Category: Entrepreneurship

Tonight I had the opportunity to hear startup pitches at the Harvard Business School New Venture Competition regional final at the Atlanta Tech Village. Being a regional final, this group represented the best HBS-affiliated teams from around the Southeast. Here are five quick presentation tips for startup pitches after seeing tonight’s event:

1. Tell a Story – Most of the pitches were product-heavy and not story-oriented. The winner of the event told the best story and made the problem/solution most relatable.
2. Invest in Slides – Slides should be visually compelling, even if the investment is modest. Everyone in the audience knows immediately if they’re homemade.
3. Don’t Read Slides – One of the presenters read multiple slides to the audience, word for word. Ouch. Engage with the audience and don’t read to them.
4. Max 10 Words Per Slide – Slides to be used as handouts are different from slides for a visual presentation. For presentations, don’t use more than 10 words per slide and ensure a sufficiently large font such that the furthest person in the room can see it.
5. Infuse Passion – Excitement and genuine enthusiasm need to come through when pitching a startup. If the pitch isn’t passionate, don’t do it.

Overall, the idea is to passionately tell a story with supportive slides. Pitching a startup is more involved than that but this is a good start.

What else? What are some more presentation tips for startup pitches?

Recently, I was talking with an entrepreneur about his company. They just launched a new initiative and he shared with me a few of the details. Then, he said something that stuck with me: money and energy are separate considerations. Meaning, most entrepreneurs, at least initially, focus more on a lack of money as the inhibiting resource. Then, as the business grows, energy becomes even more of a consideration as the company has more money and staff is more specialized.

Here are a few thoughts on money and energy as separate considerations:

• Startups have an ebb and flow where it’s clear that sometimes team members have extra energy and sometimes they are burnt out
• Startups flush with cash realize that balancing energy is tougher because it’s less quantifiable and more based on the human element
• Most projects require both money and energy, and leaders would do well to think through the energy component as much, if not more, than the money component

When planning, ask the hard questions about the costs, as we all do, and then spend time thinking through the current energy of the team. When energy is applied to a new project some other project always has its energy reduced.

What else? What are some more thoughts on money and energy being separate considerations?

Back in 2001, while an undergraduate in college, I spent a good bit of time meeting with angel investors in an effort to raise money for my startup. Not knowing much, I wrote an extensive 30-page business plan outlining every aspect of the business (I even made the mistake of paying a lawyer, yes a lawyer, to give me feedback on the plan — ouch!). At one of the meetings, the angel investor offered up a line that has stayed with me ever since: most angel investors have deep pockets and short arms.

Of course, the joke is that even though angel investors are wealthy (deep pockets), investing is a hobby for them and they don’t write that many checks (short arms). Here are a few thoughts on angel investors with deep pockets and short arms:

• When pitching angels, ask how many tech startup investments they’ve made in the last 24 months (it’s good to know if someone is truly active as many angel investors aren’t actually active angel investors)
• Find out what size check they typically write as well as their areas of interest
• Ask how they typically add value, if at all, for startups they invest in
• Inquire as to their decision making process and what, if any, red flags they see with your potential deal

While most investors — angel, VC, and other — have a combination of profit-motive and fear of missing out, angels, more so than other groups, are driven by the desire to help entrepreneurs and to be a part of something interesting. Regardless, deep pockets and short arms still holds true today, just like it did almost 15 years ago.

What else? What are some more thoughts on the saying that angel investors have deep pockets and short arms?

I remember it clearly: we were less than a year into Pardot and a venture capitalist reached out to us asking to talk. Excitedly, we set up a time for the call and waited anxiously for the date. Finally, the day arrived and we talked for 45 minutes only to realize that it wasn’t a good use of our time: the associate’s firm requires potential investments to have at least $5 million in annual recurring revenue whereas we had less than a million.

Here are a few thoughts on calls from VC associates:

• Associates cast a wide net and engage with as many entrepreneurs as possible, regardless of whether or not they’re a good fit yet
• While associates source deals for the partners, most of the firm’s investments come from referrals and existing partner relationships — not from associates cold calling
• Know that associates aren’t the decision makers at the firm and that they spend a huge amount of time cold emailing and cold calling startups (not too different from a sales rep)
• Before taking a call from an associate, ask a number of qualifying questions, and only take the call if raising money is on the horizon (remember that the best time to raise money is when you don’t need it)
• If getting ready to raise money, associates can be a good testing ground and opportunity to practice the pitch
• Make an ask at the end of the call to be introduced to three portfolio companies that might be potential customers

In the end, most entrepreneurs shouldn’t engage with associates unless they’re going to raise money in the near-term and they’ve pre-qualified the firm to ensure it’s a good fit. Too often, entrepreneurs get excited when a VC associate reaches out and it’s not actually a good use of time.

What else? What are some more thoughts on entrepreneurs and calls from VC associates?

First Round Review has a great new post up titled What the Seed Funding Boom Means for Raising a Series A. The general idea is that the number of seed funding rounds is up 4x, but the number of Series A financings hasn’t increased, meaning a significant number of startups that were expecting to raise another round failed.

Here a few notes from the post:

• Just because it’s easy for some founders to raise a seed round doesn’t mean it’ll be easy to raise subsequent rounds
• Seed rounds are often raised based on the strength of the team and idea whereas Series A rounds are based on startup traction, and many startups don’t have strong enough metrics to warrant institutional funding
• One idea for seed-stage startups is to raise a larger seed round and/or make it last longer so as to provide more time to show results
• When raising a Series A, consider starting with a lower desired amount of funding, and, if there’s more demand than expected, raise the amount (it’s easier to go up than it is to go down after talking to investors)
• Metrics matter and entrepreneurs need to have a strong handle on the key drivers for their business (too often entrepreneurs wing it, especially when the startup is so young)

For entrepreneurs that have raised a seed round, What the Seed Funding Boom Means for Raising a Series A is a must-read.

What else? What are some more thoughts for entrepreneurs that have raised a seed round and are looking to raise a Series A?

Last month I was talking to an entrepreneur that was going through a really difficult spell. No matter how hard he tried, it seemed like everything went wrong. After we talked about a number of challenges, I stopped, looked up, and said, “those are all signs you’re an entrepreneur.”

Here are 16 signs you’re an entrepreneur:

1. One day you’re on the top of the world and the next day you’re completely demoralized
2. Those layoffs last year were done by you personally
3. Dozens of investors have rejected your investment pitch
4. In the morning you’re writing code, at lunch you’re emptying the trash, and in the afternoon you’re on the phone doing a sales call
5. That first company credit card was really your personal card
6. Those two employees that don’t fit the culture — you agreed to their hiring out of desperation to fill the position
7. Every week you have a new idea to make the company better
8. Competitors have raised way more money than you
9. Those channel partners you expected to sell your product haven’t even hit 10% of expectations
10. Culture is valued more than anything else since it’s the only thing within your control
11. Everything you thought you’d accomplish took twice as long as expected and was twice as expensive
12. After thinking you were alone, you found 10 other entrepreneurs in the same exact spot
13. No matter how hard you try, there are never enough hours in the day
14. The original idea for the business wasn’t the idea that ultimately became successful
15. Making decisions with imperfect information gets you excited
16. When things are going well, you have the best job in the world

Being an entrepreneur is both exciting and scary at the same time. These 16 signs ring true for entrepreneurs around the world.

What else? What are some other signs you’re an entrepreneur?

Over the past month I’ve talked with several entrepreneurs that are trying to raise money for their startup. Often, there’s some initial success from a couple friends or a rich uncle that will put in $25,000 or $50,000, and then, when talking to angel investors, there’s not much luck. The challenge: angel investors are requiring that entrepreneurs have the start of a repeatable customer acquisition process in place. No longer is having a product with a handful of paying customers enough. Now, more investors need to see how acquiring the first 50 customers is going to translate into acquiring the next 500 customers.

Here are a few thoughts on investors requiring a repeatable customer acquisition process:

• Entrepreneurs that only have a product, or a product with a limited number of customers, are going to have an increasingly difficult time raising money (it’s already hard to raise money)
• More entrepreneurs are going to realize the importance of distribution sooner (e.g. using tools like SalesLoft to proactively reach out to prospects)
• Investors are always looking for ways to de-risk an investment, and more proof of a repeatable process helps add confidence

Investors are requiring more of a repeatable customer acquisition process from entrepreneurs before investing. Entrepreneurs would do well to plan for this and ensure that they have enough progress to satisfy investor requirements.

What else? What are some other thoughts on more investor emphasis around a repeatable customer acquisition process?