Here’s part 2: more of what I learned at Northside Innovation Festival
Uh oh. Your pitch is too good
Investors told us that incubators and the like have gotten so good at helping startups polish their pitches that they are all becoming indistinguishably great. They all hit the same metrics, the same themes. They’re becoming templated and as a result are losing the sense of passion, conviction or purpose – and uniqueness. This has made it harder for the investor to sort them through.
Many pitches still make some elementary fudges – for example projecting 20% week over week growth without noting that in week 1 they had one customer so that week 2 would give them 1.2 customers etc. Don’t forget to give absolute numbers – investors will ask you. Have pity on them and tell them what they need to know.
Startups: research and funding
Here’s an interesting investor POV: investors spend 95% of their time picking winners, but the founders they see spend only 5% of their time picking their winning idea; for them the rest is operations. So as a founder, do show that your hunch is backed up with solid quantitative research. And can you pass the so-called shower test? Is your business the last thing you think about at night and the first thing you think about in the morning in the shower? An investor will want to know this is true, not just about the founder but also about the core team. Startups are not a lifestyle or just a job, the whole core team (usually 4 or 5 people) has to be fully and passionately energized by the vision and not just helping their pal to get her idea off the ground.
Funding guide for 2016: a pre-seed round can now be up to 1 million. The average seed round is over 2 million.
When you get a meeting with the big company who might want to invest in your little startup, remember that small companies like yours have cool and cachet.Sunsetting businesses need the small companies; they are all starting their own venture funds. But before you get into bed (walk into the sunset?) with the big guys, talk to other founders they have funded to see how it worked for them.
Quick and early user testing for startups
It’s amazing how many startups apparently develop their product or service with no user/consumer input. Here’s a smart way to do some product testing: get your engineers and designers to do some research themselves. Find other nearby startups where the population will at least be friendly and know what you’re up against – and walk your team over there so they can get some quick answers about what is working and what is not. Obviously you’ll do what you have to do to protect your IP.
The product launch – and your superfans
Don’t be too aggressive with the schedule and launch too soon – it makes investors uncomfortable. Build the prototype and slog it out with a test group of users. Develop, test, iterate. Show that you understand the practical application and have tested the user case. You have to know who your customer is and who it isn’t. VCs like anecdotes of IRL experiences. Identify where your product fits in the market – it could be that you start with just 50 obsessive superfans and this could be the most powerful way to get started. Don’t scale just because – get your core engaged and “working for you.” Spend time figuring out how are you going to find these first 50 people in your market fit and then have them shout out that you’ve solved a problem. Nail your message in clear sentence and know what you’re measuring. You are what you measure!
No more office perks?
Perks are apparently over in today’s new workplace. No longer is foosball all it takes to keep the teams happy. Now it’s paid-for healthcare; companies ramp up towards providing full coverage if its too pricy from the getgo. Employee surveys have shown that dental is also popular, and 401k plans with significant corporate contributions. Parental leave is a biggie. The drive now is for employees to feel secure, with a predictable future and not just to be living for the moment. These things were cut or ignored as too expensive and replaced with sushi and pingpong – but now they are back, as employees are starting again to optimize for their lives and not so much for the workplace.
Look out for part three of what I learned at the Northside Innovation Festival, following soon.
Here are the people who spoke and whose ideas are woven through these notes
Sarah Holoubek, Luminary Labs
Ernest Ng, Salesforce
Alexandra Cavoulacos, The Muse
Marcela Sapone, Alfred
Albert Lee, NEA VC
Erin Griffith. Fortune
Jeremy Levine, Bessemer Venture Partners
Ana Andjelic, Havas LuxHub
Colin Nagy, recently of Barbarian Group
Avery Booker, Enflux
Lacey Norton, Kit and Ace,
Maud Pasturaud, Spring
Peter Olsen, IDEO
Soraya Dorabi, Zady and angel investor
Hayley Barna, First Round and Birchbox
Piers Fawkes, Scott Lachut, Adriana Krasniasky, Michelle Hum, PSFK
Michael Horn, Huge
Justin Bolognino, META
Jesse McDougall, C+ICRAVE
Kristin Maverick, Rent the Runway
George Alan, The New Stand
Mark Rosen, Artsy
Taylor Newby, Met Museum
Susi Kenna, FITZ & CO