So, as we mentioned a little while ago, Jess has been relocated down to Cambridge to help run the springboard accelerator down there.
As you can imagine, things down there are pretty hectic during the 3 month bootcamp with lots of mentoriing and advice for those participating. But instead of letting all that juicy knowledge escape, Jess has been blogging regularly with little bits of really interesting insights from each day.
Here are some of the highlights:
Pitching
- How do you prove you’re a $1 Billion company? ‘You don’t prove it. You tell a story… Tell a story that leads the investor to believe you can get there…Tell the story that this market is going to be huge, and we might win it’.
- Never ever send a cold email to an investor. Find an entrepreneur in their portfolio, another investor, or an advisor who can introduce you.
- ‘Don’t try to sell something until you know that it resonates. Don’t try to market something until you know you can sell it’.
Payment Systems
- When a user want to pay, the last thing you want to do is make it difficult for them to part with their money.
- If you start freemium, stay freemium. You can’t change from freemium to paid half way through because your users will get pissed off.
- PayPal doesn’t want to turn your phone or ipad into your wallet, because you’ll wind up with several different wallets in that case. ‘You don’t want 4 wallets. You want one wallet you can use on 4 different devices.’ Instead, the concept is ‘wallet in a cloud’.
- Think about all different platforms, not just web. There will be 60 different internet enabled devices in your house in 2 years, the majority of which don’t have display interfaces. Consider how to tap into that.
Know your stuff
- You have to know who is your customer and who are your users
- You have to know what problem you solve
- You have to know why customers need to use your service
- Be very very concentrated
- Create a value for customers and partners
Raising Funding
- If a fund has $200 million in total, they they are looking for deals that could exit for $200 million (a company that could exit for the size of the fund). Judge accordingly.
- You want an investor to reserve cash for subsequent rounds, because it looks bad to others if they don’t participate in follow-on. Let an investor know that you’re planning to raise lots of money over the next few years, and ask ahead of time how much cash they are holding onto (average 3-5x for follow-on).
- If a fund has a 10 year investment cycle, it will spend years 0-5 buying all their babies and years 6-10 looking after the babies and trying to sell them on. In order to understand the fund’s priorities and timeline, ask where in the investment cycle it is.
- Have a lead angel who will take the heat and manage all the other angels involved. Have a pack of due diligence questions investors are likely to ask, and arm your lead angel with that so they can share it around and go through it with others.
- Profit is an indication that you are adding value and creating something useful. Why do you invest? ‘To make money… To help companies create high value, high impact products that make the world a better place’ ~ Sherry.
- ‘Companies don’t fail for technology reasons; they fail for people reasons. If you’re a bit of a smart ass, sort it out really early’ ~ Laurence
- You need to be able to motivate people to do things for you, and to voluntarily open doors for you. ‘Entrepreneurs leverage assets they do not own or control’ ~ Sherry
- Do your due diligence on an investor before engaging in a deal. Look at individuals, not companies. Ask mutual contacts for references, and remember that nobody will outright say the person is crap. Consider how they would behave in tough times rather than sunny days.
- Show from the 1st interaction to the 2nd interaction that you’ve listened. And don’t talk endlessly in meetings until you’re interrupted; remember someone else is in the room, and keep them engaged in conversation rather than talking at them.
- ‘Don’t apologise too much… Be proud of what you’ve got!’ ~ Laurence
Legal
- ‘Read things yourself. You’ve got eyes. You’ve got a brain.’ If you don’t understand something, Google it (and hope you land on a trustworthy page)
- On the small deals, total lawyer fees should not exceed 5% of the amount being raised. In straightforward situations, a startup and investor may share one lawyer to keep costs down.
- The legal terms you set at the beginning of a company set the precedent for the rest of your investors/deals. Get it right from the start or it will have a knock-on effect on the rest of your deal-making.
- Don’t get legal advice from Uncle Joe who once was a lawyer. ‘If you want to f#%* your company up, that’s the fastest and easiest way to do it’ ~ a good warning from Jon.
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