five things for startups to expect from mentors & the other way round

the estc2009 innovation seed camp will introduce mentoring sessions for the pitching startups. the diverse spectrum of mentors present at estc covers founders, investors & the industry - laying the ground for interesting feedback sessions. so what can startups expect from those mentors? and the other way round, what do the mentors expect from startups?

let´s break it down into two sets of five :

5 things startups can expect from mentors
1) critical questions - no answers, no solutions.
2) instant feedback on how each and every startup gets its story across. if the pitch is bad, it will be made obvious instantly. that´s a good thing.
3) the impression a startup has on a mentor will be based 95% on pitch, 5% on executive summary et. al.
4) mentors have contacts (businesses, investors, lawyers,...) and some will help you with them - if they value the startup. if not, not more then polite friendliness can be expected.
5) not every mentor will be interesting for every project (and the other way round). that´s ok.

and now, let´s flip sides:

5 things mentors expect form startups
1) passionate, enthusiastic open entrepreneurs are welcome. self centered show-offs looking for adulation will not feel served well.
2) feedback can be direct & rather blunt - better from mentors then your customers, investors or potential employees. so startups must not be offended but take the feedback as is its & do with it what they think is best for them.
3) mentors will want to get ideas on what´s happening in the markets. some will search for investment.
4) mentors invest their energy for prepared teams. startups using the "next best" slide set available, preferring the check their tweets et al. rather then to get the most out of the sessions will receive what they seed.
5) and finally, mentors look forward to critical, even controversial discussions not yea-sayers. so let´s give them a good time!

for more on mentors see also the intersting interview of dave mcclure by mike butcher of techcrunch europe. for an overview of pitching opportunities head over to the finance mindmap. finally, to refresh the memories, find enclosed the start.upICT blog intro on start.up competitions.

startup competitions

View more documents from hannes.a.schwetz.

"surviving after investment", 6th and final part of the series "six steps to venture capital"

a successful venture capital investment into a start.up is a big step. having taken this hurdle, it is all now about staying in the game through fulfillment and transparency.

this is the final and sixth step in the series about approaching venture capital, where the systematic approach to acquire venture capital for a start.ups is discussed.

after the motivation got sorted out in step 1, the a-b list of potential investors in part 2 (part 2.1, part 2.2) got filled. the battleground was prepared in step 3, and how to approach venture capital in part 4 (part 4.1, part 4.2). the art of negotiating was the focus of part five (part 5.1, part 5.2). finally now it is all about surviving after the investment.

the entrepreneur has to be prepared to fulfil what he promised when searching for investors. the ultimate consequence of not doing so is simple: losing her job and/or the shares in company.
under-performance in revenues, product delivery and cost discipline lead to additional cash requirements, speaking vc investments. such a „down round“ (lower valuation then in the first round) is mainly done by the first investor. only some start.ups survive this without changes in management and none without the founders loosing substantial shares.

this in mind, a less ambitious company valuation and reachable key metrics (revenues, expenses, cash flow) can lead to a more desirable outcome for the founders already in the mid-term. in vc-language: increase in company value compared to the investment date.


being a start.up, it is evident that not all goals aimed for or promised get reached. ultimately the investor always finds out. many start.ups think they do not - but they always do. from customers, unsatisfied employees and latest when the company runs out of cash.

rather then „performing“ in board meetings transparency is key for survival. no investor, no advisory board member shall ever get surprised in a board meeting (link sun tzu). setting up a three to four week „one-pager“ reporting schema, outlining the good and the bad is one way. involving the investor in a „srum“ like company development process another. demanding input and such giving responsibility to the investor is crucial.

through fulfilment and transparency the so called „shit meeting“ can be avoided. this is the first meeting between investors and start.up after the investment, when the difference between the investment story presented and the reality come to the surface.

recommendation: 1) only promise what can be fulfilled, 2) fulfil what got promised and 3) always be transparent.

this „six steps to venture capital“ series is a guideline on how to get investor on board. every start.up is different, no product, market, investor or founder is alike.
it needs a compelling business opportunity and a thriving start.up team combined with a structured approach and some luck. then venture capital investments are just another task to work on.

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"approaching venture capitalists", part 4.2 of the series six steps to ventture capital

at the 2nd round meeting it goes along the same lines as on the first round. know your pitch, stick to your talking time. know who answers which questions. do not correct each other giving answers.

now it is time to hand out your references. and again: set up the schedule (yes or no, negotiation schedule, term sheet, final contract signing-closing). this tests the real interest of the vc, namely through assigning resources for the evaluation. having mastered the 2nd meeting, this either leads to a „no“ or a jump directly into the negotiation part. this will be the next part of the series.

having reached the 3rd round brings one positive problem: the vc´s approached until now were form the b-list. the leanings form the presentations and meetings will pay off, through refining the approach, the pitch. based on this, it is then time to go ahead on a-venture firms. keeping the b-vc as back up can be helpful.
following the same procedure as outlined above it is about making it to the 3rd round with two a-vc. the main difference now being, not to learn & to improve but getting qualified a investors.

there remain some side topic on approaching vc, which are worth looking at: timeframe, lawyers, costs, consultants and exclusivity.

as a general time frame, 6 month from the start of approaching vc until closing an investment are a reasonable timeframe for europe. 4 month are more seen in the anglo-saxon world.

lawyers are generally only necessary after drafting the term sheet. until then common sense suffices as singning anything which would cause obligations on the start.ups side are not necessary.

until a term sheet is signed, no costs of any kind should be accepted from the start.up by a credible investor.

if any kind of corporate finance/m&a,... -consultants which promise to bring investors to the start.up are involved, special care is required. upfront payments may sound plausible but as cash is a scare resource, only success fees should be accepted, based on real cash inflow on the start.ups account. generally start.ups have more then sufficient capabilities to acquire vc interest - if they do their homework. and paying a consultant just to be told to do the homework could be seen a waste of money. the combination of a compelling idea with preferences (see part 3) opens vc doors without the help of others.

recommendation: 1) approach 3 b-vc, 2) follow up after one week, 3) fix 1. meeting/conference call, 4) be prepared, 5)push for go/no + next meeting, 6) reach 2. & 3. meeting. 7) watch timeframe, lawyers, costs, consultants and exclusivity.

how to succeed in the negotiations with the investor will be the focus on the 5th part of the "six steps to venture capital" guide. that much can already be said: the aim is, that both parties are unhappy but still want to close the deal.

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"approaching venture capitalists", part 4.1 of the series six steps to venture capital

„giving and taking“ is the name of the game now. start.ups have bright ideas but no money, investors have, well, money and the need to earn profits. so both parties have a mutual interest to find to each other. therefore mutual respect should be the basis of the interaction on both sides.

this is the 4th part of the "six steps to venture capital" guide, where the systematic approach to acquire venture capital for a start.ups is discussed.

after the motivation got sorted out in step 1, the a-b list of potential investors in part 2 (part 1, part 2) got filled and the battleground got prepared in step 3 now it is time to approach the potential investors.

first thing to do is to contact three venture capitalists from the b-list (as laid out in part 3).

the best way to contact is through references (see here on general discussion of references in the context of venture capital). if that is not possible, it is worth to investigate on how to get in touch best with the respective firms. there has been an interesting discussion on that topic also at web2.0 berlin 2009, see here.

in case of doubt, just call the vc firm and ask which way of contact they prefer. when calling though, be prepared for the (unlikely) event, that you get put through directly to a vc partner or his associate. in this case, either just ask how to forward your project or use the opportunity to try the already prepared (and peer group tested!) 2 minute telephone pitch. depending on the latter, the executive summary could be looked with more or less care at the first screening.

having found out the way to contact, send the executive summary and announce to get in touch personally one week after.

follow up after one week as said. use whatever way fits best, e.g. by using an open approach like, „any questions, additional information wanted“. key is to find out if they interested or not. it is not worth to run after a vc for 2 month. reading the executive summary takes 10 minutes.
2nd thing to find out is how to set up the next step. be it a personal meeting or a online presentation/telephone conference. know how the time frame for meeting will be and who will attend.

when succeeding to get the 1st meeting/online presentation prepare the team: ceo and cfo are sufficient. prepare the pitch and stick to the time frame. decide who answers on which questions beforehand.
also the start.up has to have the questions to the investors prepared. a start.up which has no questions to the vc did not prepare.

at the end it is all about fixing the next steps. when - if not directly - to get an answer for go/no-go and about discussing the timeline for a follow up meeting.

if an invitation for a 2nd round discussion got nailed down, it is a ll about making it to the 3rd found. the basic idea is the same as for the first encounter. ahead of the talk, fix time frame, fix topics, check on participants (investor, start.up). additionally prepare references, have the non disclosure agreement (nda) cleared out in the meantime (so that legal stuff does not waste scare meeting time and legal topics potentially poison the spirit, long story short, that often leads to accept the nda of the vc).

handling the 2nd round meeting comes up at the second part of "approaching venture capitalists", part 4.2 of the series six steps to venture capital.

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interview with Andraž Tori of zemanta: part 2/2

this is the second part of the interview with Andraž Tori of zemanta. the first part can be found here.

Andraž, what does seedcamp and pitching mean for your company?

pitching is a fabulous experience of explaining your idea and trying to inspire other people. pitching is one of the best things, when you have a start.up.

seedcamp was a great experience, because it gives start.ups a chance. that's very important for early stage start.ups. having the possibility to present your idea to somebody that matters can help you to move your idea forward.

seedcamp was a very fortunate event as the timing was exactly right for us. this is the part of the start.up life that you can not plan for. you need to work hard as hell, but at the end you also need to have a bit of luck.

you have already left some tracks in your personal career, informatics olympiad medal winner, co-founder, open source developer and now zemanta. what`s next?

well [laughing], i do like to do cool stuff that interests me, that helps people and has some impact on the world. that's what i am going to do for a long time. but first and foremost we have to make zemanta a big success.

bostjan spetic and your are the founders of zemanta. ales septic, the ceo of your company was not among the founders. how was it to have a non-founder becoming the ceo?
it is an interesting experience. we already worked with ales before and we rely on the good sides of everybody in the team. handing over control was not really a big topic, as we were always running the company very consensually. there is always disagreement about certain topics but it is important to find a proper consensus and then honour the decisions.

semantic technologies are hard to tackle. how do you trade between a very domain specific vs. a more generic approach for your product?
we started with a very generic approach from the beginning. it is just now that we start to add specific things that are required for special areas of application. that is not the usual thinking but that helped us.

anything else you would like to talk recommend new start.ups for the beginning?
be very clear from the beginning of what kind of value you provide and to whom.

the other thing is, just do it. it is not perfect in the first iteration ever. just put something out, see what others say and how they use it. learn on that and create a new thing. it is not a bad thing to be wrong sometimes. then go ahead and improve – you sometimes fail and you just improve again.
that is probably what we haven't still completely consumed from the silicon valley type of entrepreneurship [in Europe]. failing is just part of succeeding. failure is still a failure but it is not the end of the world. it is as good experience to learn and do it better next time.

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"preparing the battleground ", part 3 of the series: six steps to venture capital

this is the 3nd part of the "six steps to venture capital" guide, where the systematic approach to get venture capital for a start.ups is discussed.

after the motivation got sorted out in step 1 and in step 2 the a-b list of potential investors (part 1, part 2) got started, it is time to "prepare the battleground".

it would not be wise, to contact the top 3 vc on the a-b list to start with. even after the excitement of achieving a list after quite some work, this would be a bad thing to do. first, because the potentially best investors should be kept for later, when a routine in pitching was developed. secondly because what would happen if a contacted (still potential) investor directly calls back and ask for the executive summary and you do not have one yet? and no, sending out something that was just compiled in a couple of hours, is not a good idea. not even for the bottom three vc from your a-b list.

following the advise of general sun zi (read more about sun zi, moltke & douglas adams für start.ups here) you should only go into a battle when you know that you will win. therefore preparation before contacting future financiers is key. there are four things that have to be in place:
1) investor picht slides (30-20-10),
2) an executive summary (2 pages, includes financials),
3) business plan (20 pages total, including all attatchments & 1 page financial summary),
4) references.
the best way now is to work through the list top - down.

plan to spend around one week on preparing your investor presentation and executive summary. follow 30 (minimum font size) - 20 (time of presentation) - 10 (number of slides) guideline from guy kawasaki. stick to this rule, do not try to improve it, it only reduces the chances of funding.
use the following headlines, kawasaki again: 1) problem, 2) solution, 3) business model, 4) underlying magic, 5) marketing and sales, 6) competition, 7) projections, 8) team & 9) status & time line.

the structure is the same for the investor presentation as well as for executive summary. for more details, read "the art of the start", or "reality check" from guy kawasaki.
the executive summary shall not succeed more then two pages. and that includes a summary of the financials (projections for revenues, number of customers contracts, personnel & other costs, number of employees, total cash requirements, sources of funds).

focusing that much requires a clear focus of the aim of the start.up and how to achieve it. if two pages are not enough, more thoughts have to be spent on the start.up.

based on the presentation and executive summary the business plan can be compiled. sticking to a readable 20 pages is key again. no vc will read a 60 page manifesto. after the focusing work was done in the executive summary, filling in the prosa can be done in 2 days. if not, going back to thinking for the exec. summary is imminent.

having followed the chronological order of the "battleground" preparation it is time to think about the start.up's references.
first, who can be the references? choose from former employers, colleagues which already made it, customers, former investors, well connected lawyers, reputable professors. whoever can give valuable, connected reference can make sense. a similar procedure as compiling the a-b list can be applied. not everyone which is known by the members of the start.up is a valuable reference for potential investors though.
as the executive summary is ready by now, it will be easier to get 2-3 references on board, using the key pitch topics is the thoroughly prepared "ammunition" at hand.

being prepared with all the materials required and the investor targets identified, it is time for approaching the investors. this will be the next part of the series, six steps to venture capital.

recommendation: while preparing the a-b vc list, create 1) pitch slides (30-20-10), 2) an executive summary (2 pages including financials), , 3) business plan (20 pages total, attachments & 1 page financial summary included), 4) prepare 2 to 3 references.

six steps to venture capital: part 2.2/6 fund selection

this is the 2nd part of the "six steps to venture capital" guide, where the systematic approach to get venture capital money for start.ups is discussed.

part 1 covered "motivation" and can be found here. part 2 deals with the selection of potential funds. the fist section covered fund selection according to investment period, geography and focus. to complete the criteria, let's look at the remaining important criteria:

4) experience
does the potential investor understand your technology, your business model, your market? or would an investment be the “pilot-investment” for a fund e.g. in semantic technologies? if so, a lot of missionary work has to be done with the investor (so b-list). not too much support market and business wise can be expected after investment as well.
smart money, as often described when talking about venture capital, which means that on top of the money from the investor comes a lot of business contacts or business advices, is often promised but seldom delivered. check with reference calls.

on a daily business, it is not “the fund” though, which a start.up is going to interact after investment. it will be a partner and an investment manager. so besides valuing their investment history and their personal background (technology or finance, entrepreneur or big corporate, number of successful relevant exits), it is absolutely necessary, to be able to consider the gut-feeling after a first meeting with them. A start.up should ask themselves the questions: do we like this person? can we work with her also in hard times? If not, then even a otherwise perfect match is useless (lower b-list).

5) cash available for investment
finding out how much cash a fund can invest is vital. if a start.up requires 2 million € and that is all the money a fund has left, that’ b-list of even worse. regular start.ups need more money then they expect, often twice as much as projected. if the fund which did the first investment can not put in additional money the start.up might run out of cash maybe just three month before taking off. finding a new investor without the first round investor putting any additional cash on the table will be very difficult (this is often seen as: the first investor does not believe in the company any more).

6) fund exit horizon
when will the fund close? some funds run for 10 years, some are evergreens.
A ten year fund invests for five years and spends the next five to sell his investments. at the end of the 10th year, the fund has to pay the money to his investors. evergreen have no determined duration. And are therefore a-list candidates. Other funds within their investment period as well.

7) references.
references are important. venture funds will check the references of their potential project – so should start.ups. fund recommendations from fellow entrepreneurs, reference contacts given by funds and even cold calls are possible. only funds with three positive references make it on an a-list place.

recommendation: prepare ranking “a-b list” of potential funds according to 1) investment period, 2) geography, 3) focus, 4) experience, 5) cash available for investment, 6) fund exit horizon and 7) references.

coming up in the next step of "six steps to venture capital" is all about preparing the "battleground".

how to turn-off investors and what business plans & sausages have in common: best of web2.0 expo belin 2008

the second incarnation of o‘ reillys web2.0 conference took place at the bcc - well placed at the center of berlin, next to alexanderplatz.

the new location was a welcomed change to last years 60ies-bunker style berliner messe facilites like a „community lounge“ promoted interaction between attendees and with last year‘s food problems solved people were happy to focus on the topics at hand.

besides the „big pictures“ keynotes for tim o‘ reilly, john lily (mozilla), martin varsavsky (fon) et al., the show brought a wide range of in depth topics , ranging from business to marketing and design to development.

the collective presentations of the show can be found on slideshare, respectively on the conference website . going through the (until now) uploaded 42 presentations on slideshare is too much noise, so let‘s setup up best of the show. start with the five best events of the show:

1) pitch camp
pitch camp was a driving event. 12 companies were selected to pitch for two minutes each, in front of a 200+ crowd and a grand jury (ranging from techcrunch and venturebeart to accel and index ventures, see here).

the short intro giving on the art of pitching can be reduced to 3 points:
1) clear view of business
this is necessary to be able to communicate the start.up (business objectives, market segments, problems solved)
2) understand your audience and what they care about
who are they, what do they want, why would they care about you.
3) build 3 month, 9-12 mont and long term business objective

there were book recommendations as well, crossing the chasm (again!) & blue ocean strategy, chan kim, renee mauborgne, understand the problems of your market.

also interesting to note were comments by the jury what turns them OFF, when the listen to pitches.

investors

• lack of ambition displayed
• lack of character and leadership
• homework not done (not knowing the background of people start.ups pitch to, not done the business metrics, not having market figures, competitor ignorance, lack of execution plan, ...)
• lack of understanding potential customers, investors, partners

media

• old stories
• no potential to bring journalist on techmeme/digg for x weeks
• clones of anything
• no magic sauce begin

potential partners

• telling the potential partner how cool the start.up is
• not telling or not being able to tell what the partner will exactly (=cash) gain from partnership, when and how.
• unfulfillable expectations from partners (like: just put my link on the google landing page...“)

how to get in contact?

• through references
• email (keep it short, send a compelling 2 sentence pitching email)

not just also judging on the start.ups at pitch camp but also discussing on stage was:

2) keynote speaker yossi vardi

being a serial entrepreneur himself and a rather successful venture capitalists, yossi vardi gave some interesting statements at the discussion with tim o‘ reilly.
that at the end of the days successful vc just have luck, is quite a open statement.
also that it is very important to check the vc a start.up is interested in. is he friendly? do entrepreneurs work repeatedly with him?
and that business plans and sausages have one thing in common: only people who do not know how they are made eat them.

this made the 2nd of the best web2.0expo berlin events. read more about moo, user interfaces and user action through design in the 2nd part of the upcoming web2.0expo roundup.

six steps to venture capital: part 2.1 fund selection

after being sure, that venture capital is the best choice (see “six steps to venture capital: part 1/6 on funding motivation) , the next step is to select which funds to approach.

2) fund selection

the best resources out there to find professional risk capital are the european venture capital association (evca) and the local venture capital associations, like avco in austria. on the evca webpage, all the national venture associations can be found.
Other sources are local economic newspapers, blogs (as can be seen in the blogroll, with lists like here), or the webpages of known venture backed start.ups in general, like jaja.

based on that basis research, a list can be compiled from all the vc out there, meeting the requirements of

1) investment period,
2) geography,
3) focus,
4) experience,
5) cash available,
6) fund exit horizons and
7) references.

the result will be an “a-b list”. “a” for your hot hits, “b” for the maybes.

1) investment period
start.ups will be looking for early stage, seed funding focus or even incubators. funds having no investments and no mission to do so will not make it on the list. funds having no early stage investments but write that they want to get into, are on the b-list.

2) geography
most investors stay within their local area. looking at their profile and their portfolios will tell that easily. if for example a uk fund has no investment outside of uk, chances are low, that they will invest e.g. in romania at all. if they are otherwise a perfect hit, make them a b-list candidate. we will see later why those are needed as well.

3) focus
there are different investment philosophies existing. funds can focus on investment stage or selected industries (horizontal or vertical). it is important to be in the funds focus, otherwise an application means wasted time.
if a fund has similar companies in it’s portfolio, for example three other software companies in the field of telecommunications, then that is an a-list candidate. because this fund should have an deep understanding of the technology, the business models, the market addressed. just to dig deeper on one point here: the technical due diligence will be faster and more accurate, as the funds typically use their portfolio companies to evaluate potential new investments.

coming up in the next post (six steps to venture capital: part 2.2) are the relevance of fund and investment manager experience, why cash matters and checking out the investors.

six steps to venture capital: part 1

recently established self financed start.ups have tight cash restrictions. sooner then later, further financing will become a main issue. in order to approach the financing process in a sustainable and therefore successful way, founders shall consider the following six steps.

1) funding motivation
2) fund selection (part 2.1, part 2.2)
3) preparing the battleground
4) approach (part 4.1, part 4.2)
5) negotiate (part 5.1, part 5.2)
6) survive after investment

each single step will be discussed in upcoming posts and brief recommendations will be given about how to handle them best. let’s start with number one:

1) funding motivation

before getting on the roller coaster-one way road to venture capital (vc), start.ups should take a short break and think about the motivation to get risk capital for early stage companies. why looking for vc money, besides the pure cash-requirements?

when the initial enthusiasm of a start.up is gone, cash is running out in some months, bug-fix lists are growing, market feedback is slow and long nights start to take their toll it is time to discuss some real basics. where should the company go? developers sometimes loose motivation, after the proofed they can do it - not everyone likes to upscale until finally becoming a legacy application. marketers and sales people might struggle hard to find first and paying customers, after the initial marketing bravo wore off.

there are three main paths after all: a) full steam up the hill or into the wall, b) bootstrap, bootstrap & bootstrap or c) stop it right there.

in a situation like this, and every start.up goes through that now or then, it is time for the whole team to sit down and discuss. at the end of the process one of the paths will be taken.

those who do not fully support the decision better leave then, so the company can move ahead united and focused. there is nothing worse then a company funded with millions of vc money, which actually does not really want to grow the fastest possible and (in reality) hand over control to the investors. and this is true for the founders, co-workers, customers and the investors.

recommendation:
- match growing ambitions with sources of fund: vc for j-curve, bootstrap for the rest.
- make sure all the founders and the core team support the direction of the company. those who do not, should leave the company. make a written note of the meeting and let everyone sign it.

having cleared the basic strategy of the company's direction strongly determines the next step in acquiring vc money. assuming that risk capital is the right choice, then the next action point is fund selection. this will be discussed in part 2 of ”six steps to venture capital".

upcoming european pitching events

a brief roundup of upcoming events to present start.ups:

FOWA
TechCrunch UK has a contest for startups in the field of Future of Web Apps coming up. location london, 8-10. oct. 2008.
a 60 second video is required. there are plenty of examples up here. this one is especially worthwhile looking at.

leWeb
already mentioned here, now they just posted their participants as of 25th of Sept, 375 people coming form 19 nations. application is open until the 10th of oct. details see here. high praises about the event with detailed program here.

Venture Lounge
...is coming to vienna on the 21st of november. apply here until the 10th of nov. 2008. detailed program can be found here.
update (01/10/08): and there is their technology and media event coming up as well, munich is the location and the 28th oct. 2008 the day. applications until the 20th of oct. 2008 possible.

challenge your start.up idea before pitching investors

venture and business angels money for web start.ups is scare around vienna. thus, when approaching them, there is just this "one" first chance to leave a good impression. meeting other entrepreneurs and discussing your start.up idea before can be crucial therefore. there are three different approaches to that. work up from step three to one.

one, compete and challenge on an international or european level.
participipate at seedcamp, pitch at library house or apply for the upcoming demo in munich (if you can afford so). find more on those competitions on the start.up mindmap. this international exposure gives a good indicator on the competitiveness of the start.up sector.
there are plenty of good ideas, smart brains and enthusiastic people out there, all fighting for investments, staff, customers and media attention. fearing to compete against them is no different then to hide one´s head in the sand. like last years bootcamp finalist, zemanta, funding can get a lot easier.

two, go out an present at the national level. look out for the barcamps around. there are plenty around. spending 30 minutes to present and discuss your start.up in from of a smart bunch can not only be challenging, but as well inspiring. do not mind to present more then once, showing your progress every time. there you can expect to get feedback from hardcore tech topics, user interface desing to grafical ideas, depending on the crowd present. barcamps are no one way story though. just trying to "get" something will not work. share your insights, give opinions and trying to help out others with what you already learned is an imperative.

three, again one scale smaller, visit even more casual community events. visit webmontag or open coffe club. for the webmontag @ werkzeugH or metalab in vienna, be prepared for a five minute pitch, no more. open coffe club is more casual. just sit down and talk with people. at the 6th open coffe club vienna for example, there were around 20 people. star.ups in every stage, bloggers, people which just came back from international engagements or just moved from london to vienna. willingness to share information is required, such that events like these work.

this three steps require little in funds but a lot in willingess to take feedback and give it back tho the community. they can substantially increase the likelyness to succeed.

fatfoogoo´s financing success factors

@ the last barcamp vienna martin herdina, ceo of the austrian start.up fatfoogoo named three main success factors for their subsequent funding rounds:

1) use contact networks

they used their existing contacts for angel funding. and kept leveraging the angels contacts to acquire their first vc round. and guess how they are looking for their next investment? by using the network of their first round investors.

2) sell and convince

their contacts with the potential angel investors did not spare them the job to sell them the idea of fatfoogoo. they had to convince them about their visionary idea and the resulting business opportunities.

3) believe in yourself

strong believe in their ideas and abilities were and are necessary to push ahead successfully, not only in terms of financing.

there is nothing to add to that.

„long tail“ financing? 2/2

second, if tackling the tail from the right end seems to take too long (either because the business opportunity is gone by then or by lack of patience), a 2 phase approach is possible

having a long tail business in mind, start with the sweet spot core business. after gaining grip there, reach out to the tail. amazon did start to sell books with the differentiators of free delivery, consumer reviews and easy search in the beginning. those provided an outstanding new shopping experience. successful growth in the core business brought in investors, closing the first phase. only after that, in phase two, the long tail got explored. (an similar approach can be expected with their web services.)

this requires a business, where competitive advantages already exist in the classical core business – and not only in the long tail. in that case, write your business plan, build your working prototype, bring along customers and core team. then approach venture capital (preferably through introductions).

start.up company success rates

with a 30% success rate, serial entrepreneurs outperform first-time company founders by 12 percent (18%). founders which failed once before have a slightly higher rate of 20% to make money out of their venture.

this is one of may results of the studies of gompers et al (“skill vs. luck in etrepreneurship and venture capital: evidence from serial entrepreneurs”, 2006).

“soft money” of venture capital investors does not bring real value in terms of higher success rates to serial entrepreneurs.

are YOU venture capital compatible?

5 out of 10 to reasons to invest for venture capitalists are related with the entrepreneurs experience and personality.
this was true in the 80ies when this survey has been done, but still holds when looking at today’s investment scene.

if you want to prepare yourself for funding, take care of the following . * mark personal criteria of the founder. failing more then two criteria gives good chances for not getting financed.

* capable of sustained effort
* knowing your market
5-10 times return for vc possible
* ability to evaluate risk and act accordingly
investment can be sold easily
big market growth
* track record in field of new venture
* ability to express
intellectual property rights protect able

while the analysis was new york focused, expect experienced venture capitalists applying the same in europe. which means: take care of sun zi.


p.s. by the way, why as an entrepreneur not evaluate your potential vc on the same criteria?!

source:
ian c. macmillan, robin siegel, p.n. subbar nar asimha, "criteria used by venture capitalists to evaluate new venture proposals", journal of business ventureing 1, 119-128 (1985) in: venture capital, volume II, edited by mike wright, harry j sapienza, lowell w. busenitz, edward elgar publishing.

barcamp track "start.up finanzierung"

anbei die im track entwickelte mindmap als jpg, bis die verlinkung auf mind42 funktioniert. auf mind42 sind dann auch kommentare zu den einzelnen elementen ersichtlich.