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Start Ups The New Reality.Score


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Startups the new reality

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Start Ups The New Reality.Score

  1. 1. “Startups Fail from a Lack of Customers not Product Development Failure” Steven Blank 2008 Start-ups have to have a process to developcustomers in parallel with product development processes.Focus on Customers and Markets from Day One! Mind2Net, Inc. © 2011 all rights reserved
  2. 2. The new start-up funding reality is you have to show TRACTIONTRACTION = SALES Revenue = INVESTOR interest = get the MONEY Everybody has a product/service idea but most entrepreneurs focus on developing the product/service thinking “if we build it they will come” – NOT!Focus on Customers and Markets from Day One! Mind2Net, Inc. © 2011 all rights reserved
  3. 3. What Early Stage Investors Are Asking?• Are you going to:– Blow my initial investment?– Or are you going to make me a ton of money?• Are there customers?– How many? Now? Later?• Is there a profitable business model?– Can it scale? Mind2Net, Inc. © 2011 all rights reserved
  4. 4. Step 1 Startup Checklist • Opportunity Where does the idea come from? • Innovation Where is the innovation? • Customer Who is the User/Payer? • Competition Who is the competitor/complementor? • Sales What is the Channel to reach the customer? • Marketing: How do you create end user demand? • What does Biz Dev do? Deals? Partnerships? Sales? • Business/Revenue Model(s) How do we organize to make money? • IP/Patents Regulatory Issues? How and how long? • Time to Market How long does it take to get to market? • Product Development Model How to you engineer it? • Manufacturing What does it take to build it? • Seed Financing How much? When? • Follow-on Financing How much? When? • Liquidity How much? When? Mind2Net, Inc. © 2011 all rights reserved
  5. 5. Step 2Focus on Customers and Markets from Day One!  Is there an articulated customer need?  How do you know?  How big a market and when?  Are others trying to solve it? If so, why you?  Does it solve an existing customer problem?  Do you have a sales roadmap?  Org chart? Influence map?  Do you understand the sales cycle?  ASP, LTV, ROI, etc.  Do you have a set of orders ($’s) validating the roadmap?  Does the financial model make sense? Mind2Net, Inc. © 2011 all rights reserved
  6. 6. Step 3 Parallel Development Tracks Product Development Cycle Feedback Concept/ Product Dev. Alpha/Beta Launch/ Bus. Plan Test 1st Ship Feedback Company Building $$$$ Customer Customer Validation Discovery Need Validated Traction Yes I’ll buy this “chasm” Customer Development Cycle Mind2Net, Inc. © 2011 all rights reserved
  7. 7. Step 4 Know Your Customer - Questions  What are your customers top problems?  Does your product concept solve them?  Do customers agree?  How much will they pay?  Draw a day-in-the-life of a customer before & after your product  Draw the org chart of users & buyersFocus on Customers and Markets from Day One! Mind2Net, Inc. © 2011 all rights reserved
  8. 8. Step 5 Iterate• Until you “cross the chasm” and validate market need.• Traction comes after proof of sales. Increasing• It is a strategy not a tactic. population of affluent singles over 40• Define the market landscape to represent reality.• Emphasis is on learning & discovery before execution (or it could be your execution). It’s hard work and usually you need outside help Mind2Net, Inc. © 2011 all rights reserved
  9. 9. Step 6 Where to get help?• Put an ad out for the talent you need to succeed - Offer equity• There are many organizations with talent that you can tap for free (Crunch Base, Score, SBA, Start-uppers, FB, LinkedIn, search)• Use online tools• Enlist a family members help• Crowd Source Mind2Net, Inc. © 2011 all rights reserved
  10. 10. Step 7 Funding• Develop your Pitch Deck • Summary with Ask, Market potential, Product Niche, Scale, … • 8-10 other slides – market forces, customer need, product description, sales strategy, scale strategy, financials – 3 yrs proforma, exit strategy, team, supplemental slides (make it visual)• Make a video Pitch• Post/Pitch to Angellist, Keiretsu, Y-combinator, Crowd Funding, Golden Seeds, Fund Me, Band of Angels, Norcal Angels, Institutional investors, Private Placements, get out here…• Practice, Practice – Make a compelling business case• Traction will attract investment Mind2Net, Inc. © 2011 all rights reserved
  11. 11. Step 8 Due Diligence Binder Be prepared – Put this together early – Accelerate the Funding ProcessDue Diligence Binder Table of Contents Marketing Plan Executive Summary Advertising Plan • Business presentation Business Operations Processes • Product/Brand definition • Sales and engagement overview • Monetization Model • Contract and payment terms • Management team bios • Business process flows • Ownership structure – CAP sheet • Expansion plan overview • 2nd deck and process overview slides • Position descriptions and training overview Financials • IP product application(s) • IP algorithm • 3Year P&L summary, scaling, ROI, 3yr P&L worst • Network architecture case, and cap table • Contingency planning • 2011 financials • IP management and protection • 2012 financials • Legal representation and trademark • 2013 financials • Data Privacy Policy • 3 Year cash flow summary, worst case and expansion cost summaries Human Resources • Hiring profiles and policies Market Research • Compensation structure • Who is our customer? • Incentive Comp. structure • Current market penetration and engagement • Benefits summary • Policies & procedures • Competitive analysis • Code of conduct • SWOT –TOWS analysis • Records Privacy Policy • Competitive landscape – Scatter diagram • Focus group research Investor Relations • Brand • Beta test interview notes • Partners • News articles Mind2Net, Inc. © 2011 all rights reserved
  12. 12. Step 9 Company Building• Is your team right for the stage of company?• Does sales growth plan match market?• Who/How will drive innovation?• Does burn rate match revenue model?• Have we built a mission-oriented culture?• Can we own the market or are we threatened by stiff competition?• Are we listening to our customers?• Does the board agree? Mind2Net, Inc. © 2011 all rights reserved
  13. 13. From stealth start-ups to cloud commerce togoing businesses - East Bay Score’sexperienced counselors can add value in Starting Running Growing Your Business. Call us at (510)-273-6611 Mind2Net, Inc. © 2011 all rights reserved