Presentation for the School of Startups in Helsinki - and a very good resource for any new business! We tackle issues from funding through valuation to scaling.

1. How to sell your business idea
to your customers / investors
Aki Inkeroinen
Santeri Muhonen
Espeo Software

2. Contents of the Workshop
• Background
• Typical Startup
• Business Challenges
• Growth Enablement
• Selling to Your Customers
• Selling to Investors
• Software Development for Scalability

3. Background

4. Aki - background
• Business development, sales and sales management
• Experience of how to create exponential growth
• Several large international ICT enterprises
• EdTech gamification startup
• Software houses
My current role:
• Responsible for Espeo Software business in Finland
• Daily contacts to dozens of startups

5. Santeri - background
• Sales in B2B, B2C over the last decade
• Software, Tech, CRM, Security, Blockchain
My current role:
• Sales Development Representative
• Lead hunting & refinement
• Development of business processes

6. Espeo Software
• Polish company with Finnish roots. Founded 2008
• Combines the Finnish business and software consulting
with the Polish programming skills
• With a number of Finnish customers we have done
close cooperation over 8 years
• Sanoma Oikotie jobs, Janton, Ottoboni, Solita, YLE,
Startups, Advertizing agencies and Industrial customers
• We know startups well – during the last 2 years we have
started software development for 14 new Finnish
startups
• We have clients also in other Nordic countries, in
Central Europe, Asia and in the USA

7. Typical Startup

8. Typical Startup Company
• Innovative business idea
• Group of persons with different skills
• Not always enough experience
• Money and time constraint
• Need to show the business potential to the investors
• After investment rounds, needs more resources and
external experience to solve the bottlenecks
• When the success hits – often impossible to get
resources fast enough to enable the growth

9. Business Challenges

10. Our Targets for Success
• Every startup employee able to use his/her skills
• Successful selling to end customers
• Investors’ development expectations fulfilled
• Fast development cycles of the product / company
• Scalable resourcing when success peak hits
• Internalization and scalability of the products and
organization
• Exponential growth with correct actions done

11. Key Growth Issues with Startups
1. Bad business idea. No money
2. Wrong timing vs. competition
3. Not able to show validity for investments
• Not fast enough vs. competitors
• Missing product features
• Incomplete / inexperienced team
• Solution scalability problems
4. Missing monetizing of the solution
5. Design or user interface help needed
6. Suitable partnering for growth
7. Support and maintenance of the solution

12. Growth Enablement

13. Startup Team
Startup needs the following resources:
• Business idea owner, quite often the founder
• Technology owner, technical viability
• Monetizing owner, profitability of the product
• Solution sales owner, selling and partnering
• Potentially a set of own software developers
• Team of experienced advisors, for creating contacts

14. Time
Revenue
Target
Growth
Start and Scaling

15. Digitalization
Software development & digitalization
• Digitalization creates visibility & added value
• Good to think in early stages of you startup
• Even if you product is totally something else, digital
presence strengthens your company image
• Product and company image are the factors that define
if your product or solution sells at all
• Integration to payment systems generates easier cash
flow
• Almost every product or service can contain remote
management features or at least some connection to
social media

16. Selling to Your Customers

17. Lead generation
• Define your target customers
• Find the decision makers
• How and when you contact your leads depends on
who they are
• Industry events, online databases, networks
• Professional looking materials with prices
• Select the right people for the task
• Outsourcing is a common option

18. Selling Cycles
Solution selling
• Do NOT expect quick acceptance of your product or
your totally new company
• Selling means repeating your message to the same
potential customer 3 – 4 times before getting the order
• Selling cycles are long: 3 months to several years
• This is regardless of your target group of
customers, B2B or B2C
• Concentrate on having 1 – 3 references that can be
used to sell to others
• Check SPIN Selling or other solution selling method
• “Selling starts when the customer says no”

19. Don’t change your message
Keep your customer message
• Big mistake is to change your customer message or
company image too quickly
• Make a three year strategy and keep your customer
message steady
• Every time you make changes, the selling
cycle counter starts from zero
• Customers need to hear the same message
several times
• They want to see that your company and the
products still exist
• They may have selected your product, but are
in “wait and see mode” before the final
decision

20. Revenuegrowth
Planning Activity and continuation
New business
Areas
Partners
Pricing model
Customer
references
Product MVP
Business
model
Exponential Growth - Do it once and replicate

21. Correct Timing
There is a correct time for every solution
• Typically there are moments where markets,
technologies or customer needs validate some specific
solution
• When this time hits the same solution is invented in
several places at the same time
• Just like singers, for example Bruce Springsteen:
• Was singing with his own style 20 years
• Suddenly, at the correct time, 1975 came well
known worldwide for 15 years
• Then disappeared back from the highlights
By Bill Ebbesen, https://en.Wikipedia.org

22. New Ideas
Hard work to sell
• First they ignore you, then they laugh at you, then they
fight you, then you win - Mahatma Gandhi
• Typical example. Elon Musk & Tesla and SpaceX
• Both start to be in the “win” phase
Competitors are needed
• Competitors create credibility
• Customers buy when they see also some
alternative products
• Investors believe that you startup has potential
for growth
• You can verify the validity of your solution
Courtesy Tesla & SpaceX

23. Be Fast. Copy from Others
Be fast
• … when you get money. Investors expect results in
months.
• You may not have time to recruit new resources
Fail fast
• Fail fast internally. Learn from failures.
• Do not show it to the customers
Copy from others
• Use your valuable own resources for business (idea)
development
• Copy the best practices from others
• Use external professional skills effectively

24. Organize when growing
Adapt to markets and grow
• Do actions for growth consistently
• When in “small startup mode” you need to be able to
adapt your resourcing very quickly according to
the needs
• In small startup everyone knows each other
• Larger company needs processes
• Standardized processes are needed and enable
your company growth after approx. 40 employees
• It might also be useful to hire a new CEO

25. Selling to Investors

26. Investment rounds
Pitching needed at every stage
• You need to show consistent results at every stage
• Critical thing is to keep the promises
• Try to be realistic of what you promise
• Failing is possible at every stage
• Investors follow carefully the personalities and skills
in your team
• Also your team need to show development during
the company growth

27. The Pitch
Prepare well
• Investors see many pitches yearly
• Make sure your core message and important information is available

28. The Pitch
A good blueprint for a pitch goes something along the lines of:
• There is a problem in the market
• We have a solution
• The solution has a large (enough) market
• We have a good team for the work ahead
• Where a profitable business can be built with the right model
• There are competitors, but we are better and we stand out
• We have already got this far
• We want to be more - which is why we seek an investment/expertise/contacts
Example of the pitch structure: etula.fi/pdfs/pitch_en.pptx

29. Funding
Investor Profile
• Early funding rounds are usually from
business angels
• On average a person between 35-65
• Has worked in management of a large
company or as an entrepreneur
• When planning a pitch, take this into account.
Soft values not a priority in the pitch, focus on
fact and info relevant to growth and scalability
• Angel investors usually seek between 10%
and 40% of shares
• Investments from venture capital companies
are more common at later stages of a start-
ups development

30. Valuation
Valuation refers to how much money your company and all its assets such as
IPR is worth. In Finland valuation generally refers to a pre money valuation or
how much the company is worth before an investment.
A post money valuation is a sum of the following factors:
Pre money valuation
+ Private equity investment
+ Sweat equity investment
+ Network equity investment
= Post money valuation
A post money valuation is different for almost every investor. The post money
valuation is based on how much added value an investor brings into your
company.

31. Valuation
Valuation is something entrepreneurs should not do themselves. Most times
they get it wrong, and this often leads to investors losing interest. A good
resource is a free tool called Angeltool.
Without a valuation tool you can use the following as a good rulebook:
1: Great idea - A powerpoint presentation: 100 000 €
2: Working MVP or prototype: 250 000 €
3: Working product in market with proven sales: 500 000 €
4: Stabilised business - established sales: 1 200 000 €
http://etula.fi/pdfs/guide_to_finding_an_angel_investment.pdf
http://angeltool.org/#/new

32. Valuation gap
• What is a valuation gap and how it is formed?
Companies seek to maximize valuation and hold on to as many shares as
possible. Investors want to minimize valuation to increase the amount of their
profits.
Things to look out for
• A bad valuation can lead to difficulty in next rounds of investment and drive
a company into a financial dead end. Don't overvalue your company even if
the investor would give you the money!
• A valuation gap is the main reason why negotiations between investors and
start-ups fail

33. Best places to look for an investment
• FiBAN - Companies of all sizes, usually turnover under 1M €, mostly
Finnish angel investors
• Arctic 15 -Startups and growth companies, business focused
• Kasvu Open -Focused on Start-again companies
• Slush -Start-ups, large investment need, over 0,5M €. International
investors
• Vigo-accelerators -Several different accelerators focused on the field or
investment phases
For later investment rounds new possibilities arise:
• Crowdfunding via “traditional” channels - Kickstarter
• Venture capital companies
• Crowdfunding via new channels: ICO’s

34. ICOs as an option for funding
• ICOs are similar in some ways to a crowdfunding campaign
• Unlike Crowdfunder or Kickstarter digital tokens are offered
• Tokens have varied uses - are often tradable
• Funding often received via other cryptocurrencies
• Most commonly in Bitcoin or Ether.
• ICOs have raised 3,2 billion $ of funds in 2017 alone

35. Software Development
for Scalability

36. Spaghetti code and bottlenecks
Spaghetti code
• Inexperienced software developers
• Need to get more features into the product
• Need to show credibility to the investors
• All these result as a spaghetti code
Bottlenecks
• Need to fix the code
• Need to grow fast
• No time to recruit
• Scalable resourcing helps

37. Monetarization & Integrations
Monetarization
This is the point where you make your money!
• Web shops
• Payment systems integrations
• Payment security solutions
Integrations
This is the way how you increase the visibility and
popularity of your solution
• Integrations to partners' systems
• Integerations to social media
• General API available for connections
• Open documentation / interfaces for development

38. Scalability and testing
Downscaling
• After one investment round product has reached the
specified level of functions and features
• Development resources need to go down quickly
• Product goes into field testing mode
Testing the product
• Testing the product with real customers mean support
functions and feedback collection
• Selling starts for new level of investments
Upscaling
• New investment round means quick upscaling to the
same or higher level as earlier

39. Solution for scaling
• The cost level of the software development can
be halved by using nearshoring
• Spaghetti code cleanup and redesign is done
quickly by experienced software developers
• Business idea validity can be checked at
workshops and bootcamps with business and
software consultants
• When the growth need hits, external resources
can be delivered fast
• External developers can be scaled according to
the needs
• The whole solution development can be
outsourced and the own team can concentrate on
finalizing the business idea

40. Thank you
Aki & Santeri
www.espeo.eu