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Great Pitches Don’t Start with the Problem

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You’ve been told to start your pitch to investors by naming the problem.

Do you know why?

Because for early stage companies this is all that really matters.  This is why you exist.

It’s the foundation of your entire business. It’s how you position your product. It’s the ‘why’.  And it can trigger powerful human emotions.

As one of our clients, the CEO of Modumate, Richman Neuman, explained it to me upon successfully completing his oversubscribed Seed round, “Idea is 10x more important than Team, which is 10x more important than Traction, which is 10x more important than Funding.” Read more…

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Looking for VC Funding?

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We have some exciting news for you!

Over the past six months we have been collecting feedback from startup entrepreneurs looking to garner VC funding and have noticed one major pain point that each of you experience.

You each ask yourself: “How do I know what VC Firm is right for my company?”

While you might be thinking, ANY VC firm willing to give me money is right for my company” – there is a more strategic method you should be using to research and choose your investors.

Investors become a part of your company. Once you accept capital from them, they’re on board for the journey too. And they’ll likely be there for the duration of your company’s lifespan.

So it is essential that you pick your investors wisely. And yes, I mean you pick them.

Before accepting capital, and even before reaching out to them, you need to do some research on the VC Firm and find out:

  1. What sectors, or industries, does the VC Firm invest in?
  2. What companies have they invested in previously?
  3. How do they interact with their portfolio companies?

 

Over the course of the next two weeks we will be releasing daily VC Firm synopses to assist you in this research. These synopses will provide you with an overview of several VC firms, the sectors they invest in, and examples of previous investments they’ve made – so that you can make an educated decision on whether or not you should include them in your list of potential investors.

We will be releasing these daily synopses in anticipation of the launch of our Virtual Incubator, More Than A Pitch Deck, which will take startup founders step-by-step through our process for building a fundamentally sound company that a VC would want to invest in. So be on the lookout for further details on that program over the next few weeks.

To view our daily synopses visit our GET FUNDED page here: http://bit.ly/trggetfunded

We hope you find this information valuable, and good luck with your future funding!

What is an Early Stage CEO’s Real Job?

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Every CEO is different, just like every company is different.  Some are great salesmen, others are great engineers, developers, and coders.  Some are great negotiators, others are great leaders.  Some are introverts and others are extroverts.

CEOs and their backgrounds can be very diverse. So what do successful CEOs have in common?

What is their ‘real job’?

It boils down to just 3 things: Read more…

When Should Startups Focus On Marketing?

When to Focus on Marketing

As the founder of a startup you have legal issues to work through, the development of a roadmap for your company, addressing your customers’ problems  – or maybe finding some customers (that’s a biggie!) – raising capital, and ultimately making the world a better place, right?…

It’s hard to know what to focus on first.

When I listen to founders pitch their company to investors for early round funding, I hear a lot of them state that one of the areas they plan to focus on is their marketing efforts. This likely comes about because of that Catch-22 issue most startups face when looking to raise capital:

“A VC wants to invest in me only if I can prove I have Traction, but how can I build any Traction if I don’t get their funding?!”

It seems most founders believe the answer to this Catch-22 is Marketing. The thought is, “If I get more people aware of my product/service, then they’ll sign up or buy and I’ll be able to prove Traction and raise capital.” So they spend the money on AdWords and Facebook Retargeting, or elaborate SEO or marketing gurus, to see how it goes.

As a marketing professional it pains me to say this, but marketing is not always the answer to this Catch-22.

A far better use of a founder’s time and money, before spending it on marketing, is to ensure that they have a strong product.  Too often I see companies launch into marketing efforts before their customers really care about, or need, the product or service they built. The end result is wasted cash on promotion of a product that no one will buy – and with cash so crucial in the startup phase, this misstep can be deadly.

That is why establishing Product-Market Fit is much more important at this point in your company’s growth stage – and you’ll know it when you have it.

If you want more background on Product-Market Fit I suggest you watch this video, or read this article, as they go into more detail on this topic then I do here:

Product Market Fit Mike Rogers

But essentially, Product-Market Fit is:

“Being in a good market with a product that can satisfy that market”

– Marc Andreesen

When people understand and use your product enough to recognize it’s value that’s a huge win. But when they begin to share their positive experience with others, when you can replicate the experience with every new user who your existing users tell, then you have product market fit on your hands. And when this occurs something magical happens. All of a sudden your customers become your salespeople. Evergreen.

You’ll know you have Product-Market Fit when these things happen:

  1. Your customers are inclined to spread the word about your product to their peers
  2. You have high engagement rates (aka “stickiness”), or low churn rates
  3. You start to see reduced lead times & shorter sales cycles as customers become eager to try your product
  4. Your customers are willing to sign on at a higher price point. They’re not just willing to pay for it, they’re willing to pay more than the cheapest option

If these things aren’t happening yet for your business, then – before doing any marketing – I recommend you talk to your customers (or friends and family if you don’t have customers yet), get their feedback, incorporate their feedback, ask them to review the product again – and repeat the process until you have a solid product that addresses a real problem. You may have to pivot your business several times over until you get true Product-Market Fit, but that is part of the journey and will be worth it in the end.

Only once you’ve established good organic growth and virality, is it time for you to focus on marketing.

Once you have Product-Market Fit, then you can scale your message about how great your product is and get more people to sign on, which they’ll be more likely to do now that you have a solid product. Go ahead and spend the money on Facebook ads and video campaigns, banners at conference events, and guerrilla marketing – whatever works best for your company.

But don’t spend time and money on marketing before you build a loyal base of customers who are willing to advocate on your behalf.

You need Product-Market Fit before focusing on Product-Marketing Fit.

I guess, to go back to the beginning of this post, my real answer to the Catch-22 issue that all startups face, “how do I prove Traction without getting investor funding”, is to prove that you have Product-Market Fit. No matter how small your current customer list is, even if you don’t have a product yet, you can still show Product-Market Fit by stating your plans for addressing a specific problem in a specific market and why your team is the one to solve it. Share customer feedback that shows your product’s strong retention rate or how your customers don’t want to, or can’t, function without it.

Proving this to potential investors in a pitch is far more impactful than telling them that you plan to use their funds to focus on Marketing.

Upcoming Virtual Accelerator Launch: “More Than a Pitch Deck”

We are launching a new online program that will help guide entrepreneurs step-by-step through the best methods for building a fundamentally sound company; a company that a VC would want to invest in.

Sign up to learn more about what’s included in the virtual accelerator program, plus details on the bonus material you’ll receive: SIGN UP HERE

Characteristics VCs are looking for in a CEO

Characteristic Traits VCs Look For

Starting a company and becoming a CEO takes hard work and dedication. It isn’t for the faint of heart. Effective leadership is the most important aspect of a company and its team’s success. But what makes a leader effective?

I wrote a piece on the Best Traits of a Successful CEO.  This is MY perspective on the 3 main qualities of a CEO for growing a successful company.

But what does a VC look for?

Firas Raouf wrote a good piece for Inc. listing his Top 3 Qualities.  While I think his three qualities:

  1. A crystal clear and compelling vision
  2. The ability to attract, recruit, and retain top talent
  3. A track record of successfully executing against a vision

are all valid, I think a there are a few more qualities that can be added to the list.

Based on my experience working with CEOs and companies from around the world, a  CEO must possess these certain traits to truly become a great leader in the eyes of a VC:

  1. Can articulate the business and the vision clearly, concisely, and compellingly.
  2. Has a demonstrated ability to push the company forward (“here’s what we achieved in the past quarter, here’s how it compares to what we thought we’d do…”)
  3. Has an impressive grasp of their users’/customers’ mental makeup, psychology, reasons for buying, etc. You can tell that they’ve gone through the hundreds of conversations required to really understand what will satisfy these people.
  4. Is resourceful — has an impressive amount of progress to show for a small amount of money & time.
  5. Is not defensive about risks and weaknesses in the business.
  6. Doesn’t wait for permission to get started / never blames money or investors for why they haven’t built or sold anything yet.
  7. Can think strategically over the long run — is focused on executing near-term goals, but can explain how these goals help accumulate intermediate assets that let them shoot for a real big prize in the more distant future.

While technical expertise is important, marrying technical skills with short-term milestones and rapid execution is crucial.  As Peter Drucker states, effective executives “get the right things done” – at the right time.

Learn What a VC is Looking For

Need Help Understanding what a VC looks for when evaluating the companies they might invest in?

Download the VC Due Diligence Checklist and learn what they want from you.  https://www.therevenuegroup.net/vc-due-diligence-checklist

Upcoming Virtual Accelerator Launch: “More Than a Pitch Deck”

We are about to launch a new online program that will help entrepreneurs learn the best methods for building a fundamentally sound company; a company that a VC would want to invest in.

Help us tailor the program by letting us know what issues or questions you have about securing VC funding.  Please take the survey here:  https://www.therevenuegroup.net/virtual-accelerator

 

How much money should I raise?

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“How much money should I raise for my startup?”

It’s a great question and one I get asked all the time. This is a pretty challenging topic for many entrepreneurs, and there is a lot of good and not so good advice floating around out there.

So let’s assume you believe your company can grow to $50-$100+ million in sales and you’re taking the VC route.

Formula

Fortunately there is actually a pretty formulaic answer. Read more…

4 Top Marketing Mistakes Tech Companies Make

Marketing Mistakes

Marketing in general can be a bit of a beast. Every company knows they should be doing it, but every company struggles with determining what methods work best for them.

This is true of all companies, no matter their size. Fortune 500 companies struggle with what marketing strategies work best, just as startup companies do. And the fact that the marketing landscape changes on a nearly daily basis doesn’t help the situation.

Companies with especially complex solutions, such as those within the technology space, have an even harder time marketing to their customers because they need to convey the intricacies of their solution, which often requires a lot of existing knowledge in their field, to a consumer with an average attention span of 8 seconds. Read more…