Skip to content

4 Mistakes made by Startups preventing a Successful Exit

SD_MA_mistakesWhile exiting your startup might not seem like the goal in the beginning, it will be if and when you take investor money.  And while you may think you’ll want to run your business forever, the reality is that the time to move on will eventually present itself.

So the issue at hand should not be deciding whether or not to sell, but rather deciding what you can do now/today to make sure your business is acquired for as much money as possible.

And while large companies and investors won’t overpay for something, they will hand over big sums of money for something they consider valuable.

For founders this means that securing the best exit for your startup starts with thinking about your business in the same way those considering buying it will be.

Obviously you need to make sure your numbers are strong and that you have a long-term strategy in place, but there are other factors that many startups ignore. Read more…

Advertisements

How to Present Your Financial Forecast

women s white button up long sleeved shirt

Photo by Moose Photos on Pexels.com

Having A Powerful Financial Forecast

When it comes to start-ups it is very difficult to know where you will be in 5 years. However, having a powerful financial forecast will help you in understanding the capital that is required for at least the next 18 to 24 months of runway.

Now, what should you present in your financial projections to justify both the amount you want to raise and to get as high a valuation as possible to minimize dilution?  I believe you should present a financial model you believe you can deliver.

Everyone projects their revenue will go up and to the right.  Investors expect that.  After all, why would you approach an investor if you think your revenue will decline over time?  Investors, therefore are very skeptical of the actual projections.  They’re looking for something else. Read more…

BUILDING (not busting) TRUST and the growing importance of a strong corporate purpose

man person clouds apple

Photo by Stokpic on Pexels.com

As we become more interconnected and interdependent, concern about a business trust gap has grown: 58% of CEOs worry that lack of trust in business could harm their company’s growth, up significantly from 37% in 2013. I believe this breakdown in public confidence creates risks for individual companies, but also political, economic, and social systems around the globe.

As with just about everything, technology plays a role here too. A significant number of  CEOs are convinced that gaining and retaining trust is harder in the digital era. Notably, they also emphasize the growing importance of establishing a strong corporate purpose and reflecting that purpose in their organizational values, culture, and behavior–recognizing that the definition of trust has changed—specifically, expanded.

Today, for example, to counter the risks stemming from the inevitable data breaches and cybersecurity issues, a company based on integrity and transparency will be strongly positioned to speak directly to its customers and stakeholders–both present and future–outlining all that was done and will be done to preserve data privacy.

Look what has happened to Equifax and Sony when their databases were breached, or to Facebook when it simply turned over data from 50 million Facebook accounts to Cambridge Analytica , then didn’t watch where it went.

This prompted Mark Zuckerberg to make a statement: “We have a responsibility to protect your data, and if we can’t then we don’t deserve to serve you.”

The days where the CEO of a company was rarely accessible to the end customer or was able to get sanitized feedback are gone, as are the days where the consumer had little insight into how a product was produced and a supply chain crafted.

Today, I believe executive teams need to fully grasp the ethical and moral implications of their decisions, and communicate their actions with integrity. Trust has become an equalizing force, moving power from top-down to peer-to-peer.

This means that while trust is an increasingly challenging issue, organizations that succeed in earning and retaining trust have much to gain. I have seen that when businesses effectively articulate their purpose, act transparently, and stand by their values, trust and success can go hand in hand. Sustained execution is key.

Core Values

I believe that without a strong core, the organization risks instability from cultural challenges, loss of focus, disengagement, and lack of heart as the company scales up.  Core Values are the rules and boundaries that define the company’s culture and personality, and provide a final “Should/Shouldn’t” test or all the behaviors and decisions by everyone in the company.

Core Purpose

If the Core Values are the soul of the company, the Core Purpose (some call it “mission”) gives it heart.  The Purpose answers the ultimate question “Why?”  Why does what we do matter, and what difference are we making in the world?  Why would our customers or the world miss us if we weren’t around?

I believe that without a purpose more meaningful than making money, employees will pour their enthusiasm and energy into something else.  A powerful Purpose tends to revolve around a single word or idea.

  • Innovation
  • Happiness
  • Freedom
  • Value

Out of this single idea should emerge a “stump” speech that the CEO shares repeatedly, reminding everyone of the big picture and “why we do what we do.”

A leader must go beyond merely posting a company’s Values and Purpose on the wall and handing out plastic laminated cards.  The key is for you to align ALL of your HR systems and process around one list of your Values and Purpose.

One fact is indisputable: the role of business in society has never been more important. Hand-wringing over uncertainty will not lead to success. But leaders who step up to collaborate across sectors, borders, and markets and the public at large will forge ahead.

For help with effectively defining your Core Values and Core Purpose, the foundational piece to setting strategy, contact me at mike@therevenuegroup.net

Feel free to also visit our website to learn more about the services we offer to help you Position Your Potential: https://www.therevenuegroup.net/

p.s.

I also invite you to download the white paper and learn the 5 step process on How to Quickly Increase Your Valuation: a Proven 5 Step Process

How NOT to contact a VC by email

How Not to Contact A VC

I received this email recently from someone looking to raise money:

Subject: Detecting motion with WiFi, Pilots, funding.

Dear Mike,

We turn every WiFi Router into a motion sensor for home security and automation thanks to our CES Award-winning patented technology, with no hardware modifications required.

We made several pilots with WiFi Chipset Makers, WiFi Routers Manufacturers and Fixed Broadband Providers such as Microchip, Marvell, Netgear, Arris, Comcast and we are close to licensing agreements. We have raised $1M before and now we need to beef up the team to fulfill our customers’ orders and to scale to more leads.

I am sending a link to our pitch deck for your consideration.

I live in Los Altos Hills, so we can have easily a face-to-face meeting.

Let’s go through the points one by one to see what’s wrong with this and what we could do to improve the likelihood of getting a response:

  1. Subject – This sounds like a phishing email and I’m likely to send it to the junk file.  It would be better if the writer was clearer about the purpose of the email.
  2. Who are you?  The writer starts right in describing her solution.  I have no idea why she thought I’d be interested.  A better way would be to start with a mutual connection, maybe she knows someone I know who told her to contact me.
  3. Why would I care?  The writer doesn’t mention why she reached out to me.  Is it in a sector I’d invest in?  No. The writer hasn’t shown me that she’s done any homework on the areas I might invest in or any of my previous investments.  Without showing me that she’s done some research, it seems that she simply has a name and is blindly sending emails. If she doesn’t put in the time or effort, why am I expected to?
  4. Traction – the writer does a good job of mentioning the pilots they’re doing and that they’re close to licensing agreements.  But I don’t know if they have any revenue at all. 
  5. Funds – So they’ve raised $1 million before but how much are they raising now?  Is it a seed round or Series A?  Who were the previous investors and will they be participating in this round?  I know how they plan to spend the money but I have no context for it to determine if it is relevant.
  6. Pitch Deck – She did provide a link to an online pitch deck.  That’s good.  The pitch deck could use a bit of fine-tuning, but providing the deck is a great way to help the potential investor get a sense of the company and the opportunity.
  7. Clear Ask – There is no clear ask to close the email.  I know where she lives but that’s about it.  She hasn’t told me what she wants from me. She implies that a meeting is the next step, but a stronger email would be to directly ask for a meeting and suggest some times.

This might be how the email could be written to generate a better result:

Subject: Name of your company, or Name + details of the raise (“Initech — Series A — Raising $4M”)

Dear Mike,

I see that we’re both connected to Rick Hunter and wanted to reach out. I told him I’d be reaching out to you, and he thought it would be a good connection.

Your firm has invested in some pretty amazing companies in the home security sector and I believe my company could be of interest to you because of our CES Award-winning patented technology that turns every WiFi Router into a motion sensor for home security and automation, with no hardware modifications required.

  • We have had several pilots with WiFi Chipset Makers, WiFi Routers Manufacturers and Fixed Broadband Providers such as Microchip, Marvell, Netgear, Arris, Comcast 
  • We are very close to closing our first licensing agreements and the funds will be used to fulfill these customers’ orders.
  • We raised $1M in a Seed round in [June 2017] 
  • We are a 15 person firm based in Silicon Valley and now we need to beef up the team.

Here is a link to our pitch deck for your consideration.

Please let me know if this interests you as an investment and I’d be happy to connect however you prefer.

I didn’t add much more information but simply be reordering and rephrasing it, the email is much more likely to generate a response and it’s a lot easier for me, as the potential investor, to understand what she’s looking for and what I’m to do if I’m interested.

Virtual Incubator: “More Than a Pitch Deck”

We discuss in more detail how to connect with potential investors in our virtual incubator program. This incubator will guide entrepreneurs step-by-step through the best methods for building a fundamentally sound company that a VC would want to invest in.

Learn more about what’s included in the virtual incubator program, plus details on the bonus material you’ll receive.

It’s not your typical incubator.  You get the Silicon Valley mindset without having to travel to Silicon Valley.

We don’t take any equity and there is no success fee.  We just want you to succeed.  Simple as that.

LEARN MORE HERE

 

Great Pitches Don’t Start with the Problem

images

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…

Looking for VC Funding?

Overhead view of two business persons in the lobby

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?

image (1)

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…