The Importance of Design in Solving Real Problems: Featured Speaker Steve Vassallo

As hardware components like sensors and chips are getting smaller and cheaper it seems like every day a new connected product is hitting the scene. But what sets a good product apart from a great one is its ability to solve a real need for a user which is reflected in the product design. Thus the role of the Designer is increasingly important for any startup in the shaping of an idea they wish to take to market. 

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At some point you have to build a real business, generate real profits, sustain the company without the largess of investor’s capital, and start producing value the old fashioned way.
— 

Burn Baby Burn via AVC

Yep, it is happening in the B2B SaaS sector as well and eventually there are no safety nets for these companies because they spent themselves out of existence.  But what is driving founders to push the pedal and spend like no tomorrow?  While Fred and Bill are not targeting valuations as the cause, in a frothy funding environment, entrepreneurs are under the belief (egged on by plenty of investors) that the money train will continue to roll on.  It is the growth at all cost theory, and well, I remember that did not play out too well the first time we did this in tech fifteen years back.

Everyone is under the impression that it is raining money.  That certainly is the case now, but nothing to bet the farm on long-term.  I know it may sound all fuddy-duddy, but turning a profit and running a cash flow positive business is a good thing.

And one thing about sales & marketing. Achieving massive scale by blowing it out on sales & marketing is certainly one way to win a market.  But you can also be much more intelligent about the process and executing with purpose and precision.  That is what is going to win, more so than playing someone else’s game when they turn on the sales & marketing spigot.

Our Four Favorite Startups From The StartX Summer 2014 Demo Day

 StartX, the Stanford-funded and affiliated incubator, just held the first demo day at its new Palo Alto-based office space. In an hour, twelve startups pitched their wares to investors and the press, showing products and services that range from a whiledating service for Chinese ex-pats to zoom lenses for next-gen smartphones. Read More


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"That will never work"

MG wrote a post yesterday about scoffing in the technology world. It’s a great read, especially going into the new iPhone and “iWatch” launch today.

It also reminded me of all the scoffing I’ve heard in my time as an investor these 9+ years. Things like: 

"User generated content can’t compete with professional content"

"Advertisers won’t put their ad next to user generated content"

"You can’t build a big company outside of Silicon Valley"

"You can’t hire great engineers in San Francisco"

"You can’t build a big business around photographs"

"We wanted flying cars and all we got were 140 characters"

"Digital goods are a fad"

"Social networks are a fad"

"Startups can’t build hardware"

"Why would someone want a blog"

"You can’t compete with Facebook"

"Nobody cares about virtual reality"

"You can’t build a real company with a $15k seed" (in reference to all the early scoffing about YC in the early days)

"You can’t build a big company in the music space"

"You can’t build a big company if you don’t charge for your software"

"Bitcoin will never work"

"You can’t build a big open source company"

It is a helpful reminder why I love this industry. 

We have this factory model, and we think someone’s working if they show up in the morning and they’re not drunk, they don’t sleep at their desks, they leave at the right time. But that has so little to do with what you create. And we all know people who create a lot without fitting into those norms.
Mobli Media Buys Social Media Platform Pheed

Mobli Media Buys Social Media Platform Pheed

Mobli Media has purchased Pheed, the fledgling social media network, the companies announced Tuesday. The companies didn’t disclose a price for the cash and stock deal, though a source close to the transaction says Pheed went for around $20 million. Mobli also said it plans to invest $10 million in the reintroduction of Pheed, which will remain a standalone platform…

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#AYUDANOSAAYUDAR JUNTOS POR UN CONTINENTE MÁS JUSTO Y SOLIDARIO

 

image

#AyudanosAAyudar fue la campaña para América Solidaria producida dentro de un espacio colaborativo por BAKU COLECTIVO, LA RULA Y LA RONERA fue el 90% online pero apoyada por muchas personas no solo en redes sociales sino en nuestro entorno offline como quien imprimió volantes para compartir con sus amigos.

Buscábamos dar a conocer la misión de América Solidaria y apoyarlos para que más personas quisieran unirse como voluntarios, objetivo que se logró porque todos los que vieron el video o siguieron la actividad en redes sociales supieron que la organización existía y así fuera por simplemente curiosidad averiguaron que hacían y a los que les pareció chévere se acercaron y preguntaron cómo podían ser parte de la campaña y de la organización.

La campaña nos impuso retos, nos dejó aprendizajes y creó una red de buenas personas aplicando el voluntariado 2.0 o virtual que hoy en día pueden convertirse en amigos.

Teníamos una meta bastante alta: 30.000 views de la historia de Lucas (el video). Sin embargo la meta pronto disminuyó y se volvió mucho más real 3.000 views (el 10%) y no estuvo mal, al contrario concentraron mucho más los esfuerzo y al alcanzarla y sobre pasarla fue bastante gratificante.

En  campaña pudimos implementar varias estrategias de social media para lograr la difusión que tuvo, y sobrepasar la falta de presupuesto. Por ejemplo:

  • Contamos con el apoyo de influenciadores para quienes creamos una pequeña plataforma propiciando una sana competencia que impulsaba a la difusión. La ganadora tuvo su reconocimiento.
  • Tuvimos selfies (no solamente en el continente americano) apoyando la campaña ampliando nuestra llegada a más personas.
  • El álbum con los reconocimientos a los actores principales de la campaña también generó reacciones positivas. Por ese álbum no solo estuvieron los equipos sino personas que se unieron a ayudar con toda.
  •  Los medios de comunicación online abrieron sus micrófonos y pusieron sus páginas a disposición nuestra para contar la historia de América Solidaria y Lucas en un gesto de apoyo a la difusión.
  • Portales que independiente a su actividad nos publicaron como spa Trinity en Argentina o Encolombia un portal de contenido.
  • Enviamos la campaña por WhatsApp lo que nos permitió llegar a personas que no manejan redes sociales.

En total el video dentro de la campaña fue visto 3204 veces recibiendo mayor tráfico desde Twitter. Fue visto principalmente en Colombia, Argentina y en tercer lugar España. También fuimos vistos en lugares inimaginables como Vietnam, Corea del Sur o Serbia, así fuera una sola vez. Tuvimos una comunidad de 481 personas en Facebook y una actividad en Twitter que dejó aproximadamente el 30% de las visitas.

Solo tenemos agradecimientos para todas las personas que abrieron su corazón y nos donaron su tiempo para llegar a donde llegamos. Esperamos que las cosas buenas sigan para todos. Hay una sociedad por reconstruir y mucho trabajo por hacer pero juntos es posible.

 

Moment’s lenses add versatility to your iPhone camera, for a price

Moment, a new company from one of the founders of Contour Camera, launched a crowdfunding campaign earlier this year to develop and produce two new accessory lenses for smartphones: the Moment Wide and Moment Tele. The Moment lenses seperate themselves from the rest of the field with their machined metal and glass construction and unique, bayonet style mounting system. The Moment lenses aren’t cheap — they are shipping now for $99.99 each from Moment’s online store — but they promise to offer better quality than anything else on the market.

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Why Business Plans Don't Get Funded - Common Startup Mistakes

See on Scoop.it - business plan template

Your business plan is very often the first impression potential investors get about your venture. Avoid these mistakes and make it to the next step.

Your business plan is very often the first impression potential investors get about your venture. But even if you have a great product, team, and customers, it could also be the last impression the investor gets if you make any of these avoidable mistakes.

Investors see thousands of business plans each year, even in this down market. Apart from a referral from a trusted source, the business plan is the only basis they have for deciding whether or not to invite an entrepreneur to their offices for an initial meeting.

With so many opportunities, most investors simply focus on finding reasons to say no. They reason that entrepreneurs who know what they are doing will not make fundamental mistakes. Every mistake counts against you.

This article shows you how to avoid the most common errors found in business plans.

Get your Free Business Plan Template here: http://bit.ly/1aKy7km

Content MistakesFailing to relate to a true pain

Pain comes in many flavors: my computer network keeps crashing; my accounts receivable cycle is too long; existing treatments for a medical condition are ineffective; my tax returns are too hard to prepare. Businesses and consumers pay good money to make pain go away.

You are in business to get paid for making pain go away.

Pain, in this setting, is synonymous with market opportunity. The greater the pain, the more widespread the pain, and the better your product is at alleviating the pain, the greater your market potential.

A well written business plan places the solution firmly in the context of the problem being solved.

Value inflation

Phrases like “unparalleled in the industry;” “unique and limited opportunity;” or “superb returns with limited capital investment” - taken from actual documents - are nothing but assertions and hype.

Investors will judge these factors for themselves. Lay out the facts - the problem, your solution, the market size, how you will sell it, and how you will stay ahead of competitors - and lay off the hype.

Trying to be all things to all people

Many early-stage companies believe that more is better. They explain how their product can be applied to multiple, very different markets, or they devise a complex suite of products to bring to a market.

Most investors prefer to see a more focused strategy, especially for very early stage companies: a single, superior product that solves a troublesome problem in a single, large market that will be sold through a single, proven distribution strategy.

That is not to say that additional products, applications, markets, and distribution channels should be discarded - instead, they should be used to enrich and support the highly focused core strategy.

You need to hold the story together with a strong, compelling core thread. Identify that, and let the rest be supporting characters.

No go-to-market strategy

Business plans that fail to explain the sales, marketing, and distribution strategy are doomed.

The key questions that must be answered are: who will buy it, why, and most importantly, how will you get it to them?

You must explain how you have already generated customer interest, obtained pre-orders, or better yet, made actual sales - and describe how you will leverage this experience through a cost-effective go-to-market strategy.

"We have no competition"

No matter what you may think, you have competitors. Maybe not a direct competitor - in the sense of a company offering an identical solution - but at least a substitute. Fingers are a substitute for a spoon. First class mail is a substitute for e-mail. A coronary bypass is a substitute for an angioplasty.

Competitors, simply stated, consist of everybody pursuing the same customer dollars.

To say that you have no competition is one of the fastest ways you can get your plan tossed - investors will conclude that you do not have a full understanding of your market.

The “Competition” section of your business plan is your opportunity to showcase your relative strengths against direct competitors, indirect competitors, and substitutes.

Besides, having competitors is a good thing. It shows investors that a real market exists.

Too long

Investors are very busy, and do not have the time to read long business plans. They also favor entrepreneurs who demonstrate the ability to convey the most important elements of a complex idea with an economy of words.

An ideal executive summary is no more than 1-3 pages. An ideal business plan is 20-30 pages (and most investors prefer the lower end of this range).

Remember, the primary purpose of a fund-raising business plan is to motivate the investor to pick up the phone and invite you to an in-person meeting. It is not intended to describe every last detail.

Document the details elsewhere: in your operating plan, R&D plan, marketing plan, white papers, etc.

Too technical

Business plans - especially those authored by people with scientific backgrounds - are often packed with too many technical details and scientific jargon.

Initially, investors are interested in your technology only in terms of how it:

  • Solves a really big problem that people will pay for;
  • Is significantly better than competing solutions;
  • Can be protected through patents or other means; and
  • Can be implemented on a reasonable budget.

All of these questions can be answered without a highly technical discussion of how your product works. The details will be reviewed by experts during the due diligence process.

Keep the business plan simple. Document the technical details in separate white papers.

Get your Free Business Plan Template here: http://bit.ly/1aKy7km

No risk analysis

Investors are in the business of balancing risks versus rewards. Some of the first things they want to know are what are the risks inherent in your business, and what has been done to mitigate these risks.

The key risks of entrepreneurial ventures include:

  • Market risks: Will people actually buy what you have to sell? Will you need to create a major change in consumer behavior?
  • Technology risks: Can you actually deliver what you say you can? On budget and on time?
  • Operational risks: What can go wrong in the day-to-day operations of the company? What can go wrong with manufacturing and customer support?
  • Management risks: Can you attract and retain the right team? Can your team actually pull this off? Are you prepared to step aside and let somebody else take over if necessary?
  • Legal risks: Is your intellectual property truly protected? Are you infringing on another company’s patents? If your solution does not work, can you limit your liability?

This is, of course, just a partial list of risks.

Even though you may feel that the risks are negligible, potential investors will feel otherwise unless you demonstrate that you have given a lot of thought to what can go wrong and have taken prudent steps to mitigate these risks.

Poorly organized

Your plan should flow in a nice, organized fashion. Each section should build logically on the previous section, without requiring the reader to know something that is presented later in the plan.

Although there is no single “correct” business plan structure, one successful structure is as follows:

  • Executive Summary: This is a brief, 1 to 3 page summary of everything that follows in the plan. It should be a stand-alone document, as many readers will make their initial decision based on the executive summary alone.
  • Background: If you are in a highly specialized field, you should provide some background in layman terms since most investors will not have advanced degrees in your field.
  • Market Opportunity: Describe how businesses and consumers are suffering, and how much they are willing to pay for a solution.
  • Products or Services: Describe what you do, and how your solution fits into the market opportunity.
  • Market Traction: Describe how you have succeeded in attracting customers, marketing and distribution partnerships, and other alliances that demonstrate that experts in your market are betting on your solution.
  • Competitive Analysis: Identify your direct and indirect competitors, and describe how your solution is better.
  • Distribution and Marketing Strategy: Describe how you will go to market, how you will price your products, etc.
  • Risk Analysis: Identify major sources of risks, and describe how you are mitigating them.
  • Milestones: Showcase a strong past track record, and describe key checkpoints for the future.
  • Company and Management: Provide the basic facts about your company - where and when you incorporated, where you are located, and brief biographies of your core team.
  • Financials: Provide summaries of your P&L and cash flows, and the assumptions used to come up with these. Also describe your funding needs, how you will use the proceeds, and possible exit strategies for investors.

As stated earlier, there is no “right” structure - you will need to experiment to find the one that best suits your business.

Financial Model MistakesForgetting Cash

Revenues are not cash. Gross margins are not cash. Profits are not cash. Only cash is cash.

For example, suppose you sell something this month for $100, and it cost you $60 to make it. But you have to pay your suppliers within 30 days, while the buyer probably won’t pay you for at least 60 days.

In this case, your revenue for the month was $100, your profit for the month was $40, and your cash flow for the month was zero. Your cash flow for the transaction will be negative $60 next month when you pay your suppliers.

Although this example may seem trivial, very slight changes in the timing difference between cash receipt and disbursement - just a couple of weeks - can bankrupt your business.

When you build your financial model, make sure that your assumptions are realistic so that you raise sufficient capital.

Lack of Detail

Your financials should be constructed from the bottom-up, and then validated from the top-down.

A bottom-up model starts with details such as when you expect to make certain sales, or when you expect to hire specific employees.

Top-down validation means that you examine your overall market potential and compare that to the bottom-up revenue projections.

Round numbers - like one million in R&D expenses in Year 2, and two million in Year 3 - are a sure sign that you do not have a bottom-up model.

Unrealistic financials

Only a very small handful of companies achieve $100 million or more in sales only five years after founding.

Projecting much more than that will not be credible, and will get your business plan canned faster than almost anything else.

On the other hand, a business with only $25 million in revenues after five years will be too small to interest serious investors.

Financial forecasts are a litmus test of your understanding of how venture capitalists think.

If you have a realistic basis for projecting $50-100 million in Year 5, you are probably a good candidate for venture financing. Otherwise, you should probably look elsewhere.

Get your Free Business Plan Template here: http://bit.ly/1aKy7km

Insufficient financial projections

Basic financial projections consist of three fundamental elements: Income Statements, Balance Sheets, and Cash Flow Statements. All of these must conform to Generally Accepted Accounting Principles, or GAAP.

Investors generally expect to see five years of projections. Of course, nobody can see five years into the future. Investors primarily want to see the thought process you employ to create long-term projections.

A good financial model will also include sensitivity analyses, showing how your projected results will change if your assumptions turn out to be incorrect. This allows both you and the investor to identify the assumptions that can have a material effect on your future performance, so that you can focus your energies on validating those assumptions.

They should also include benchmark comparisons to other companies in your industry - things like revenues per employee, gross margin per employee, gross margin as a percentage of revenues, and various expense ratios (general and administrative, sales and marketing, research and development, and operations as a percentage of total operating expenses).

Conservative assumptions

Nobody ever believes that assumptions are conservative, even if they truly are.

Develop realistic assumptions that you can support, refrain from using the words “conservative” or “aggressive” in your plan, and leave it at that.

Offering a valuation

Many business plans err by stating that their company is worth a certain amount. How do you know? The value of a company is determined by the market - by what others are willing to pay - and unless you are in the business of buying, selling, or investing in companies, you probably don’t have an acute sense of what the market will bear.

If you name a price, one of two things can happen: (a) your price is too high, and investors will toss your plan; or (b) your price is too low, and investors will take advantage of you. Both are bad.

The purpose of the business plan is to tell your story in the most compelling manner possible so that investors will want to go to the next step. You can always negotiate the price later.

Stylistic MistakesPoor spelling and grammar

If you make silly mistakes in your business plan, what does that say about how you run your business?

Use your spelling and grammar checkers, get other people to edit the plan, do whatever it takes to purge embarrassing errors.

Too repetitive

All too often, a plan covers the same points over and over. A well-written plan should cover key points only twice: once, briefly, in the executive summary, and again, in greater detail, in the body of the plan.

Appearance matters

At any point in time, an investor has dozens if not hundreds of plans waiting to be read. Get to the top of the pile by making sure that the cover is attractive, the binding is professional, the pages are well laid out, and the fonts are large enough to be easily read.

On the other hand, don’t go too far - you don’t want to give the impression that you are all style and no substance.

Get your Free Business Plan Template here: http://bit.ly/1aKy7km

Execution MistakesWaiting until too late

The capital formation process takes a long time. In general, count on 6 months to a year from the time you start writing the plan until the time the money is in the bank.

Don’t put it off. Your management team should be prepared to invest about 500 hours into the plan. If you are too busy building your product, company, or customers (which is arguably a better use of your time), consider outsourcing the development of the business plan.

Failing to seek outside review

Make sure that you have at least a few people review your plan before you send it out - preferably people who understand your market, sales and distribution strategies, the VC market, etc.

Your plan may look perfect to you and your team, but that’s probably because you’ve been staring at it for months.

Good, objective reviews from outsiders with a fresh perspective can save you from myopia.

Overtweaking

You could spend countless hours tweaking your plan in the pursuit of perfection.

A lot of this time would be better spent working on your product, company, and customers.

At some point, you need to pull the trigger and get the plan out in front of a few investors.

If the reaction is positive, and they want to move forward, great.

If the reaction is negative (assuming that the investor was a good fit to begin with), then you may have been heading down the wrong path. Get feedback from a couple of investors, and if a general consensus emerges, go back and refine your plan.

Conclusion

It’s a tough investment climate, but good ideas backed by good teams and good business plans are still getting funded.

Give yourself the best possible chance by avoiding these simple mistakes.

Get your Free Business Plan Template here: http://bit.ly/1aKy7km

Marc Kneepkens's insight:

Must-read before starting that business plan.


See on caycon.com

25 Reasons I Will Not Invest in Your Startup

See on Scoop.it - Pitch it!

What’s the point in losing money on purpose? Here are some telltale clues that your business is not a sound proposition.

Every investor wants to bet on a winning horse. I mean what’s the point in losing money on purpose? But that’s the risk taken on a gamble. And the same can be said about investing in startups.

Over the past month I’ve been putting together pitch decks for my next startup, a free web-hosting company. This got me thinking about the hundreds of startup founders who have approached me and some of the things they did that really ticked me off. (I’ve invested in 16 different startups over the past four to five years.)

No matter what stage your startup is in, you’re probably going to need some investment dollars. So to save everyone a lot of time, here are 25 reasons I personally would not invest in a startup. Review and address these points for smoother sailing when trying to secure funding from an investor like me and others:

1. Proof of your potential success is missing.

There’s no evidence that there’s interest in your startup or that it has some traction. Have you sold anything yet? Have you run a successful Kickstarter campaign? Have you launched a startup before? Passing those tests would prove to me that you have what it takes to get this startup off the ground.

Show me that your business is something worth my putting my hard-earned cash into and that this investment will work hard for me as your company starts to have success. 

2. I don’t trust you.

I stalk every company that I personally invest in. I typically invest in people. You could walk into my office and pitch me one heck of a product. Yet I’m not sold on you as a person, so forget about my investing in your company. 

If I can’t trust your character, judgment or leadership skills, then let’s not waste each other’s time.    

3. You have an inexperienced team.

Members of your team seem to lack the experience needed to operate a startup. 

Let’s say that I like you and your idea but not your team. Don’t expect an investment from me. I need to be sure that members of your team have the qualifications and discipline to complete tasks, meet deadlines and follow through on objectives. 

4. Members of your team don’t work well together.

The co-founders or team members of your startup are constantly bickering. So I’m going to become uneasy about your startup. I don’t want to risk an investment in a setup if the colleagues can’t get along. Does everyone get along on your team? 

5. You’re keeping things from me.

You’re keeping every piece of information from me. I’m not asking you to reveal every little secret regarding your startup. But if I’m investing in your company, I have to at least know the basics of what makes your startup tick.

Investors want to know everything about your startup. Don’t worry: I won’t steal your idea. I’m too busy.

6. You don’t have a business model or plan.

You have failed to tell me how and where you expect to take your startup in the next couple of years, though you indicated that there’s interest in your product, That’s why creating a business plan is such an important piece of the puzzle.

If I’m not impressed with your business plan, then I won’t invest in your startup.

Get your Free Business Plan Template here: http://bit.ly/1aKy7km

7. Evidence that the startup will earn money is scant.

There are no preorders or not many signups for your product or service. So I won’t be interested in your company. If you can’t prove that people are willing to pay for your service, then why should I, as an investor, give you money? 

8. I don’t believe you can build your product.

A great idea is one thing. Making it a reality is another. You haven’t convinced me that your product can actually function. I personally need to see some sort of working prototype. I’d like to also see a few customers using your product.

9. Your company is not the first to enter the market or unique.

I typically don’t invest in startups that are not trying to create something new or that have not come up with a different business model. You must have something different or unique beyond what the competition has. Perhaps create a new idea from an old business model.  

10. The founder or CEO is uncoachable.

You’re not willing to listen to advice or suggestions and become defensive when I criticize an element of your business. Thus I can’t work with you.

One time when several founders came to pitch me, I made one suggestion and they became offended. Some even went so far as to blog that I didn’t know anything. Their company is out of business now. 

11. Your startup costs too much.

You may think your new company is worth $10 million. But I believe that it’s worth only one-tenth of that.

Figuring out the value of your startup can be a challenge. The value should be based on past accomplishments and the company’s potential. If I feel that a startup is being assessed at a value that’s too expensive, I’m going to look for another investment opportunity.

12. You handle rejection poorly.

You have come across like those entrepreneurs who gripe and moan about how unfair life is. Sure you’ll be rejected by investors. And that’s part of the process. But handle that rejection properly.

Identify what went wrong and make the proper adjustments. What happens after the pitch and rejection says a lot about an entrepreneur. Investors are watching, even after they’ve said no.

13. You cold-called me.

You sent your plan to every angel investor or venture capitalist for whom you could find contact information. Your request is just going to be tossed into the trash. Instead approach investors through referrals or recommendations from people they trust and who can vouch for you.

I only invest in startups when the founders are referred to me or they go above and beyond the call of duty to get my attention. 

14. I’m not the right investor.  

Your company is not operating in my area of expertise. Just like a doctor might have a specialty, so do investors. Do some research ahead of time and locate the investors who are involved in your field.  

15. You don’t focus.

You’re trying to launch every single product idea that you have. Instead stay on track and focus on creating the best product that you can release. 

You’re not going to please every customer. But you do have to please the right customers or the situation will come back to burn you — perhaps in an online mention.

16. You’re way too early for my money.

You wanted to develop an idea that could revolutionize your business niche. But your concept is too far out. I’m going to stay away until there’s been more research, your protect has traction with customers or other investors show interest. Investors typically want to stick with proven technology and industries. 

17. Your company’s technology is already forgotten.

Honestly, in the past six months I’ve received pitches concerning VHS tapes. Business trends, especially in the technology, move extremely fast. Why should I risk my money supporting a startup that makes VHS tapes more efficient, even if in 2012 roughly 13 million blank cassettes and VHS tapes were sold in America? 

18. You’re too slow to launch a product.

Your company is moving too slowly. Whether it’s because you lack confidence or are a perfectionist, the longer it takes to launch your product, the longer it takes for me to see a return. Remember, there’s nothing wrong with releasing a version 1.0 and making the appropriate adjustments at time goes on.

19. You lack a marketing strategy.

Your startup is poised to begin selling a product but lacks a plan for how to boost sales and gain a competitive advantage. I, along with thousands of other investors, can tear your startup apart in seconds. Have you set marketing goals? How will you promote your product? These are crucial marketing questions that need to be addressed before you come knocking on my door. 

20. What problem were you trying to solve again?

When you founded your startup, you did it with the intention of solving a problem. But you, the entrepreneur, have shifted your focus from contemplating an idea to running an actual business, you have lost sight of the original problem. I need to confirm that you’re still addressing a problem that exists and your solution is feasible,

21. You don’t understand the industry.

As an entrepreneur, you don’t seem to be familiar with the business sector involved so I’m not interested in investing in your startup. If you had experience in a related area, that would at least inform me that you have some knowledge relevant to potential customers or an inkling about how to enhance the industry.

Break down the actual numbers that concern your particular niche of the industry and know them solid. If you don’t have those figures, I’ll assume the worst or even more awful, I’ll come up with my own calculations.

22. You don’t understand the word “lean.”

You’re spending money on things like branded hats, key chains or coffee mugs. Why would I want to invest your startup? An investment is supposed to go a long way toward getting a product ready for launch. That means not spending a ton of money on swag. A couple of T-shirts for promotional purposes is fine, but don’t go on a spending spree.

Also, don’t be paying yourself a big fat salary just because you’re the boss. A study by Compass indicated that 66 percent of Silicon Valley startup founders using its benchmarking tool gave themselves salaries lower than $75,000. The average around the world is $32,000 to $72,000, according to Compass. How much are you paying yourself? 

23. You’re not concerned about tomorrow.

Your startup seems to be based only on a current trend. You can’t expect a startup to have longevity this way. I know that we can’t predict the future, but I want to invest in startups whose owners are thinking about the future, not just contemporary trends. 

24. There aren’t any other investors.

I’m not finding evidence that others have invested in your business, even a couple of thousand dollars. Unless I’m a fervent believer in your startup, I need to see interest from other investors. The presence of other investments gives me an indication that someone else sees potential in your startup and that other people are support your vision. Having a couple of investors is good as they will help promote your business.

25. You’re oblivious.

Many of above issues apply to you and you haven’t realized it. That’s a serious problem. I can’t stand dealing with people who can’t see flaws and are clueless about trying to overcome them. Remember, no one is perfect. Accept your weaknesses and work on correcting them. 

Let these reasons that I won’t invest in certain startups serve as tips for every startup founder to remember when pitching an investor. 

What other tips would you give entrepreneurs who are pitching startups?  

Get your Free Business Plan Template here: http://bit.ly/1aKy7km

 

Marc Kneepkens's insight:

What a great list. Pin this on your refrigerator, use it before pitching your startup. Once you think you’re ready, check it.


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