Sonntag, 23. Dezember 2007

„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).

„long tail“ financing? 1/2

starting a „long tail“ business means challenging financing conditions. micro financing and/or a 2 phase approach could work.
chris andersons´s book “the long tail” points out that sustainable business can be build on large amounts of low turnover items. but how to finance such a business, where investors will see a return only in the long run? two proposed approaches seem applicable.
first, micro finance it. avoid costs (using free open source software for development, a business which hardly requires any own stocks or heavy capital investments, evangelise and build your – working for free and enjoying it - core team, use guerrilla marketing). prepare to keep the day job and drive the idea for as long as it takes to generate cash flows.
institutional investors will, at least in central europe, not be interested to finance this stage. how to still get them aboard, read the second part of the “long tail financing”.
selected business angels or incubators which see further ahead then most of their colleagues could be interested. bringing along limited but sufficient financial resources, like €20.000 per investment, they focus on developing and driving the business model. the downside for founders is, they can be expecting up to 50 percent of the company. therefore real business value has to be found within their business networks (marketing, sales, finance, people).
if giving away shares is not the preferred way, but small initial cash requirements can not be covered buy the founder, convertible loan agreements can be interesting. handing out tranches not lower then €10.000 per investor and putting them all under one trustee agreement keeps administration at a minimum. this micro finance allows to attack the long tail from it´s tail.

Freitag, 23. November 2007

start.up finance mindmap update

the mindmap "start.up finanzierung"/start.up financing has been updated with business angels links.
thanks for feeback on the mimpdamp to smime.

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.

Dienstag, 20. November 2007

start.up weekend & seedcamp

the mindmap "start.up finanzierung"/start.up financing has been updated with: startup weekend.

a recent presentation of seedcamp from the web2.0expo berlin, slides can be found @ slideshare.

Mittwoch, 7. November 2007

web2.0 berlin & start.ups

besides all the web2.0 buzz, what´s relevant for founders?
one: use technology offers to bootstrap to the max.
two: use technology to develop consumer enjoyment.

tech
g.ho.st, an web-operating system - they prefer to call them "virtual computer" - extensively uses amazons web services. this allows them to massively reduce their start.up costs & concentrate on their vision and it´s implementation. and not on buying, installing, mantaining, backing up,... expensive hardware.
that´s bootstrapping thanks to technology and a start.up living this essential ingredience for start.up success.

business
jesse garrett in his keynote speech focused strongly on creating products that are "1) beautiful, 2) elegant, 3) solutions that 4) work". strongly pointing to apple´s approach on how to make complex things: lovable, presentable, solving/creating a need you can not live without once you tried it while staying extremely simpel.
is your idea/produkt/website like that?are there rumour sites about what you will do next with your start.up or are you still trying to "bruteforce" community building.


thatmuch for a start from the web2.0 berlin expo, which brings an intersting crowd together. developers, entreprenerus, investors and plenty of speakers.

Mittwoch, 3. Oktober 2007

How NOT to start your StartUp

i prepared the following notes for the oktober barcamp
in vienna. unfortunately a flu was keeping me away. so here are the notes, i am looking fortward to discuss that @ the next barcamp.


SLIDE1


++ 70% of companies fail because of internal reasons
(KSV, 2006 Insolvenzstatistik)

++ Out of 100 applying Start.ups 10 get "aws Seedfinancing" funded,
5 survive the next 10 years

++ --> 7 of the 140 techchrunch40 conf will survive

++ youtube owners made 1,65B$ in 21 month

++ 12 year old co-founder gets 6,5M$ investment (playspan)

++ Full disclosure: i work at www.awsg.at
investment manager ict high-tech startups
quite an portfolio
quite a while


SLIDE 2

++ What you want (maybe)
Stay alive (personally, company)
Keep old & make new friends
Make people happy
Have fun
Change the world with your vision in mind
Do good & talk about
Earn money


++ What you do NOT want (maybe again)
Heart Attack before floating on the stock market
Loose friends
Make people unhappy
Be frustrated
Give up
Keep it secret
You and your friends/family/fools get bankrupt


SLIDE 3

++ "Recommendations"

+++ *Tech Founder*
Cross out Life in life-work balance
live on coke, pizza and sweeties until you overtake "super size me"
friends/family/partner shall only be important if it helps your company
never leave the net/phone/... for more then 1 hour
do not delegate
Insist, believe and act upon:
know everything better then your co-founders and (potential) customers & investors
The customers will come by themselves,
as soon as they realize that you are a genius and
that your product is "the" product


+++ *Marketing/Sales/Finance/Operations/Quality/you name it*
Who needs any of those?
Therefore do NOT build a complete team
so you do not have the problem, that:
someone knows about it
anyone shall ever buy your product/chrossing the chasm
invest in your company + knowing when you run out of cash
actually ever deliver and service your product
have a satisfactory working product
...

+++ *Product*
Leave "under the radar screen" before you have something to show and say
Release first public version before core functionality is there
Do not keep your alpha/beta community interested by
rolling out new functionality every 2 weeks
respecting their feedback and maintaining the forums alive
Announce ambitious release schedules and never keep them
Focus on features, not your on the (product) core (vision) or even customer benefit


SLIDE 4

++ Others
- Never prepare your pitch
regardless of your audience, be it sales guys, techies, any customers, finance people
neither adapt to "their" interest or specific questions on language
nor prepare, as your genius will always bring you through
no presentation under 50 slides
- Use consultants for everything
without selecting them according to their proven (reference calls) success for
your specific requirement
without keeping them under strict control (topic wise, timeline, hours they want you to
sign of) this will help you to keep your cash burn rate high


SLIDE 5

++ Links
Do NOT look at those financing opportunities:
finance mindmap @ http://www.startupict.blogspot.com

Do NOT read any of those:
founders at work, jessica livingston
the art of the start, guy kawasaki
the startup company bible, michael stathis
crossing the chasm, geoffrey a. moore
guerilla marketing, jay c. levinson

And NEVER ever look at this one:
einführung in die allgemeine betriebswirtschaftslehre, lechner/egger/schauer

NOR listen to the podcast:
www.manager-tools.com

For the ones which want/can make the crossover from military strategy to start.up business
do NOT look at:
the art of war, sun tzi

Finally do NOT read this Start.up guide:
The Pmarca Guide to Startups, part 1: Why not to do a startup
(link thanks to brundo haid, www.systemone.at)




++ What would you NOT do?