Most Popular
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What should I be looking to get out of my first meeting with a VC?
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You want to learn something from the experience (especially early on when you’re relatively new to pitching.) So learning to improve future pitches is a big part of it.
Strong interest (you’ll have to gage body language, what they say, etc.) is also nice.
The opportunity to follow up as well. Try and come to a conclusion on next steps with the investors and action items.
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What are the most favorable deal terms for startups?
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One of the most important things to look at is CONTROL. Who controls your company? If it’s the investors, that’s bad. If it’s you, that’s good. There are other control issues you want to understand around your investors' rights to invest in follow on rounds, block acquisitions, etc. So I’d focus mostly on control and less on valuation or $$ raised.
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What is the best advice you can give for finding a business partner? Especially if you need to quickly choose someone.
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Don’t choose quickly.
And the only real answer is: Network.
It takes time and it’s very hard. But I believe teams of 2 or 3 are better than single founders.
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How do you evaluate whether or not an entrepreneur "has what it takes" to run a company?
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It’s a combination of things. I’ve written about Founder DNA before (http://www.instigatorblog.com/founder-dna-how-investors-evaluate-startup-founders/2010/10/21/). Personally, I’m looking for tenacity, intensity, self-motivation. Also, someone who is willing to learn, be flexible, can brainstorm, think on his/her feet.
I look for people who can get things done – which is why I lean more towards technical founders vs. non-technical founders. Other factors: judgement, big vision, market knowledge, ability to sacrifice and maturity.
It’s far from a perfect science.
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Why do you think startups need two founders? Why not just hire? Multiple founders leads to massive dillution (not too mention too many chefs in the kitchen!)
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Running a startup is extremely hard. To put all of that on one person’s shoulders is herculean. I like the idea of having a co-founder to brainstorm with, make decisions with, lean on, etc. Running a startup is lonely enough as it is, doing it alone is worse.
Yes, there’s dilution, but that founder (theoretically of course) should provide significant value and aid in the ultimate success of the business.
Having a great co-founder (there can be lousy ones of course, just like there can be lousy anything) means having someone that’s fighting the same fight you are, arm in arm, day after day. That’s good for morale, good for business.
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hi benjamin, have you faced any critical mass problem with any startups you're involved? how did you solve it? we are a solid team with a mobile location based idea with a local niche market. questions about critical mass problem are the most ones we encounter most when talking to angels. How important is this from the VCs eyes, if you have a pretty promising idea and execution? Can you give any advices?
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Most VCs want big, huge markets. If the market is “too small” it’ll be hard to convince them to make a bet.
Angels are more able to invest in niche opportunities, especially if they have market expertise that’s relevant. Accelerators are the same. Dave McClure for example has said that he’s happy investing in a small $50M market, if the team can execute and disrupt things.
But for VCs it’s definitely a challenge. You can look for alternatives in funding, or find a way of changing the story / presentation / strategy to expand the “market opportunity.”
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Can customer development be done jointly with a beta release?
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Yes, but it does complicate things because you’re going to market, and potentially doing so with no idea as to whether it will work or not. You can still “back-track” (although I wouldn’t think of it in a negative way) and figure out the hypotheses around your startup (write ‘em down!):
- Who is the target market
- What problem am I solving
- Why will people care?
Then go speak to people. Don’t focus on your solution immediately, do real customer development. If your solution is a fit, great! You’re able to very quickly show it to them in beta format. If not … you can still pivot.
You can also work to drive some traffic to the beta and use that to test things out – the value proposition, messaging, etc.
What I would recommend – even if you launch the beta – is to NOT invest heavily in product development post-launch. Focus on customer development, feedback, validation – then take those learnings and apply them to future product dev.
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How do you handle working for such a wondering and likeable person like Jevon?
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There’s no way I can do this question justice. I would need many hours to express my thoughts on Jevon, and much more space than this text box allows.
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How long should it take to achieve product/market fit? When do you throw in the towel?
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I don’t know that you can specify a length of time to define product/market fit. It’s a bit of a moving target and depends on the business and a number of other variables.
If you’re tracking the right metrics, you should be able to tell if things are progressing or not, and the pace of that progress. And you need to be interviewing your users/customers to solicit qualitative feedback as well. Combine those together with your gut instinct and be brutally honest with yourself as to whether things are moving in the right direction.
Before abandoning, look for a pivot. What are people telling you? Can you move in another direction? Can you identify one element of your product that people really do love and expand that out into a meaningful service?
End of the day there’s no shame in shutting something down and moving on. Failure is what it is; and if you’ve learned a lot from the experience, move on and go for it. You may find that you get completely re-energized starting anew.
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is there such a thing as applying or pitching too many investors ?
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Yes. For starters at some point you have to ask yourself if it’s ever going to happen. If you’re not learning from each pitch you’re in trouble.
Also, investors talk to each other. And if they find out you’re pitching everyone under the sun it’s a negative signal that you’re desperate, not trying to build a real relationship with them, etc. So they don’t like that.
I wouldn’t worry about that as much as I’d worry about your own health. If you’re pitching endlessly and not getting anywhere you really have to look at what you’re doing and figure out if it’s still worthwhile.
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I am at the stage of validating the problem with users via face-to-face and email interviews. I still need more feedback and am finding the process slow, I'm considering starting a blog in the parent + technology + learning space to potentially find more people to interview (and eventually beta test). My questions are: -Is it worth starting a blog unless your 100% committed? -other than a landing page with a sign-up form what else would you recommend for finding early users/adopters? E
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Have you tried advertising (Facebook, elsewhere) to drive traffic?
I’m a big fan of blogging, I think it can have a significant impact on a company’s brand, attention, lead generation, etc. but it sounds like it’s still a bit early. And a blog is a very long-term strategy, using it to try and get 10-30 more interviews doesn’t make sense. It’d be better to find a more direct approach.
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What information should we include in our executive summary?
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Here’s a list:
- Current status: funds raised to-date, monthly budget, revenue, team size, team expertise, customers, metrics
- Problem you’re solving
- Market size & potential
- Solution
- Competition
- Go to market strategy
- Unfair advantage
- The ask (how much you want to raise & why)</li>
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We're three co-founders of an enterprise oriented healthcare startup. We're all doing sales now because 1) we're bootstrapping it and 2) we want to understand customer pain points and the process as a whole. We've been successful so far but us doing high touch sales is not sustainable. Are there places we could go to find contract salespeople? Our platform sort of sells itself, so it's really a matter of just getting in front of the right people.
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If you’re at the point where you understand the customer pain, you understand why and how they buy (how long it takes, etc.) and the lifetime value of the customer (what they’re worth to you), it’s a good time to bring on salespeople.
Like any recruiting, it involves networking, researching people, and figuring out who might be worth trying. There are contract salespeople that work for multiple customers that you can find, or commissioned sales guys willing to “dial for dollars” with a formula (which it sounds like you have, or almost have defined.)
- Make a list of all the companies in and around your space.
- Make a list of all the salespeople at those companies.
- Figure out how well those companies are doing, and rank the people (there can be multiple criteria here)
- Reach out and recruit.
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I currently have an idea for a new internet start-up, and wondering how I should proceed with getting it up and running. I'm not sure if I should approach venture caps or angel investors first, or try and get the site up first then approach them.
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Get it up and running first, build traction, prove value and THEN see if you need to raise capital.
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What advice would you give to a free social communication tool start up looking to acquire more users?
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You have to have kick ass virality built into the product. Without virality built in that’s allowing you to acquire users into the product through its use, it won’t scale.
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What are the most important questions an entrepreneur should the answers to when seeking funding? (unit economics, team strengths, cash flow needs...)
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All of the above. Depending on the business, unit economics / business model may not be as relevant. But if you look at what most investors expect when you pitch them (and many have blogs and have written about this stuff) … you can very quickly understand the questions they’ll have.
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if you are fresh out of college and obsessed with entrepreneurship and want to do a start up at some stage, what would be a good training ground: advertising, sales, management consulting ?
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Product management role at a big company is one option. There are some companies that do a great job of grooming product managers – and product managers are a rare breed. Often very entrepreneurial. So that’s one option that I don’t think enough people consider.
Joining a startup is another reasonable path, but I’d encourage you to pick wisely. Working for a bad startup can really sour you and skew your views of what a startup is all about.
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We have a fairly working version of a online platform (market is niche curation) that could be offered to different type of customers, but we are not sure what our next steps should be. Is it possible to connect with successful investors/entrepreneurs to ask for feedback and guidance, without having to give up shares in the business?
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It’s always possible to solicit feedback without giving up equity. Most people in the world like to provide their opinion to other people. The question is this: Do investors or other entrepreneurs have the right feedback?
Are you speaking to customers? Prospects? Potential partners?
Go right to the source for the best answers. If you think a certain type of company in a certain industry is your ideal customer … go ask for feedback from them and see if you’re solving a problem that’s important to them.
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What do you feel is the single most important quality in an entrepreneur? What sort of founders do you like to fund? Hustlers? Technical? Balanced teams?
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There’s a difference between an entrepreneur and a team.
I do think teams need to be balanced, but I don’t believe in putting founders into silos.
http://www.instigatorblog.com/the-death-of-the-business-founder/2010/11/24/
http://www.instigatorblog.com/startup-founders-in-silos/2010/05/19/
As for an entrepreneur – as an individual – irrespective of whether they’re a technical person or not – it’s about hustle and passion. Then it’s about strategic ability to think and problem solve. Passion alone isn’t enough. It’s a balance between passion/dreaming/hustle and clarity/execution/getting shit done.
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Tips for how to stay focused and motivated when working a guillotine job and trying to get a startup off the ground? How do you find the time?
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Quit your job. If that’s not possible, I understand but that’s the simplest answer. When you want to knock down a wall quickly you get a sledgehammer not a fork. The fastest path to simplifying is quitting the job so you can focus.
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What is the best and relevant revenue model for job listings website? and How can i differentitate it from others, any tips? I am from Turkey by the way.Thanks
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Pay per post. That’s the model HR people understand and that’s how they budget. You don’t necessarily need to innovate on the business model for job web sites.
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What are the key stats you look at on your blog?
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I don’t focus a lot on stats for my blog, but I do look at:
- traffic
- content popularity
- social media mentions
My blog is almost all about personal branding, so it’s less important that millions of people read it, and more important that the right people read it. I want my traffic to grow, but I want that to be a specific audience, and see how that reflects in my own brand within that audience.
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How do you know when to quit your job to launch your business?
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When you quit, you know.
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You just wrote about how the Lean Startup process is slow -> fast -> slow. Can you explain that process?
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Hopefully the post itself did a reasonably good job of that. But essentially:
You come up with an idea and need to go validate the problem / solution. This feels slow because you’re not coding anything (which chances are is your expertise, if you’re a technical founder). Scheduling and having 20-50 customer interviews feels like going through mud. It’s extremely hard, and almost no one likes doing it or is comfortable doing it. So that’s SLOW.
If you find something worth building, you start coding. Generally, that’s FAST. You’re in your comfort zone and you code, code, code.
But then, instead of launching and moving into massive PR/marketing initiatives, you’re back to speaking with prospects again, 20-50 interviews to see if what you built is satisfying the needs/problems you discovered previously. SLOW again.
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I want to start a website and I have researched a lot of information about outlining and researching the industry now I need to decide if I should outsource the idea to an established company or find a person with experience and partner up with him. What would be the best option?
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Generally I would recommend partnering with someone and co-founding the company.
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How do you come up with blog ideas, and where do you get your inspiration?
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It’s tough. One of the reasons I don’t write as frequently is because it’s a challenge to come up with ideas. In some cases there are things I’d like to write about that are too touchy from a privacy issue (for example interactions with companies at Year One Labs). I base all blog posts on personal experience, but try to go up a level or two to avoid diving into such specifics that I’m breaching trust.
So while I’m learning and working, I reflect that in the blog.
Reading also helps – which I don’t do enough of – but when I get a chance to read a bunch of blogs that I admire it often triggers ideas.
Quite often an idea comes from a conversation with the people at Year One Labs – one small thing is said, and that blows out into a blog post.
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I have an idea and about to build a prototype. Validation of my idea has been positive. When and how should i approach VCs for funding? Before building prototype or wait until afterwards which would take a month?
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Generally I suggest – the longer you wait the better. You’ll hopefully have more proof and traction and can present that to investors. But there’s nothing wrong with starting to build relationships right out of the gate.
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How can I best prepare for a first meeting with an investor?
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Research the investor and figure out how they like to be pitched (if you can), look at their portfolio (to see if there’s a match with what you’re doing), speak to founders they’ve invested in previously (especially if you know them).
Have a pitch deck ready AND a product demo (ideally). Go in and listen. Ask questions. Be ready for a good conversation that can go in a lot of different directions.
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What is the best way to find a "tech" co-founder? and please don't say look on techcofounder.com
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I’ve never heard of techcofounder.com – so I won’t say that :)
It comes down to networking, no easy answer. No silver bullet.
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What advice do you have for someone who is just at the "idea" stage?
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Invest a significant amount of time exploring the Lean Startup methodology of how to validate an idea. And if you’re ready to commit to that process, go ahead and validate (or invalidate) the idea. If it validates, or some form of it validates, move to building an MVP. If not, leave the idea aside and don’t invest more in it.
I would also suggest you research competition and speak to as many people as you can about your idea — do these things in parallel to investing in a rigorous Lean Startup process.
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Hello, I am an entrepreneur working on a start-up specialty bakery business. I left a secure corporate job to pursue this full time. My friend (and someone who is an extremely hard worker and who I trust) let me know from the very beginning she wants to help me build this business. So, my question is: Understanding that she will be an asset to the business from a creative/website/technical perspective, what percentage of the business should I be prepared to let her sign on to take? 70/30?
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It sounds like she can help you get started with a web presence, but after that it’s your business to run and her technical skills are less useful/meaningful. If that’s the case you’re looking at a very small piece of the pie – 1-5%. If she’s co-founding the business and going to be working on it with you daily, then you’re in the 30%+ range.
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You have recommended that I convince someone to join my start-up as co-founder. However, I am ready to launch in January or February...all of major development is completed. Still a good idea to find a partner? Where do I look if my inner circle of friends/colleagues would not be the right fit. I live in Toronto.
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I think it’s always valuable to have someone to go to war with every single day. Doing it alone is possible, but it makes things just a little bit harder.
I wouldn’t delay launching to find someone though. Launch, and continue looking for someone that can genuinely add value. If you can’t find someone inside your inner circle, go beyond it. Toronto has a very large startup community. Or recruit from elsewhere by putting out the word, networking and meeting as many people as you can.
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How do startups find alpha testers and their first 100 users?
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By any and all means necessary. Examples:
- Advertising: Google ads, FB ads, Craiglist ads
- Friends
- Social networks: Twitter, FB, etc.
- Begging
- Standing on the street corner and waving flyers around
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Can you outline the steps to delivering a good pitch?
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Not in a short answer here. There are lots of ways to deliver a good pitch. It should be clear, concise and interesting. You need to explain the problem you’re tackling and why it matters. You need to describe the market size and the opportunity. This may help: http://www.instigatorblog.com/how-to-raise-startup-financing/
Don’t drone on and don’t get upset when you’re interrupted with questions. Don’t assume you’ll get through the pitch as you’ve practiced it in a specific order. Investors will want to jump around.
Show don’t tell – if you’ve got a demo, use it.
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If I have a very good and new idea for a website, what shold be my first steps. Searching an investor only with the idea. Searching someone to make my business plan or an incubator company?
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Build it.
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How do you validate what ideas are worthwhile exploring further?
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This is the classic question of Customer Development. You can do research on this easily by looking up: Steve Blank, Eric Ries, Cindy Alvarez, Hiten Shah, Ash Maurya (to name a few).
Bottom line – find 50 people that you think are potential customers and talk to them. Sounds simple, but it’s hard and much more complex than that (you have to ask the write questions, you need the write hypotheses to test, etc.)
Customer Development + Lean Startup — figure those out and you’ll be on your way.
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Am a 21 yr old CEO, currently running a software startup in Nigeria and still in college. Write now, we are really making head way with the company but my grades are falling badly and my folks are bothered! Most of them say its the illusion of money that is blinding me to usefulness of my college degree later. Right now, class are boring and i'll rather spend my day coding, talking to clients or upgrading our products. How did you cope in college?
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It’s hard for me to recommend that people quit school, unless I really know them personally and their situation. And when I started my first company, between 3rd and 4th year university, I finished my degree, even though I didn’t want to because work was more fun. The reality is – you can always go back to school – but if you’ve got a business that’s gaining traction, you can’t put it on hold and come back to it later (at least usually you can’t.) And there’s nothing wrong with money.
There are plenty of successful entrepreneurs without university degrees. There’s nothing wrong with a backup plan, and in your case I’d say that finishing school in the future could very well be that backup plan. But you’ll never learn more than you can right now in your business.
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Hi, I have a potential idea for a start up. What are steps that I should be ready with before approaching a venture capitalist? to put it more appropriately, how can I approach a Venture Capitalist?
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Validate the idea with customers. Build a prototype. Get it into people’s hands, validate the value you’re creating. Then go see investors.
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At what point is it safe to start talking to people about my idea? I'm worried about someone stealing it (it's really good!)
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If it’s really good (heck, even if it’s not) there’s a very, very good chance that hundreds of others are working on it right now. So you can’t worry about sharing. You need to share on day one, immediately – talking to prospects/customers, etc.
People generally don’t steal other people’s ideas because they’ve got their own they’re working on. And they haven’t made as much progress as you have either.
So share. Right away. All the time.
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Thanks a lot for answering my last question, I have got another. In one of your posts on INSTIGATORBLOG(i'm an advent follower), you talked about a startup being D.O.A. Is it best, if you find yourself in that kind of situation, try figuring out a way to turn the startup around or just quit! Also, what should be a startup's focus? Clients or Revenue? Thanks
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I don’t think there’s an absolute answer to your question – quit or keep going – it depends on a lot of circumstances, including how you can fund continued effort, are you willing to go “backwards” to implement a rigorous lean startup process, etc. So it’s something you have to answer case by case.
Generally, I would be inclined to cut my losses and move on, because there’s a very good chance that starting new, you will apply everything you’ve learned, and have a much better chance of success.
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Can you recommend any good resources or templates that will help me map out my idea and the steps I need to take to execute?
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I would read http://custdev.com and look up Lean Canvas (http://leancanvas.com). Lean Canvas is based off of Business Model Generation – great book that you should also look into for modelling and developing your biz model.
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Sir, I have an idea, which has not yet been copyrighted. I am looking for investors but can I feel safe while letting them know about my idea (Website). I dont feel safe while talking about this to any stranger. Please advise the best way to go about it.
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Talk to them. Investors will never sign NDAs. Investors are not in the business of stealing stuff; (a) they’re too busy themselves and (b) they often don’t have the skill set to steal things. And they won’t hire others or go to others they know to get it done – they cannot be bothered.
You need to share your ideas, simple as that. You’re the expert, no one else. You’re the guy that’s further ahead with the thinking, validation and building.
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What Toronto based Incubators/ Angels are currently active in the Seed Stage Funding for Tech Start-ups ?
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Matt Golden is investing (Golden Ventures). Grassfed Capital is investing. Extreme is doing stuff. There are others as well. And I expect we’ll hear news about new accelerators coming out of Toronto soon…
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