses that instead used traditional law firms, or did not file incorporation documents.

About one-third of the business owners were women.

- See more at: http://www.chicagotribune.com/features/sns-rt-us-startups-surveybre91r0po-20130228,0,478419.story#sthash.T8zPeXAp.dpuf

0 Categories : Featured
Feb
8

5 Things for Startups To Do When Raising Capital

by nick

Tomio Geron on the Forbes Staff gives these points in his recent article from Dave Samuel, cofounder of seed stage investment firm Freestyle Capital. His firm, founded four years ago, has invested in companies such as SimpleGeo, GoInstant, GetSatisfaction, TypeKit, CrowdFlower and 9Gag. The firm has had 10 exits including acquisitions by the likes of Twitter and LinkedIn. The firm, founded four years ago, invests at the seed stage. But unlike some other seed investors, its style is as a focused investor, getting heavily involved working with the startups early on. H

1. Show, Don’t Tell

The founding team needs to be able build a beta version of a project on a shoestring budget. It used to be in the late 1990s that you’d tell an investor, “I have a PowerPoint, this what I’m going to build, and I need money to build it.” Understandably, that’s changed today today with cloud computing, education online, and distributed workforces. Entrepreneurs now can build an early version of their product for much less cost. Instead of a pitch deck just showing a demo. (Even if it’s a basic demo.) That’s kind of standard and a requirement Josh and I have.

2. It’s Who You Know

We’ll only look at pitches and startups that come referred through our network. We don’t necessarily need to see a business plan. People send unsolicited messages and say, “Hey we should talk” via Linkedin. Sadly we usually hit “Delete.” So many entrepreneurs are raising capital that you need to be a smarter salesperson and customize the pitch and come in through the investor’s trusted network. (That is, a recommendation from someone the investor knows and trusts.) And you have to be able to have other people help sell your business. The main thing is you need to be able to prove you’re a salesperson and have that ability. The approach can’t be a chain letter and unpersonalized.

3. Know Thy Competition

I started my first company back in 1995. That allows me to understand how startups fit into the landscape. The “Competitive Landscape” slide is a requirement for any good pitch deck. It’s extremely rare that a company has no competition, which is what many entrepreneurs say. If there’s no competition, then I question whether it’s a good market to go after. It shows how other people are thinking about the problem and trying to also solve the problem. Competition is good. I need to understand how the product is different from the competition.

4. Pick A Seed Investor Who Will Stick With You

It’s best to raise from a seed firm that has enough capital to bridge you to a Series A. We’ve heard about the “Series A Crunch.” What’s happening is a tremendous amount of angel-backed companies are raising between $500,000 and $1.5 million. But if you don’t have a lead firm as part of that raise, when the company goes back to raise additional financing or raise a Series A financing, if not all things are going correctly, it will take longer and be much more difficult to raise. If you ask VCs on Sand Hill Road, they’ll say they’re seeing five times more quality deal flow than 2 years ago. That’s understandable because there are so many companies being funded at the seed level. So if you can raise from a seed fund that is big enough to bridge you with additional funding if needed and extend your runway, that’s very wise. (Freestyle has $27 million in its fund.)

5. Know Your Target

What do we need to make the decision to invest? We have some criteria listed on our website. The biggest one is companies need to prove they’ll go on to something big within the first year. We will do some enterprise tech companies but “light enterprise.” (For example, Freestyle invested in Typekit and GoInstant.) With B2B companies for example, if there’s a long sales cycle for installation of a product, we will not fund that. For B2C companies, there needs to be either strong social or viral hooks for growth within what the company is doing. If you go into B2C and don’t have the ability to have a strong viral or social component it becomes too expensive building your consumer audience. On B2B we don’t have this as a requirement. For B2B deals we want to confirm growth as more customers come on to the platform.

0 Categories : Featured
Oct
17

DEHUMANIZING PROFITS- Business 101

by nick
The focus on profits is poisonous: An educational primer for our politicians — and voters. Huffington Post, by Nick Bassill, 10/16/12
Instant gratification! Keep it simple — no one will read or listen to more than a few lines. Let’s get to the basics, which President Obama has not talked about nor which Mitt Romney wants to talk about.

In reviewing business textbooks, business school promotions and corporate reports it is clear that the purpose of a business is to maximize profits for its shareholders, its owners. Others often philosophize that business has as its primary focus to serve its customers and society. However, in today’s world of short focus span and high priority on instant gratification, customers that are hard to get are not pursued and the ones that cost more to satisfy, are dropped.

Drucker once said, “Business management must always, in every decision and action, put economic performance first.”

He also states that too much focus on profits in an organization, just as too much oxygen in the human body, can be toxic. And today the focus on profits is poisonous.

How to keep that million dollar bonus

In today’s economy, profit maximization is for the benefit of not only the shareholders, but for the highly rewarded executives that run the businesses, many will million dollar bonuses. Wall Street demands quick results, not long-term gains. If you are an executive not doing well for a year or two, you will not have a job. So their primary responsibility is short-term profitability so they and their business look good on Wall Street.

For the average American, that simply means if you are in the way of a business profit, you are going to be eliminated. In the insurance business that means, if your could possibly cost the company money, the incentive is to get rid of you or to find a way to charge you a lot of extra money.

What about business on Main Street?

And what does the focus on profitability mean for America’s Main Street businesses? What is America for most of us? Do we all want to work for large international companies with thousands of workers? Or would you prefer to work for smaller companies where you can see your contribution and you are more than just a number in a gigantic machine? The American culture was built on local businesses that share a common interest with the local community.

A small business is a small business

And let’s be clear. Stop throwing around the word “small business.” When used by the Republicans it can mean companies with revenues in the hundreds of millions to a billion dollars. That is not the small business we are talking about or the small business many Americans work for in pursuit of their American Dream.

From the U.S. Census Report, Statistics of U.S. Businesses, 98.2% of the approximate 6 million companies in the U.S. have less than 100 employees and employ over 35% of the American workers. These companies have average sales of just over $1.3 million. That is a small business.

Companies that employ 100 to 500 workers represent just 1.5% of all companies, employ 14.2% of all workers and have average annual sales of over $40 million.

The remaining 0.3%, or 3 out of 1,000, of all American companies employ 50.4% of all workers and have sales of over $1 billion each year. This concentration of sales, workers and power changes how the American culture will evolve. These small groups of powerful and wealthy companies are now treated with individual rights, so you can expect that they will lobby for politicians and legislation that is in their best interest, not the best interest of society or of individuals.

In which community do you want to live?

There is no longer a community of local shop owners with their children participating and living in the community. Local small businesses need to make a profit, just like the big guys, but what choices do they make versus the decisions made by a distant corporate owner in China or some other remote country. Who cares for you and your family?

You need to make a decision. Who will have your best interest in mind and the best interest of the community? Would it be best to support 100 local small businesses whose owners live and work in your community or have 100 international conglomerates that supplies a few stores where everyone goes to buy everything they need. That one business may report to headquarters in some remote city in the U.S., China or another foreign country where the owners can again maximize, or avoid U.S. taxes on their profits. Who knows where? Who cares? It is all impersonal at the moment. Just find the cheapest product at the cheapest price. As business executives like to say, “It’s just business, nothing personal.”

Many international giants ship clothing into the U.S. made in shops where the workers are paid a few dollars a day at best. Is that what you want to support? Do you want to work for those wages? If not, then why do you shop there and continue to enable these international gigantic robots to control your life?

We are becoming cogs in a gigantic machine, engineered to control the thoughts and decisions of us all through advertising and promotions, to get our money through our purchases, and then, as we lose our jobs and our small businesses, give up our lives and become unwilling consumers to corporate and foreign interests.

The politicians seem to have forgotten the basic economic principles.

Read this carefully.

Which one do you want? What does the American Dream mean to you? You decide! You vote!

Follow Nick Bassill on Twitter: www.twitter.com/LaunchAmerica

0 Categories : Featured, Uncategorized
Oct
13

The Rise of the Female Entrepreneur

by nick

Women entrepreneurs have come a long way over the last 40 years. Before 1974, banks could require women borrowers to guarantee their loans with cosignatures from husbands, fathers or male business partners. Today, women aren’t only starting small businesses faster than men, but they’re also creating more jobs. And the types of businesses and jobs they’re starting are diversifying workplaces in big ways. Women-owned firms are more likely to be smaller and also more likely to offer workers benefits like venture profit-sharing and tuition reimbursement. Making employee enrichment more of a priority is only one of many positive changes female leaders are bringing to business.

Of course, the glass ceiling isn’t falling just yet. Women founders still receive very little of the annual seed capital handed over to investors each year. And the number of tech start-ups with female co-founders is still very low. Female-focused incubators and networking organizations are looking to change all this. Check out the graphic below to see how far women entrepreneurs have come and where they’re going next.

October 8, 2012, Staff Writers, Onlinebusinessdegree.org.

OnlineBusinessDegree.org

0 Categories : Featured, Uncategorized
Aug
30

SEC Updates! – Buddy, Have I Got a Startup Deal for You

by nick

Your “friends” may be inundating you with bake-sale notices, Kickstarter pitches, and used Razor-scooter listings, but the barrage of monetary appeals is only going to get more intense thanks to the Feds, who today proposed only the loosest of restrictions on how startups may broadly solicit capital.

The Securities and Exchange Commission finally, after three blown deadlines, Wednesday outlined how it wants to rescind decades-old rules barring startups from advertising that they want venture-capital-style investments. Startups have it pretty easy under the SEC’s proposed rules (full, summary): They can advertise for investors in any venue and format and also screen backers using any “reasonable steps” that verify they are millionaires and thus allowed to buy the unregistered securities typically held by angel investors and VCs.

In other words, assuming nothing changes after a 30-day public comment period, Facebook may soon need to add an “investment status” field, because startups will be able to rattle their virtual cups for prospective investors anywhere they like, so long as they only take money from sufficiently wealthy investors.

Such broad fundraising rules might seem a step too far, but it has real virtues. Investment and regulatory experts expect the ad-rule changes to shake-up the tech investing landscape, as we’ve detailed previously. Historically barred from advertising their need for investment, startups have gravitated toward entrenched, high-profile venture capitalists. Thanks to the JOBS Act and today’s SEC proposal, startups can now tell everyone they want money – on social networks, newspapers, billboards, television, radio, via direct marketing, blimps, you name it – and let investors come to them. That opens the door to including investors traditionally shut out of Silicon Valley dealflow and, some players hope, will bring lots of fresh capital into undercapitalized industries like consumer products and improve deal terms in well-capitalized sectors like tech.

“Less than 5 percent of accredited investors participate in the market,” says Rory Eakin, COO of CircleUp, a San Francisco startup that lets qualified investors shop for startups on the web. “Under the ban on general solicitation, it difficult to identify which companies are raising capital at any given time.”

Growing VC-style investments 10 percent would add $5 billion each year to the economy, CircleUp figures.

But no new money comes without risk. When the SEC lifted an advertising ban for smaller startups from 1992 to 1999, pump and dump schemes sprang up like so many weeds. Worries over fraud persist today. Dissenting from his fellow SEC commissioners, Luis Aguilar warned that today’s proposed rules will “increase the vulnerability of investors” to “boiler-room cold-calling and other high-pressure sales techniques.” Commissioner Aguilar wants investors to be more thoroughly screened for sophistication, for example by examining how much of their money is in securities like stocks and bonds, and to force companies to file a required notice with the SEC before they begin advertising rather than after.

The rules proposed by the commission say specific “verification methods could be overly burdensome.” But if commissioners think verifying someone’s stock holdings is tough, just wait until they try to navigate a Twitter stream choked with ads from mobile social gaming startups looking for a little seed funding.

0 Categories : Featured
Aug
7

Keys to Funding Success

by nick
  

By: Dan Roberts, Maverick COO, Featured in Caypen Magazine - Issue #11 page 34.

 

The funding ecosystem has dramatically evolved in the past five years. We have experienced the global economic meltdown of 2008, the constriction of venture capital funds resulting in a void that must be filled by angels and the recently passed JOBS Act, allowing companies to sell equity to non-accredited investors. Despite these changes, three fund raising strategies remain constant; Preparation,Communication and Determination.

Preparation

Whether presenting your new venture to a family member, professional angel investor, venture capital firm or crowdfunders through an approved Crowdfunding Portal, you must understand the audience expectations and exceed those expectations.

The most important element of fundraising an entrepreneur must understand is the Investors Perspective. Investors are typically motivated to invest in early stage deals solely to make money. Some investors seek out investments with an altruistic focus, however in nearly all cases the primary driver is the upside potential for a healthy return on investment (ROI). Recognizing the emphasis on ROI is extremely important because every entrepreneur must develop a compelling exit strategy. Strategic acquisition and IPO (historical data demonstrates that an IPO is highly unlikely) are not the only options for an exit. In the case of lean ventures that generate large profits, a profit sharing or quarterly distribution ROI strategy may be attractive to potential investors. Many entrepreneurs kill their chances with investors by asking for capital, in return for equity of course, and not demonstrating a clear path to a reasonable ROI in a reasonable amount of time. When raising equity capital “from the Crowd,” pending SEC and FINRA regulations, the same principle applies. Understanding the investors’ perspective can be achieved by soliciting feedback from investors prior to asking for their money.

Developing a relationship with potential future investors can dramatically improve your chances of fundraising success. The key to relationship building is introducing the investor to your venture while garnering their feedback. You then must act upon that feedback to demonstrate the company’s ability to reach milestones. This method will build credibility and trust. Inviting these investors to join your Advisory Board is encouraged as well, given that it’s a fit for both parties.   My colleague Mike Miller once told me a priceless quote relating to the Investor’s Perspective, “Ask me for Money, I will give you Advice; Ask me for Advice, I will give you Money.” While this does not hold true in all cases it is a good motto to follow.

A well-prepared entrepreneur will communicate their opportunity in a manner that is complete and compelling, increasing their chances of gaining investor interest.

Communication

Great communication skills are not limited to verbal expression, but also must include clear and concise written communication. An entrepreneur’s ability to build a network, leverage that network and deliver information in a complete fashion will lead to success.

Long before the need to raise capital for your budding venture, entrepreneurs must develop a professional network that includes investors. In any given metropolitan area with an entrepreneurial sub-culture, there will be a plethora of events where networking is a key focus. To maximize your efforts during a networking event you should have a well-articulated 60-second presentation or elevator pitch that explains: the problem the company is solving, the solution, the market, the business model (how you make money), the capital needs and the exit/ROI strategy. When delivering this elevator pitch you should not “shoot from the hip,” rather prepare the pitch well in advance and practice several times, long before attending an event. A clear and compelling pitch should grab the attention of your audience, in this case a one-to-one conversation, and have them wanting more information. This excitement will drive your new contact to make further introductions growing your network. Successful crowdfunding is built on an entrepreneur’s ability to leverage their network to raise the necessary funds. Therefore, whether raising capital “from the crowd” or from private investors, you must build and grow your network.

In the meantime, while not attending networking events and gaining priceless feedback from investors, gather your investor due diligence materials in a centralized location to create your “Investor Due Diligence Package.”. Recommended tools include: Dropbox, Gust and Google Docs. This package should include but is not limited to: business plan (written or slide deck form); detailed financials with pro-forma and cap-table; marketing and sales strategy; competitive analysis; resumes and biographies of management team, board or directors and advisors; investment opportunity term sheet and subscription agreement; and an explanation of the exit strategy. Creating this “Investor Package” prior to raising capital improves your speed to investment decision and will demonstrate a level of professionalism and preparation that will be well received.

Now that you have a network, have solicited the advice of several potential investors and have fully prepared yourself to raise capital, it’s time hit the fundraising trail. Apply to present to any and all investment networks that are a fit for your company/technology. You will need to make your pitch ten, twenty, fifty times in some cases before completing your funding round. This will be a long and trying process but with preparation and determination you will prevail with investments in hand and the advisors to help grow the company.

Determination

It is extremely important for entrepreneurs to understand that their technology/ company will not appeal to all early-stage investors, in fact it will only be a fit for a small fraction of investors that are introduced to the opportunity. That said, rejection is inherent in the fundraising process and the ability to learn from that rejection and evolve the program will only make the company stronger.

After each pitch to an individual or network of investors, timely follow-up is essential to maintain the momentum. Within 48-hours following a pitch, send each of the interested parties the “Due Diligence Package” previously discussed. At this time you must also schedule a due diligence meeting and or conference call to answer any questions that arise from their review of the information provided. When appropriate, schedule a site visit and show the investors the inner workings of the organization. Meanwhile continue to build value in the company and communicate that value to the investors.

Throughout this process there will likely be some investors that lose interest, but do not assume they are off the table. These individuals have already demonstrated interest and may regain that interest given company progresses down a positive path. Save the investor contact info in a special file and provide them with regular updates on the companies growth, as well as momentum with other investors. Continued outreach and determination with all investors will eventually lead to funding success. Most importantly, learn and evolve along the journey.

The early-stage funding gauntlet is not an easy process, however a well prepared entrepreneur who understands the perspective of the investor, is able to communicate their offering in a complete and compelling manner, has the determination to learn from rejection and demonstrate growth will achieve the funds needed to accelerate their company to a healthy ROI for all.

 
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