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6 startups that passed Homebrew partner Hunter Walk’s terrifying ‘10-year’ test

6 startups that passed Homebrew partner Hunter Walk’s terrifying ‘10-year’ test | Pitch it! | Scoop.it
Hunter Walk is a popular investor, which means he's had to refine his process for identifying startups he wants to work with. But just one question stands above all the others.

H unter Walk has made a career for himself separating the wheat from the chaff. The former Google product manager who ended up leading YouTube's consumer product team is now a partner at Homebrew, a seed-stage investment company, based in San Franscisco.

But time is money, as the saying goes, and with a reputation like Walk's, the potential future partners are plentiful. In a blog post earlier this week, Walk shared the one question he relies upon more than any other to accelerate the "would we work well together" conversation. Based on his company's portfolio, only six companies have passed the test, one just yesterday.

"One question which matters to me is the "why" of your startups, especially as it relates to your longevity as a founder," he wrote. "The most difficult question for some founders is 'why do you want to spend 10 years of your life working on solving this problem.'" He explained that most startups don't even make it this long, so a gauge of the founder's commitment can make or break a deal.

At Walk's current company, named after the Homebrew Computer Club of the 1970s that helped spawn Apple computers and other companies, six startups have passed the test: Layer, an Internet communications company, Plaid, a banking API company, Shyp, to ship goods, theSkimm, an e-newsletter, UpCounsel, for legal advice, and yesterday, Q, an office management company that announced a seed round.

Six other unannounced startups are in Homebrew's portfolio, ranging from a debit-card alternative to a mobile app for mental health.

Walk, was also a founding member of the product and marketing team at Linden Lab, the creators of Second Life, which in 2011 generated$100 million revenue, and in June celebrated its 11th birthday, and is currently undergoing a revamp.


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Marc Kneepkens's insight:

Essential question. Ask yourself and find out if what you're doing is right for you.

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25 Reasons I Will Not Invest in Your Startup

25 Reasons I Will Not Invest in Your Startup | Pitch it! | Scoop.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







Via Official AndreasCY
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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Official AndreasCY's curator insight, September 16, 5:32 AM

Review and address these points for smoother sailing when trying to secure funding from an investor.

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Find Your Dennis: How to Close the First Investor

3 Tactics to help with closing your first investor


$10,800. Dennis' check was the smallest check we've ever raised from investors; but it was also the biggest. While subsequent venture capital and corporate investments added several more zeroes to our bank account, Dennis' check--our first--added much more at the earliest stage in our company's founding: credibility with our investor community, confidence we could achieve our vision, and capital to reach critical company milestones.

Every entrepreneur raising capital comes to the same conclusion: no one wants to be the first investor in their company. Many investors want to be early. "Early" equates with the high risk, high reward that has elevated a select few angel investors into billionaire status, but no one wants to be the very first. Like us, you need to find your Dennis--the one investor who will jump off the cliff with you and be that very first investor. Follow these three tactics to find and close your Dennis:

1. Create a network of could-be investors

If you plan to go around cold calling qualified investors to invest in your business, particularly if this is your first company, good luck. Not only does the lack of an established connection prevent you from getting in the door with investors, it is often the case that entrepreneurs ask for money before they truly need it.

To find your Dennis, you have to build a strong network of could-be investors. This network creation comes as the result of two steps. First, identify could-be investors in every one of your networks (work, school, locality, friends and family). Founding NuLabel out of school, we immediately looked to our alumni network for could-be investors and in our local entrepreneur community in Providence, RI--where we connected with Dennis. Second, engage could-be investors to provide what you really need when you first launch your business: intellectual capital. Most could-be investors bring valuable advice to the table, and engaging could-be investors as informal advisors can build a strong connection to your company's story without immediately demanding they open their wallet to help you as an investor.

2. Treat could-be investors like they already invested

Now that could-be investors are engaged and even providing occasional, informal advice, treat these valuable members of your network like you would an existing investor. Provide them with regular updates that establish meaningful, achievable milestones and showcase results. As you achieve these milestones and share them in a consistent and periodic manner, momentum builds, risk starts to evaporate, and your could-be investors start to become will-be investors as you establish a track record of results that exhibit not only you achieving your vision, but their intellectual capital creating value.

3. Ask for the check

Don't wait for your potential first investor to offer to invest, because that won't happen. Instead, ask for a specific investment; state the use of proceeds; and most importantly, explain how this first check can be leveraged into many additional, bigger investments from others. With an immediate term need to fund a specific, measurable milestone, we asked Dennis for the capital to cover the expenses to get to that milestone. We showed upfront how we knew we would exceed expectations and that we had several interested could-be investors awaiting the achievement of that milestone who ultimately jumped in less than one month after Dennis' check came in and we accomplished that immediate term business objective.

....

The lunch bill when Dennis told me, "Yes, I'm in," was modest: two cheeseburgers, two Diet Cokes, and a side of fries. The feeling after Dennis agreed to invest $10,800: well, that was worth a million bucks.



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



Marc Kneepkens's insight:

Big point: get your first investor committed, no matter how big that check is, the rest will follow.

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When to work with an incubator or accelerator


If you live in start-up world, as we do there are an astounding number of incubators and accelerator schemes out there. Frankly I could spend most of the article listing them and telling you what they do and how they work. But I won’t – not for a public article, but if you stay after class I will provide some pointers….

However there is a real question to be answered, as an entrepreneur what are the benefits of becoming part of an accelerator/incubator. More to the point what is the difference between them?

To read the full article, click on the title or image.



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



Via marcduke
Marc Kneepkens's insight:

Figuring out what fits best for your startup is part of the process of being successful. Do you want to go the fast way and join an accelerator experience, or do you need a little more time and get things straight? An incubator might be what you need. Or do you need none of the above?

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What I’ve Learned in My First Month as a VC

What I’ve Learned in My First Month as a VC | Pitch it! | Scoop.it

After 13 years at startups—the last four at Twitter—I’ve made the transition into venture capital as a partner at Redpoint Ventures. It has been just over a month since I began spending my days on Sand Hill Road and in that short time, I’ve learned quickly about working in a tight, seasoned partnership as well as having listened to some of the smartest, most interesting startup pitches.

Thus far, my transition from an operating role into an investing and advisory role has been a rapid, intense education. Some parts of the job are as I expected but others have been surprising. Before it all becomes a big blur, I thought I’d share some of the most interesting and unexpected lessons I’ve learned —so far:

To continue reading, click on the title of the article.



Get your Free Business Plan Template here:

http://bit.ly/1aKy7km



Looking for VC capital? Learn from the best, watch this presentation by the CEO of Growthink: 'VC Pitch Formula'



Via Guillaume Decugis, Marc Kneepkens
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Guillaume Decugis's curator insight, December 5, 2013 2:27 AM

A candid list of lessons learned from Ryan Sarver that gives interesting insights on how VCs will look at an investment opportunity. Useful to craft the perfect pitch. 

Marc Kneepkens's curator insight, December 7, 2013 11:17 AM

Whether you are a Startup looking for funding, or an investor, looking for the right investment, there is a lot to learn from this article. It's and inside viewpoint that examines the process of funding the right idea and team.

Lori Wilk's curator insight, December 23, 2013 10:30 AM

It's great to learn from what others have tried and experienced so that you can be better prepared.

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6 Questions Every Business Plan Should Answer

6 Questions Every Business Plan Should Answer | Pitch it! | Scoop.it
What investors, mentors and advisers look for in business plans.
Marc Kneepkens's insight:

www.Business-Funder-Insider.com provides information and articles to improve your business presentations.


Get your free Business Plan Template here: http://www.business-funding-insider.com/free-business-plan-template.html


or check our 'Growthink's Business Plan Template Review'
Can you write your business plan in 8 hrs or less? http://www.business-funding-insider.com/business-plan-template.html

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How to Create an Elevator Pitch That Will Get You Funded

How to Create an Elevator Pitch That Will Get You Funded | Pitch it! | Scoop.it

I was catching up over coffee and a muffin with a student I hadn’t seen for years who’s now CEO of his own struggling startup. As I listened to him present the problems of matching lithium-ion battery packs to EV powertrains and direct drive motors, I realized that he had built a product for a segment of the electric vehicle market that possibly could put his company on the right side of a major industry discontinuity.

But he was explaining it like it was his PhD dissertation defense.

Our product is really complicated
After hearing more details about the features of the product (I think he was heading to the level of Quantum electrodynamics) I asked if he could explain to me why I should care. His response was to describe even more features. When I called for a time-out the reaction was one I hear a lot. “Our product is really complicated I need to tell you all about it so you get it.”

I told him I disagreed and pointed out that anyone can make a complicated idea sound complicated. The art is making it sound simple, compelling and inevitable.

Turning on your Reality Distortion Field
The ability to deliver a persuasive elevator pitch and follow it up with a substantive presentation is the difference between a funded entrepreneur and those having coffee complaining that they’re out of cash. It’s a litmus test of how you will behave in front of customers, employees and investors.

30 seconds
The common wisdom is that you need to be able to describe your product/company in 30-seconds. The 30 second elevator pitch is such a common euphemism that people forget it's not about the time, it’s about the impact and the objective. The goal is not to pack in every technical detail about the product. You don’t even need to mention the product. The objective is to get the listener to stop whatever they had planned to do next and instead say, “Tell me more.”

How do you put together a 30-second pitch?

Envision how the world will be different five years after people started using your product. Tell me. Explain to me why it’s a logical conclusion. Quickly show me that it’s possible. And do this in less than 100 words.

The CEO's reaction over his half-finished muffin was, “An elevator pitch is hype. I’m not a sales guy I’m an engineer.”

The reality is that if you are going to be a founding CEO, investors want to understand that you have a vision big enough to address a major opportunity and an investment. Potential employees need to understand your vision of the future to decide whether, against all other choices, they will join you. Customers need to stop being satisfied with the status quo and queue up for whatever you are going to deliver. Your elevator pitch is a proxy for all of these things.

While my ex-student had been describing the detailed architecture of middleware of electric vehicles I realized what I wanted to understand was how this company was going to change the world.

All he had to say was, “The electric vehicle business is like the automobile business in 1898. We’re on the cusp of a major transformation. If you believe electric vehicles are going to have a significant share of the truck business in 10 years, we are going to be on the right side of the fault zone. The heart of these vehicles will be a powertrain controller and propulsion system. We’ve designed, built and installed them. Every electric truck will have to have a product like ours.”

75 words.

That would have been enough to have me say, “Tell me more.”

Lessons Learned

  • Complex products need a simple summary
  • Tell me why I should quit my job to join you
  • Tell me why I should invest in you rather than the line outside my door
  • Tell me why I should buy from you rather than the existing suppliers
  • Do it in 100 words or less


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


Marc Kneepkens's insight:

Delvering a good pitch is essential in funding and sales. Read this article, it'll give you the basics.

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Leanometry's curator insight, September 26, 4:11 PM

Steve Blank talks about the importance of being able to present what you are working on clearly and concise. Even if a product is complex what its purpose is should be straightforward. To help with creating the perfect pitch we created Pitchgrub - http://pitchgrub.com

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28 Mistakes Startups Make When Pitching To Investors

28 Mistakes Startups Make When Pitching To Investors | Pitch it! | Scoop.it
As a venture capital and angel investor who has heard many pitches, I’ve compiled a list of mistakes and things to avoid if you are an entrepreneur seeking angel or venture financing.


Entrepreneurs from early stage startups have to pitch to investors to raise financing, and many entrepreneurs are inexperienced or terrible at making the presentation. As a venture capital and angel investor who has heard many pitches, I’ve compiled a list of mistakes and things to avoid if you are an entrepreneur seeking angel or venture financing.

Mistake 1: Sending me your executive summary or business plan unsolicited

Investors routinely discard or don’t read unsolicited emails. They get hundreds if not thousands of such emails, and they can’t spend the time sifting through them all to find that diamond in the rough. But what they will pay attention to is a referral from someone in their network — a lawyer, an entrepreneur from one of their portfolio companies, or a fellow venture capitalist.

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


Mistake 2: Pitching me your company unless it’s clear that you are in a space I am interested in

Some investors only care about biotech. Or mobile apps. Or clean tech. Or Internet and digital media. Do your homework first before trying to pitch me to make sure your company is in my sweet spot.

Mistake 3: Giving me a 50-page business plan to review

I don’t have the time to review a 50-page business plan up front to decide whether it’s worth taking a meeting or following up. Give me a 2-3 page executive summary and maybe a PowerPoint deck.

Mistake 4: Not showing me why the market opportunity is big

Most investors are looking for businesses that can scale and become meaningful. So make sure you address this issue right up front as to why your business can really become big. Don’t present any small ideas. If the first product or service is small, then perhaps you need to position the company as a “platform” business allowing the creation of multiple products or apps. I will want to know the actual addressable market and what percentage of the market you plan to get over time.

Mistake 5: Coming in with your team to a pitch meeting, but only have the CEO speak

Investors want to know that you have a good team. Only having the CEO speak at a pitch meeting is a mistake. How will the investor gauge whether the other team members are any good if they don’t hear them speak? And please don’t have the team members contradict themselves.

Mistake 6: Telling me you don’t have any competition

Telling me you have no competition likely says you are unrealistic or naive. Of course you have competition, whether direct, indirect. or someone who provides a substitute solution. And your analysis of your competitors will show me you have an understanding of the market.

Mistake 7: Showing me uninteresting or unrealistic projections

If you show me projections for the company to become $5 million in revenue in five years, I will have little interest. I want to invest in a company that can grow significantly and become an exciting business. Alternatively, if you show me projections where you are at $500 million in three years, I will just think you are unrealistic, especially if you are at zero in revenues today. Avoid assumptions in your projections that will be difficult to justify, such as how you will get to a 400% growth in revenue with only a 20% growth in operating and marketing costs.

Mistake 8: Asking me to sign an NDA before you will share information with me

Most investors have a policy not to sign non-disclosure agreements. Why would you want to put a hurdle in front of being able to connect with an investor? And if you have something highly confidential, don’t share it with me.

Mistake 9: Giving me confusing or bad answers to my questions

Entrepreneurs should practice their pitch with friends and advisors before presenting to an investor. You need to be prepared to give crisp answers to questions. You have to anticipate the difficult questions you may get. Telling me that “you will get back to me with an answer” seldom leaves a good impression. If I am asking you questions, that’s a good sign that I am engaged. So do your best to answer them right away. Don’t evade the hard questions or tell me that you will get to it later in the presentation. I want to see if you can think on your feet. Expect to get interrupted during your presentation.

Mistake 10: Not telling me what problem your business solves

What problem does your business solve? Does it matter at all?


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


Mistake 11: Presenting unrealistic valuation expectations for your company

If you tell me you want a $100 million valuation when you started the business three weeks ago, or don’t have much traction yet, the conversation will likely end very quickly. Often, it’s best not to discuss valuation in a first meeting other than to say you expect to be reasonable on valuation.

Mistake 12: Giving me clichés

Phrases to avoid:

  • “All we need is 1% of the market” (unlikely you will get that)
  • “We will get huge viral usage” (unless you show me early traction, that will be difficult to believe)
  • “This product will market itself” (no, it won’t)
  • “Google will want to buy us” (maybe, but not likely)
  • “Our projection numbers are conservative” (just once I would like to hear an entrepreneur say, “Our projections are wildly optimistic”).

Mistake 13: Having more than 20 slides in your PowerPoint deck

You will have an hour at most to make your pitch. So overloading your PowerPoint deck with too many slides will cut into the crispness of the presentation, and you won’t have time to get to the slides at the end of your deck. If an investor is interested, you can always provide more detailed information later.

Mistake 14: Forgetting to highlight your team’s experience and credentials

Many investors consider the team behind a startup more important than the idea or the product. The investors will want to know that the team has the right set of skills, drive, experience, and temperament to grow the business. I want to be shown all of this together with a passion to do something truly great and unique. Anticipate these questions:

  • Who are the founders and key team members?
  • What relevant domain experience does the team have?
  • What key additions to the team are needed in the short term?
  • Why is the team uniquely capable to execute the company’s business plan?
  • How many employees do you have?
  • What motivates the founders?
  • How do you plan to scale the team in the next 12 months?

Mistake 15: Not paying attention to detail

Make sure your presentation doesn’t contain typos or inconsistencies. Present a well-written, visually interesting presentation. Include page numbers on each slide so I can easily reference a specific page. For your legal protection, put a copyright notice at the bottom and add the phrase “Confidential and Private.”

Mistake 16: Not doing a demo
A demo is worth a thousand words. Show me a prototype or working demo of your product, app, or website. It will give me a better sense of what you are trying to do. Make sure it works well and isn’t buggy. Impress me with its look and feel.

Mistake 17: Not doing research on the investor and his portfolio

Showing some awareness of my background and the companies I am invested in will facilitate parts of the conversation, and also shows you have done some advance due diligence for the meeting.

Mistake 18: Not looking at other pitch decks and executive summaries

Looking at other pitch decks and executive summaries can help you improve your own. You can ask your lawyer or entrepreneur or angel investor friends for samples. Plenty are available on the Web, such as the deck for Mint.com, a startup that sold to Intuit for $170 million.

Mistake 19: Not understanding customer acquisition costs and long-term value of the customer

I will be interested in your understanding of customer or user acquisition issues. What costs will you incur to acquire a customer? What will be the likely lifetime value of the customer? What channels will you use to acquire that user or customer? What marketing costs will you incur? What is the typical sales cycle between initial customer contact and closing of a sale? Not being prepared for those types of questions will hurt my perception of how well you have thought out your business plan.

Mistake 20: Not understanding the potential risks to the business

I will want to test what you see are the risks to the business. I want to understand your thought process and the mitigating precautions you might take. There inevitably are risks in any business plan, so be prepared to answer these questions thoughtfully:

  • What do you see are the principal risks to the business?
  • What legal risks do you have?
  • What technology risks do you have?
  • Do you have any regulatory risks?
  • Are there any product liability risks?
  • What steps do you anticipate to mitigate such risks?

Mistake 21: Not being able to explain the key assumptions in your projections

In order for me to believe your financial projections, I will want you to articulate the key assumptions and convince me they are reasonable. If you can’t do that, then I won’t feel you have a real handle on the business. I will push back on the numbers in the assumptions and I will want you to have a cogent, thoughtful response.

Mistake 22: Not articulating why your product or technology is differentiated from a competitor

I will want to know why your product or technology is better than or different from what is already out there. You can assume I will know about competitive products or technology, so you need to have a good response. For example, “We are different from Instagram in three important ways: (1) we are easier to use; (2) we have better editing functions; and (3) we are monetizing earlier than Instagram was able to.”

Mistake 23: Not being able to articulate a coherent marketing strategy

Just because you build something great doesn’t mean it’s going to sell or get user adoption. So I will care about your plans to market your product or service. What outlets are you going to use? How can you cost-effectively get to prospective customers? How will you use social media, such as Facebook, Twitter, LinkedIn, Pinterest, etc.? Will you do content marketing and put sponsored posts on sites like BusinessInsider.com, Forbes.com, and AllBusiness.com? Will you do search engine marketing and can you show it will be productive? What steps will you take to get some rapid sales or adoption of your offering?

Mistake 24: Not telling me what early buzz or press you have gotten

Don’t forget to show me any early buzz or press you have received, especially from prominent sites or publications. Feature the headlines in a slide on your deck. List the number of articles and publications mentioning you.


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Mistake 25: Not telling me what traction or customers you have already gotten

One of the most important things for me will be signs of any early traction or customers. If you have an app, how many downloads have you gotten and how many additional ones are you getting a week? Have you gotten any brand-name customers if you are a software company? How can the early traction be accelerated? What has been the principal reason for the traction? Show me how you can scale this early traction.

Mistake 26: Being unable to tell me how you will invest my investment capital and how long it will last

I will absolutely want to know how my capital will be invested and your proposed burn rate (so that I can understand when you may need the next round of financing). It will also allow me to test whether your fund-raising plans are reasonable given the capital requirements you will have. And it will allow me to see whether your estimate of costs (e.g., for engineering talent, for marketing costs, or office space) is reasonable given my experiences with other companies.

Mistake 27: Not selling me on your intellectual property 

For many companies, their intellectual property will be a key to success. Investors will pay particular attention to your answers to these questions:

  • What key intellectual property does the company have (patents, patents pending, copyrights, trade secrets, trademarks, domain names)?
  • What comfort do you have that the company’s intellectual property does not violate the rights of a third party?
  • How was the company’s intellectual property developed?
  • Would any prior employers of a team member have a potential claim to the company’s intellectual property?

Mistake 28: Not explaining the product or service well enough

The entrepreneur must clearly articulate what the company’s product or service consists of and why it is unique, so expect to get the following questions:

  • Why do users care about your product or service?
  • What are the major product milestones?
  • What are the key differentiated features of your product or service?
  • What have you learned from early versions of the product or service?
  • What are the two or three key features you plan to add?
  • How often do you envision enhancing or updating the product or service?

Conclusion

Not all of these mistakes are fatal. And as you practice and make more presentations to advisors and investors, you will learn what they care about and what doesn’t resonate with them. So make sure to adapt your PowerPoint deck, Executive Summary, and presentation from these learnings.

Copyright ©2014 by Richard D. Harroch. All Rights Reserved.


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Marc Kneepkens's insight:

From the perspective of an investor: why did they not read your business plan or respond to your email? Excellent information.

Remember my article a while ago? It's still on my site: http://www.business-funding-insider.com/investment-proposal.html

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5 Mistakes to Avoid When Approaching an Investor

5 Mistakes to Avoid When Approaching an Investor | Pitch it! | Scoop.it

We are pitched thousands of business plans annually. Here are the top five mistakes to avoid.

“All these investors claim that there are not enough opportunities out there to invest in, yet when I send them my business plan, I don’t even get a response.”

Considering that venture capital investors get tens of thousands of business plans, investor decks and other pitches annually, it is hardly surprising that not all of them get an investment. Based on reactions to one of my previous posts on investor feedback, it seems that a lot of entrepreneurs don’t even receive a response to their presentation.

At the end of the day, this is the investor’s fault. But there are certain mistakes that I have seen entrepreneurs approaching Credo commit over and over again, which significantly diminish the chance of any investor reacting to the pitch. Thankfully, they are pretty easy to fix.

Here are the top five which anyone can and should avoid:

To read the full article, click on the image or title.



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Via Ivan Berlocher
Marc Kneepkens's insight:

Good points. Also read 16 reasons why your investment proposal won’t get read! : http://www.business-funding-insider.com/investment-proposal.html

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Michael Binzer's curator insight, May 18, 1:05 PM

Good info if you are thinking of starting up as an entrepreneur. Also the business plan template

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P2P lending: What's to worry?

P2P lending: What's to worry? | Pitch it! | Scoop.it

Former FDIC chair Sheila Bair explains why a good idea needs more regulation. (Investors are making good money extending credit to their fellow Americans via crowdlending platforms!

Brother, can you spare a loan?

Investors are making good money extending credit to their fellow Americans via peer-to-peer lending platforms (P2P), such as Lending Club and Prosper. P2P is also good news for borrowers -- most of whom are consolidating debts -- because they can often get interest rates lower than those offered by banks.

Mon dieu! Decent investor returns. Cheaper loan rates. Could this actually be a good financial innovation? Perhaps, but I see some causes for concern.

Securities regulators fret about potential fraud, since the companies don't always document borrower incomes. The cops also worry that investors can't understand how the companies determine the likelihood of default. Says David Massey, North Carolina's Deputy Securities Administrator: "Peer-to-peer investors generally don't have direct access to the information that might let them know whether they're buying into a loan that's going to pay them back, or whether they're taking a flier on a situation that's going to end in a default."

To read the full article, click on the title.



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http://bit.ly/1aKy7km


Via Therese Torris, Marc Kneepkens
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Therese Torris's curator insight, December 28, 2013 5:13 AM
Expresses concerns that the cost advantage of crowdfunding over community banks might come only from lighter regulation
Marc Kneepkens's curator insight, December 28, 2013 12:43 PM

Good introduction to Peer-to-Peer lending. A good alternative for some.

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Does your digital strategy fit your business plan? | Business Tas blog

Does your digital strategy fit your business plan? | Business Tas blog | Pitch it! | Scoop.it

What do most small-to-medium businesses do when they try something new?

Generally, they fail to set clear objectives for reaching their goals. They fail to plan and as Winston Churchill said “failing to plan is planning to fail”.

As a business owner, you should start by understanding what you are trying to achieve and why. It’s important to ask yourself whether everything you do  moves you closer to your goals. If you are doing something that doesn’t then why do it? There are some things in business we can’t avoid (like bookwork), but it is vital that we think critically about everything we do.

Your digital activity is no different. Every business needs to ask why they are doing this? There must be a reason. A clear objective is essential to the success of the digital strategy.

Before you decide what your digital objectives are, look at your business plan (you do have one, don’t you?). What goals have you set? Are you achieving your current objectives?

Having a business plan reminds you why you are in business and what you are trying to achieve. Without a business plan, you will be playing hit and miss with anything you do, including your digital activity.


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Marc Kneepkens's curator insight, August 26, 2013 7:32 PM

"You do have one, don't you?" It's a given, no plan, no direction, no goals, no results.