StartupGuy

I am StartupGuy
I start a fire with ice

Born: 29th July 19XX

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December 19, 2017 StartupGuy0

Startups are the place to be in today’s day and time. But have you ever pondered over what make one startup better than the other. What is the secret recipe that one startup grows while another fails? Well we found out that the secret recipe lies in the DNA of every startup. And, it is as simple as Charles Darwin’s quote about the evolution of mankind – “Survival of the Fittest”

Survival is the basic technique that guides and governs people, place and things to keep moving ahead and startups are no exception to this rule. I have enlisted a few survival tricks that all startups believe in:

1. Make the first move
Be prompt with your ideas and be the one to make the first move. Start building up on your idea and launch the product in a pilot as soon as you think it is ready. Don’t sleep over your ideas. Pick good co-founders if it is difficult to fly solo. But ensure that your goals are aligned with those of your co-founders. Let your ideas evolve and keep tracking all that your users might want from your product or service.

2. Customer is the King
A famous quote mentions, customer is the king and very rightly so. Hence, it is very important to cater to the wishes of your customers and it is even more important to reward the ones that love your work. Make sure that your pre and post sales service is equally good. While you are at it, make sure that you don’t overspend. As a startup always keep your finances in check.

3. Don’t Give Up
The way to your goal is often filled with distractions, that is how the devil plays its game. But as a startup founder avoid distractions at all costs. And more importantly don’t get demoralized. Fight your demons and keep moving ahead don’t get bogged down at any point because tough situations don’t last but tough people do.

As Swami Vivekananda once said, “Arise, awake and stop not till the goal is reached.” So just find your dream and go ahead and chase it. At the end you will realize that it was worth all the sacrifices that you might have made on the way.

Wishing you all the best for the new year!


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October 23, 2017 StartupGuy0

StartupGuy shares some handy tips on exploring the power and potential of partnerships for your startup…

As a smaller or newer startup, the appeal of going it alone is obvious. All the power, all the rewards, every opportunity to write your own success story. But if there’s one thing history has taught me about success in any area of business, it’s this:

You’re stronger as a team than as an individual.

Think about it – how many of the world’s most successful businesses operate with a skeleton staff of next to none? Likewise, how many operate 100% independently, without any binding partnerships or collaborations with other businesses/service providers?

Of course, the answer is none.
So while it can seem as if proactively seeking collaboration is a sign of weakness, dependency or desperation, it’s actually quite the opposite. The right partnerships at the right time can transform a small and perhaps struggling startup into a competitive powerhouse.

The key question being – how to build the kinds of partnerships that breed positive progress?

Examine multiple collaborative opportunities

Well, the first thing to do is consider your options. That being, think carefully about the different types of collaborative opportunities available, in order to determine which make the most sense for your business. The worst thing any smaller business can do is jump into a collaboration just for the sake of it, without considering its value and relevance. Think about what each collaborative opportunity could offer your business long-term, scrutinising every option until you’re 100% satisfied.

Devise a clear partnership strategy

Of course, in order to make any kind of business relationship work, you first need to determine your partnership strategy. It’s one thing to be interested in collaboration, but what exactly do you expect to get out of it? How will it work? What will you offer and expect in return? What are your long-term plans for the partnership? It’s not enough to simply want partners – you need to consider how they’ll be integrated into your business plan. Otherwise, you’ll struggle to gain the interest of prospective collaborators and are unlikely to get anything meaningful out of the deal.

Fully evaluate partners
After identifying the kinds of partners your business could approach and work with, the time comes to carefully and comprehensively evaluate them. Sure, they’re in the same line of work as you, but are you genuinely on the same page? Do they share your passion, pride and priorities? Do they have the character traits you’re looking for in a partner? Can you honestly say you have complete and total trust in their abilities and attitude? Always remember that it’s the very future of your business that’s on the line. Which means you’ve every right to be as selective, demanding and picky as necessary.

Monitor partnership success

Last up, when creating your partnership strategy in the first place, you will (or should) have defined benchmarks and measures for the success or otherwise of the venture. When the partnership gets underway, it’s of critical importance to continually monitor its performance and efficiency against these benchmarks. Focus on the strengths, weaknesses and areas for possible improvement you identify, working to continually enhance and optimise the partnership for mutual benefit.”


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October 20, 2017 StartupGuy0

There are few situations in the workplace that induce the level of stress that giving a presentation does. Not only do you have to speak in front of an audience, but oftentimes the quality of your presentation will decide whether a potential client gives you their business or not.

There are many different roads to giving an engaging and effective presentation, there is no one strategy which is superior. The right strategy for you will depend on a number of factors, including your personality, your preferred conversational style, the client you are hoping to win over, and the project that you are presenting.

Giving the very best presentation you possibly can depends upon more than what’s on your slideshow. In fact, one of the most common mistakes people make with their presentations is that they focus so heavily on making their slides look pretty that they end up becoming cluttered and needlessly complex. Simpler is usually better; you want to ensure that your audience is able to easily understand your presentation and that they walk away having taken in the key points.

Instilling Confidence

In order to really sell your idea, it is important that your audience can see that you have confidence, both in yourself and in the idea that you are trying to sell them on. The most important step to instilling confidence in your audience is to prepare as much as you can beforehand. Don’t just memorize what you’re going to say, but also give some consideration to the kind of questions that the audience is likely to ask, and ensure that you have adequate answers prepared beforehand.

However, it is also possible to over prepare, causing the answers you give to sound as if they have been pre-prepared. You want your presentation and your answers to sound as natural as possible. What you’re doing is essentially a sales pitch, but it shouldn’t feel that way to your audience.

Whenever possible, give your audience examples of similar tasks and projects that you have taken on in the past to demonstrate that you have successfully overcome the necessary hurdles before and that you have experience in delivering on these kinds of promises.

If you are faced with a question that you don’t know the answer to then you should be honest about this fact. The audience can tell when you’re deflecting or being evasive and this will greatly damage their confidence in you. Being willing to say you don’t know will demonstrate honesty and integrity.

When deciding on the content of your presentation, be sure that it prioritizes the client and their needs, not your own. Don’t spend too much time telling the client why you as an individual are perfect for this project. Instead, try to focus on the project itself and reassure your audience that you are confident but not arrogant.

Any way that you can demonstrate your organisational skills will also help to instil confidence in your audience. In fact, it is the little touches that make the most difference here. Ensure that your appearance is smart and if you are bringing any extra documentation, such as a printout copy of your presentation, then use a binder. You can order custom binders for which you can tailor the design to your needs.

Making a Connection
Making a connection with a prospective client will make it much easier to sell to them; as consumers, we all prefer to buy products from individuals and companies that we trust and like.

The easiest way to make a connection is to demonstrate your enthusiasm for the project that you are selling. Clients want to know that they will be working with someone who cares about the end result, and that the investment they are making will be respected and treated seriously. Find something about the project that you can really get behind and demonstrate enthusiasm for. If you can reference and show any previous work you have done that is relevant to the task ahead then do so.

The client will be looking for you to show that your enthusiasm extends beyond the project itself, demonstrate that you are eager to work with the client and that you will give serious consideration to their wants and needs. After the presentation, offer to leave copies of it with the client while they make up their minds. If you’re going to do this, it would be wise to invest in 3-ring binders to secure the documents. This option is ideal for presentations as the client will have both your presentation and your a reminder of your brand in the palm of their hands, making your presentation much more memorable.

You should always try and get their email address and business card to then follow up with and also then if you feel appropriate to connect with via LinkedIn and other business networking platforms.

Another effective tactic for building a connection with the audience is to do as much as you can to make your presentation feel like a discussion. There are a number of different ways that you can make this happen. For example, you could introduce your presentation by saying something along the lines of “I’m going to give you a short presentation which outlines the project and briefly explains why I / we are the right people to take it on. I’ll then open the floor up for any questions or comments you might have.” Another option is to divide your presentation up into logical sections and pause after each section to ask the audience if they are understanding everything and if they have any questions.

Of course, adding a little humour to your presentation will help to establish a rapport between you and the client. If they are not only interested in your presentation but actually enjoy watching it, then they will have a much more positive impression of both it and you.

Obviously, you need to make sure that your humour isn’t in any way offensive or controversial, you need to remain professional at all times.

Don’t Just Read Them a PowerPoint
PowerPoint has become the standard tool for putting together and presenting slideshows and it is certainly an excellent piece of software for this purpose. The mistake that most people make when using PowerPoint is that they feel the need to add all manner of animations, graphics, and other effects, which add nothing to the presentation and in fact may even make it less readable and slow it down. Keep your presentation simple and effective, make sure that everything on the slide needs to be there and has a purpose.

The other common mistake people make when using PowerPoint is that they simply read to the audience what is displayed on the screen.

This is completely pointless and will not create a good impression of you to the client. It is fine for the presentation to summarise what you are saying, but you should ensure that you give the client a reason to listen to what you are saying. If they can simply read everything for themselves, they will feel as if you are wasting their time.

Give a Summary
At the end of your presentation, give the audience a summary of your proposal to ensure that everything is fresh in their minds when you begin to take questions. The summary should be concise and should remind your audience of the most important aspects of the proposal.

Creating and giving an engaging presentation requires just the right amount of preparation and as much confidence as you can muster. Stay calm and analyse your presentation from the perspective of the audience to ensure that you convey everything that you need to and give the best possible impression of yourself.

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October 10, 2017 StartupGuy0

The best way to get your new business recognised is by sharing good content, contributing something worthwhile to the market and getting people excited enough to talk about you too.

You can do all three of these things as a speaker at big events.

Getting a top speaking gig is a big deal. Being recognised as a thought leader is an incredible feeling and gaining access to inspiring speakers and engaged press is a huge bonus. However, the best part is having the opportunity to share your knowledge, challenge assumptions, entertain and teach the audience something new.

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Every startup wants to get to the stage where event organisers are inviting them to speak, and Startup Mzansi is no different.

How I secured speaking gigs for my startup (hint: it involved a lot of hustle!)

Firstly, let me reassure you that my journey from small stage to mainstage hasn’t been easy, these opportunities didn’t fall into my lap. It’s taken a lot of hard work, persistence and ambition to get here.

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I’ll give you some context:

The first big conference Startup Mzansi attended was Global Entrepreneurship Congress (Liverpool) in 2012. We were new to the game, and understood that we needed to hustle A LOT. So that’s what we did, we created good relationships with the organisers, we would talk to anyone who came to visit our stand as if they were the most important person in the room and stand there all day ignoring our urges to eat, take a break (even visit the bathroom!) because we were afraid of missing out.

We treated every conversation as a potential game changer, and we did that at numerous events globally.

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Pitching requires preparation and a good understanding of your audience. A struggle we had to overcome as a sextech brand is gaining the recognition we deserved.

How you can secure speaking gigs for your startup

From one hustler to another, here are my tips for any startup looking to go from pitch to main stage in a year…

Show that you mean business

There’s no room for haphazard effort. If you’re serious about your business’ growth it needs to be obvious and you need to show that you’re in this for the long run. This is where that persistence comes into play.

It’s really important you make good connections with event organisers because they’re your key to connecting with other speakers, business and press. If you want something from someone what do you do? You make an effort to understand how you can help them.

Having this insight allows you to structure your pitch and content accordingly.

Position yourself as a thought leader in your industry

People trust people. If your peers and customers are talking about you, and you’re consistently sharing good content and commenting on the market then you’re halfway there.

You should be considered a thought leader in your industry before speaking at any event, because it’s only then the audience will engage and take you seriously.

Talk about your market, and it’ll talk about you. That’s the formula we’ve been working with.

Expand and develop your network

Networking is the oldest trick in the book, because it works! There’s no better brand ambassador than other thought leaders in your industry giving you good feedback. Some of the best and most exciting opportunities we’ve experienced have come from conversations with interesting people.

If you meet someone cool at a conference and they offer an introduction to someone new, always follow up!

It’s also really important you listen to conversations and offer valuable input. Don’t just give to receive.

Create good content that steals the limelight

This should be your priority. There’s nothing worse than listening to a presentation that lacks enthusiasm and interest. You need to have a good mix of informative, fun and thought provoking content.

You want the audience to go away thinking;

  1. “I want to learn more about that business”
  2. “That talk resonated with me”
  3. “They’re really cool, I enjoyed that”

Deliver on this advice and you’re likely to clinch those great keynote speaker slots that will help your business stand out. Of course, following the steps of one blog post won’t make you the next StartupGuy, but it’s a good place to start…


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October 6, 2017 StartupGuy1

Today I met Sifiso, an avid young entrepreneur from Benoni. Sifiso had been in an abusive relationship with his seed investor. According to Sifiso, his investor has not honored their terms of engagement and has rather opted to pay a salary to Sifiso for the past 9 months, thus jeopardizing and further deteriorating their relationship. I believe that in this case Sifiso failed to say no to this kind of investment and relationship with his investor. So I decided to write this article to help budding entrepreneurs establish how to say no to investors who don’t have skin in the game and don’t fit in their vision.

If you’re in the position where you need to turn down a potential investor, the good news is that you’re in great company. The hottest deals are often courted by many investors — too many investors to fit in a single round.

Not many entrepreneurs or founders will agree to this thought specially when the Number 1 Challenge for any entrepreneur worldwide in the seed or early stages is wanting to get FUNDS ! Yes some of the entrepreneurs may not even get to this stage of saying NO while trying every option in the world to hunt for funds.

While turning down investment might seem awkward, understand that much like VCs have to turn down a lot of startups, they also receive a lot of rejections from the most popular deals that they pursue. My best advice is that you be upfront and honest in your response.

Much like entrepreneurs don’t want to be dragged along by an investor who knows they aren’t interested in doing a deal, VCs also don’t want to be dragged along by an entrepreneur who knows they don’t want to take an investor’s money. When you know it’s not a fit, politely decline the interest and, ideally, provide a reason.
Possible reasons for not wanting to take an investor’s money include a lack of personality fit or industry expertise, a mismatch of company cultures or misaligned goals, terms in the deal that you aren’t comfortable with, the fact that you aren’t interested in raising at this time, or the fact that you are already oversubscribed.

If you are saying no to an investor because you have an oversubscribed round, you are totally in the driver’s seat.
While it’s good to be upfront about not wanting to take investment, it’s also good to leave the door open where possible. You never know when you might need to go back to an investor down the line. You can leave the door open to future conversations by giving VCs a soft no, rather than a hard no. A hard no would be, “thank you, but we are not interested in your investment.” A soft no would say “thank you for your interest, but we don’t see a fit at this time.”

When you receive a cold email from an investor interested in your company, a great response to decline the interest is usually something along the lines of “thank you for your interest. We’re heads down on project X right now and not looking for investment, but will keep in touch should that change down the line.”
As an entrepreneur raising money, you’ve probably seen VCs use the soft no on you in the past. Rather that saying ‘no’, investors will tell you ‘not now’, encouraging you to send updates and keep in touch. They do this so that they can maintain their relationship with you, in case one day they change their mind and want to invest. Your best bet is to use this same tactic on investors. While this may seem a bit manipulative, it’s really just a smart way to keep the door open for a relationship in the future.

There’s one time you might want to keep an investor that you aren’t interested in taking investment from at the table: when you need their interest as a bargaining chip in a negotiation with another investor. In this scenario, you’d use their interest to make other investors act faster or drive better terms. If you choose to use this technique, be careful. Driving too hard a bargain may scare the investor you actually want away — leaving only the investor that you weren’t actually interested in at the table. Or worse yet, scaring both investors away.

Many entrepreneurs have also suffered as they have lost to the bait of giving away critical share or authority to the investors in this process.

In my own experience and having met or spoken with some brilliant entrepreneurs worldwide this is one question that I bounced out on.

Here are some of the top reasons why YOU SHOULD DAMN WELL SAY NO TO AN INVESTOR.
1. RETURNS: When the effort, expertise and time that you will invest in the business out weighs the startup capital, and the benefits you would get on evaluation don’t balance out. It also holds good when they want too much equity for the investment they are making versus the benefits they will bring
2. DRIVER: Who will be the driver of your business post your funding ? If the Investor is bringing unwelcome steering or controlling decision affecting your business. You say no (thank you) when their ideas for the company, product line or personnel are not in line with yours. Unfortunately (many VC) investors can like your idea but want a path to control. They love to “help” identify your CFO…..:)
3. SMART MONEY, IS BETTER THAN MONEY: Smart money brings more than just rands. These are investors with great social proof, connections, or assets that are specifically beneficial to your business. If you can, say NO to investors that aren’t a good fit, or who aren’t bringing anything else to the table, say no to the ones who treat you as though you are on opposing sides during negotiations for the round.
4. TERMS OF LENDING: You should say ‘No’, to any investor whose term sheet looks like a lender’s document rather than an investor’s document. Most investors secure their money and lock in their returns at the expense of the promoter. Carefully check the Drag Along rights and the Exit Clauses particularly if they insist on a high guaranteed return on investment. Then it is not an equity deal in the real sense. It is always wise to wait for the right investor because struggle is a given in a start up. A wrong investor will only focus on his return. In the process, your shares will get further diluted if another (right) investor comes in at a realistic valuation.
5. BEYOND JUST MONEY: There are a number of times and reasons from the actual cost of the capital, to how they plan to seat the board. Are they hands-on or hands-off the business? Does their portfolio align to your organization, product or services? Does their philosophy make sense?
6. JUST ROI DRIVEN: You say NO to an investor when he/she are interested only in numbers and not in operation hurdles, your great idea, your passion to succeed. Clearly he/she is not visionary or may not be supportive in your critical operational chores. You will always carry a burden of such investors. Better walk alone than walking with an assassin.
7. DO YOUR DAMN HOMEWORK FIRST: Investors come in many forms…hands on, arms length and cash only: which means…they want to be In (make decisions for their percentage), they want to influence (limited decision making but active monitoring of their investment) or hands off (they are a bank..no more no less). Unless you really know what they are bringing to the table that will help fuel your company forward with an anticipated limited ownership period for their investment with an expected payoff date..in every case, you are also running the risk of losing more than you might think you are gaining. Investors and partners, while they have their place and can bring benefit …..can also create the worst of business divorces. If at all possible, first seek the option of having them as a lender…hands off for exchange of a fair interest rate and term. If you fail, they are getting your assets anyway. If you are expecting to keep ownership of the business, ensure their voting and decision making rights can never over rule yours. If you are looking to investors as a means of an exit strategy, invest in a great business lawyer up front…to protect your return at the end. Be very careful. Like marriages, all business partnerships and investors start with the best of happy and intentions filled with potential…but when the honeymoon is over…the real personalities begin revealing themselves..and it can be devastating.
8. GUT FEEL: When you sense that post-money your freedom, expression, being, passion, command, freshness, etc could be even a fraction less than pre-money situation! An investor needs to understand your vision otherwise it is simply not worth their capital, if they want to make changes etc. especially before you’ve even taken their money that’s a massive red flag.
9. LIMITED LIABILITY: Don’t sign if the investors ask for personal warranties. Some of the entrepreneurs have been made bankrupt through other’s actions. Only accept liability in direct relation to your ability to control and/or exit. This is where a lawyer comes handy.
10. DUE DILIGENCE: A Key Attorney and a Key Note Speaker pointed these critical things. AFTER you have done your due diligence and discover things about the investor that a reasonable person would deem questionable. Here are some questions that are recommended for startups to consider getting answers to:
* Are they who they say they are?
* Can they do what they say they will do?
* What do you need to give up in exchange for their help?.
* What do their client references say about how they do business?
* Why do they want to help me?

Having said that however, you also need to understand that your demands from the investors are reasonable so that they will actually see their money back. One of the reason why they tend to try to dominate the venture so much is to protect their investments and the ROI. If you can assure them the investment will deliver, then I’m sure the need to say no will be lowered by a huge ratio.

StartupGuy’s Take:

Honesty is the best policy here and it’s definitely a good idea to keep the relationship on good terms for future collaboration.

VCs like me know that getting turned down by founders is just part of the business. Unfortunately, saying ‘no’ is a big part of our job, but hearing ‘no’ is also a part of our job. If you are chasing smart entrepreneurs, you are not going to win the right to invest in all situations, no matter who you are or what your track record is. From personal experience, I can tell you that it’s a punch in the gut for sure, but it’s nothing compared to the minefield of rejections that founders go through when they are fundraising.

I would also suggest that you say ‘no’ as quickly as you can for each investor. It will help free up your time to focus on getting to a ‘yes’ from both sides. If you had a terrible first meeting and you couldn’t dream of working with this VC for the next five plus years, trust your gut and communicate to them soon after that you are not moving forward with them. The same way you’d appreciate a quick ‘no’ from them, a professional VC will also appreciate this.


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September 22, 2017 StartupGuy0

Meeting an investor is stressful. The result of months of hard work, emails and phone calls with potential investors to generate interest in your venture are riding on this one meeting.

You’ll have prepared intensively with your consultants and mentors, and by the time you rise from the table, you’ll know if you are closer to that treasured status: “financed start-up.” But nothing frightens entrepreneurs more than the possibility of being asked questions they don’t know how to answer. Preparing for difficult questions will not only help to increase your chances of landing the money but it will also improve your entrepreneurial skills.

Here are five very difficult questions investors like to ask and some tips to help you get through them safely.

Question 1: How much money do you want to raise and can you make do with less?

Many entrepreneurs approach an investor with a specific amount that they want to raise. Of course, they also build their budget on that amount. It’s almost always a mistake. A better idea is to show the investor two or three different budgets, each based on successfully raising a different amount of money. One way to expand the budget is to mention different development costs (such as using a local dev company versus outsourcing developers from an offshore country where dev costs are lower). This “flexible” approach brings several advantages. First, you show that you understand market prices. You know how to get the best deal and can save the investor’s money. Second, you also show that you’re confident that you can succeed even if you raise less than the full amount you requested. And remember too that different investors can put in different amounts. If you’re prepared to accept investments of different sizes you can increase the number of potential investors.

 

Question 2: Who are your competitors and do you know Company X?

Never tell an investor that you have no competitors. Usually it just means that you haven’t looked hard enough for them. Worse, you looked hard enough, there are no competitors… and there’s a good reason that no one is trying to solve the problem that you claim exists. If you’ve looked and haven’t found direct competitors that are doing something similar to what you’re doing, keep looking until you find some indirect competitors.

For example, if you’re developing a chat platform that uses mind-reading to predict what the other person is about to write, WhatsApp will still be your competitor. There is an advantage to listing as many competitors as possible, even if some of them have to be forced into the list. The further your competitors are from what you’re doing, the easier it is to criticize them and point out the advantages of your product. Of course, the comparison must be reasonable.

One of the biggest fears of any entrepreneur is to be asked about a competitor they don’t know, or one that they’ve heard about but whose activities they’ve haven’t looked at closely. The best answer you can give is, of course, the truth. Explain that you have focused on checking out the strengths and weaknesses of your main competitors. Add that you’re still keeping your eyes open for more competitors and as soon as the meeting ends, of course you’ll check out the company the investor mentioned. Remember that you are also being tested on your ability to deal with difficult questions and show confidence even if it turns out that you could have checked your competitors more thoroughly.

Question 3: Describe one major error you have made so far.

This question turns up more and more often, and is a bit like the infamous job interview question “What are your faults?” However, unlike job interviews, where interviewees often describe disadvantages that are actually advantages (“I am a perfectionist,” etc.), investors actually want to hear about real mistakes that you’ve made. They want to make sure that you realize that everyone gets it wrong sometimes and that you won’t believe that you are always right. In addition, the investor also wants to know how you will deal with the setbacks and issues that will turn up along the way. You could talk about initially choosing the wrong product or service, being forced to change your founding team, picking the wrong technology, ignoring competitors, and more. Put your ego aside. Investors really do value entrepreneurs who have failed repeatedly before they succeeded. It’s often one of the reasons for success.

Question 4: What is your marketing strategy?

Marketing costs money. A lot of money. As successful as your product may become, you won’t be able to break into your product’s market without significant and expensive marketing efforts. So you need to understand the marketing channels active now, including social media, marketing partners/distributors, public relations companies, etc. One marketing method that has become very popular recently, especially for young audiences, is influencers, such as social media stars on Facebook, YouTube, Instagram, and so on.

Experience has shown that it is often much cheaper to use influencers to push a product than using another Google campaign. Even if an influencer charges thousands for a post, they’re likelier to bring you better traffic. Make sure that you know the prices in your market and, of course, the best marketing methods for what you’re building.

Show the investor that you know what you’re doing, that your budget was built with knowledge and thought, and that you’re not just filling in the gaps. The investor should feel that their money is in good hands.

 

Question 5: What happens if you do not succeed?

This is a very fair question from an investor once you understand that investors are now looking more closely at the entrepreneurial team and its abilities and less closely at the idea itself. Investors know that an idea or its method can change. The market can change (or you haven’t read it right). New competitors can emerge. New regulations can be laid down, and so on. But change is not necessarily a bad thing and it’s possible that a change (even when forced) will bring success. Investors want to understand your abilities to create the change that will make the difference. How flexible are you? How determined are you? Do you have backup plans (other than raising more money and diluting the investor)?

Small tip: the more you portray your venture as a platform (technological or otherwise) with a number of uses, markets, and so on, the more attractive you will look in the eyes of an investor in comparison to a venture with just one product, one market and so on. Try to be prepared for these questions and turn the investors (who are really investing in you and not your idea) into friends who support you even in hard times too.


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September 18, 2017 StartupGuy0

A pivot is a significant change in the product, target market, or any other part of the venture that has to be made when it becomes clear that your current path won’t bring you to your goal. In recent years, pivoting has become so widespread and legitimate that it’s no longer automatically associated with failure. Sometimes it seems that entrepreneurs simply like to tell people that they pivoted even if they didn’t need to, as though a successful pivot attests to the strength of the project and the team, and to the entrepreneurs’ ability to adapt to a changing reality.

I’ve often seen instances in which entrepreneurs have chosen to “pivot” as an excuse for giving up early and starting again elsewhere instead of investing more effort in their current direction. Those decisions, of course, are rarely a good sign for the success of their project. A solution as complex and dangerous as pivoting should only be implemented when really necessary. And of course, sometimes a pivot is just a cover story for failure (it sounds so much better). In those instances, the project that performs the pivot quietly vanishes.

However, when a pivot is done for the right reasons, it should not be identified with failure. The need to make a pivot is not always the result of a mistake or a lack of entrepreneurialexperience. Often, it’s the result of external factors such as changes in the target market, in the regulatory environment, the emergence of new competitors, and so on. Whether the need to pivot is forced on you or chosen by you, your best chance of doing it successfully is to do it quickly, efficiently and as early as possible.

In order to identify a need to pivot at an early stage, it is vital to know when you might need to pivot and the types of pivot you might encounter. Here are some examples:

1. Product Pivot – You hit a technological barrier. The product does not solve the problem that you tried to resolve, or any other problem for that matter.

2. Target Market Pivot – The product works but the pricing or some other factor does not match the target market. You’ll either need to find a different market for the product or find ways to lower, upgrade, or modify the product to suit your users.

3. Business or Legal Pivot – The product is great, users are satisfied but your business model doesn’t work. You might have discovered some legal obstacles you didn’t know about or your investors might be demanding higher profits, etc. These kinds of problems usually require a high degree of creativity, and if a solution isn’t found, they can be particularly frustrating.

Did you recognize the time you need to pivot? It’s something that has to be done quickly to minimize the damage caused by loss of time and money, a collapse of faith from investors, and missed opportunities, etc. Especially in fields that are particularly prone to pivoting, you should make sure that your project is “pivot-friendly.” For example, the slimmer your product or service, the easier it will be to make the changes and the better the process will look for customers.
Another important tool that can aid in the early detection and rapid implementation of a pivot is the investment of sufficient resources in the collection and analysis of feedback from users (which unfortunately, few start-ups bother to do). Often, the solutions you are looking for come from customers so it is worth giving them the tools they need to talk to you – and, of course, you have to listen to them.


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September 14, 2017 StartupGuy0

Your ideal investor is someone who is so enthusiastic about your idea that he’ll be happy to invest in your venture based solely on his trust in your entrepreneurial talent and possibly his belief that your product has a significant market.

Unfortunately, most investors aren’t like that. They’ll do their homework. They’ll come to a meeting with a list of prepared questions and they’ll expect detailed and grounded answers before they even begin to talk about money. Your seriousness is measured in part by your ability to provide accurate and quick answers to those questions. What can help? Knowing in advance what they’re going to ask, of course.

First, the investor will want to know who the founders are. What experience are they bringing to the table and why did they all decide to work together? The old story of a bunch of college/high school/workplace friends who just wanted to do something together no longer packs a punch. The high-tech market has matured. Many investors and entrepreneurs have already gone through several rounds in other projects. The search for a winning team has become more professional and rigorous and investors have less time and patient for trial and error.

Is your team complete? Does it still need to fill a key role? What important positions in a start-up can the founders fill and what are their special talents/ experience etc. that will make the investor want to invest in this team? You should know what it is and be ready to tell the investor before the investor tells you. You should also know how committed the founders are. Are they ready to go full-time when it becomes relevant? At what stage will they be ready? Under what conditions (e.g. if the company raises X or any other milestone)? Did you invest any of your own money in the start-up (which shows commitment and belief in your dream)?

If you do pass the personality test, the investor will want to know how much money you want to raise and how you plan to use it. Know in advance how much of the investment you want to spend on development, on marketing, on patent registration, on rent, on server maintenance, on employees and consultants, and so on. Prepare a budget that’s detailed and—no less important—realistic. What will your monthly burn rate be? How does that rate compare to other projects in your field at the same stage as you? You don’t want to appear either too wasteful or—just as vital—too optimistic and too thrifty.

What is your business model (if you have one)? If you do have a business model, do you have a revenue forecast? If you do have a revenue forecast, what did you base it on? Clearly, not every venture, in every field, at any stage, can create a serious revenue forecast (and you don’t want to offer a revenue forecast that’s not serious). But can you justify not having a revenue forecast? Some ventures are not build to create serious revenues (at least not during the first few years) and are focused on bringing a lot of users and creating value (usually with the purposed of getting acquired at some stage)? Is that your story? If so, you should tell the investor who might or might not be interested in investing in such a venture.
Be aware that the better your business’s future looks in terms of its business model even though the revenue generation is unclear, the more important it will be for the investor to understand how you plan to market your product. How will you bring in users? What marketing channels do you intend to use (e.g., social networks, monetization tools, marketing partners, influencers, etc.) If your field has a generally accepted price for user acquisition (very common in fields like gaming, gambling, adtech, e-commerce, etc.) you should know that price. That last point emphasizes the importance of having in your team (either as a founder or as an external consultant) someone who knows the industry. Some areas are considered so complex that it will be very difficult to raise money without a real “industry expert.”

The first meeting with the investor is critical because you probably won’t get another chance. Do your homework. Take advice from anyone who can help. An exciting product, a big market and an impressive presentation are certainly important. But the knowledge and preparedness that the investor expects to see in you are just as important. Make sure you’re ready.


StartupGuy shares some of his top tips for getting your first investment...

StartupGuy

August 8, 2017 StartupGuy0

There’s a point in most startups’ journey where the founders realize that the mission they’ve set out on can’t be accomplished without significant capital and resources.

It’s normally a low point and one that leads you to question what the next steps are. Well we hit this point at Startup Mzansi 6 months after launching and have managed to take the next steps with the completion of our angel round of investment. It was a difficult path and one that at times we never thought was going to end. With this in mind I decided that we should share some of our top tips for getting your first investment.

Don’t Start Too Early
Looking back I started 3 months too early with fundraising. Make sure you’re ready to take money within the next 3 months, if you’re not you’re just wasting your time and the investors.

Make a Killer Pitch Deck
Once you’re ready then make sure you have a killer pitch deck. Make sure you don’t overload it with information though – everyone hates death by PowerPoint. A couple of lines of information on each slide MAX. Also don’t just throw something together in PowerPoint. Find a designer and get them to make it look stunning, unattractive slides won’t help you or your business.

Build Your Network
You’re going to have to speak to an awful lot of people if you’re going to raise an angel round of investment. Make sure you’re keeping track of connections and network your ass off.

Oh, and make sure you tap into your mentors’ networks and get warm introductions to people that wouldn’t take your call normally.

Find A Lead Investor
And find them quick. Most investors want to know who else is backing you; it helps them justify their decisions. Find a lead investor who is willing to put their name to you and you’re well on your way.

It Takes Time
Someone says “Investors don’t invest in dots, they invest in lines.” The chance of someone meeting you once and deciding they want to invest is slim. They’ll want to see that you’re making progress. If you manage to have the money in your account within 6 months of deciding you’re going to try and raise then you’ve done a very good job.

Learn Your Stuff
Raising investment is complicated. There are more terms than you could imagine so before you set off down this path spend some time reading. I have written the Startup Recipe: A guide for startup Creators. It’ll get you up to speed and also save you some money in lawyers fees once you have investors lined up.

Beware of the Sharks
You need the money but make sure you don’t end up in bed with a shark. Don’t be afraid to say no to investors that you don’t think will benefit the business. If they thought you were worth investing in, so will others.

And the most important piece of advice – never give up. This is likely to be the most difficult thing you’ll do in the early stages of your business so be prepared to get knocked back a lot and never give up.

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July 31, 2017 StartupGuy0

As founders, one of the most difficult decisions we face that the early-stage of a startup is how to split equity amongst the founding team. Often the most simple route is a straight split. But this can lead to fundamental problems later on in the life of a startup.

The common question of “what is an idea worth” often comes up. In reality, a good idea and R50 will buy you a cup of coffee. The same problem is true of valuing the contribution of early stage investors and advisors.

One of my last startups was done on an 50/50 split, but I ended up doing 80% of the work. Then my co-founder took a full-time position back in the workforce, so I really had no alternative but to close the down the opportunity rather than buy-out his share. A good shareholder agreement can help with that problem, but your actual calculations are still often based on guesswork or notional contributions.

Dynamic Equity Splitting solves that problem by allocating the percentages of ownership after the fact, based on the actual contributions of founders, as well as investors, advisors, consultants, and even early stage hires, relative to their experience and actual contribution of labour or resources.

Dynamic Equity Splitting is a concept pioneered by another successful entrepreneur, Mike Moyer, who has had a number of succesful startup based out of the US. He also happens to lecture at the prestigious University of Chicago Booth School of Business, as well as mentoring and supporting startups (using Dynamic Equity Splitting) so his experience is well based in both the theory and the practical.

It’s gaining interest around the world from founders who want to address the challenges of splitting equity. Even the startup media has recently become interested.

DES is now the cornerstone of all our startups, including of a new type of accelerator program that we’ll be launching shortly, for young people wanting to enter the startup space, a group often overlooked in the crowd full of 20-something graduates. DES is fairer, eliminates ambiguity, recognises value, and rewards people based on their actual contribution, relative to the total contributions made by all, using pre-agreed formulas.

This also gives investors & advisors some certainty and aligns the equity of founder shares relative to the value of their own financial & advisory contributions, thereby de-risking an important part of the startup dilemma. This promotes open-ness & communication around equity, and can remove some of the ambiguity or disagreement around ownership splitting, freeing up founders & advisors to focus on critical areas area likes marketing , business development, and product/market fit.

All 11 of our startups will be using this model, and we encourage others to consider it as a method of splitting equity between founders.