We organized a 3-day bootcamp for startup entrepreneurs to polish their skills in sales and marketing, finances and investors, legal and intellectual property matters and pitching. Below is the summarized advice we, the actors of the NOCCA project, gave to boost readiness to face potential investors.
Sales & Marketing
- Product market fit is a necessity for successful business.
Tick this checklist and you have product market fit:
- Viability: a confirmed business model that makes the company real money
- Desirability: a large market that needs a problem solved
- Feasibility: a product or a service that solves the problem
You also need to have proof of the product market fit: how many customers are paying and how much. Of course, net promoter scores and potential clients are important too but they aren’t proofs. Thus, start selling immediately and ask for customer feedback at an early phase when changes are easier to make.
- Know why your company exists
The Golden Circle by Simon Sinek is a great tool to justify why your company exists. What and how your company sells, is easy to explain. But the why, that shows the purpose, the core values and the mission of your business, is essential in differentiating the offering from that of the competitors.
- Know the content and channels your customers prefer
B2C marketing is often simple, emotion-appealing messaging that focuses on benefits and problem solving. Whereas, B2B marketing content is more in-depth and logic-driven and promotes solutions and saved resources. However, even the most logic driven B2B customers are human and thus, you should not ignore marketing content with emotional aspects.
B2C business is often marketing driven as deals are closed by the product or service itself helped by appealing adds and other content. However, in B2B the focus is on sales as deals are more complex and closed face-to-face.
When choosing the marketing channels that best reach your customers and serve your purpose, we recommend the bullseye framework as a practical tool.
Start-up finances & investors
- Cashflow and a few other things
In order to build a profitable business – an idea more than just a thought without funding – you should be aware of these basic things:
- Cash flow: how much fuel you have for your business (investor money is needed early on to get up and running)
- Wages: often the biggest costs and thus, it is important to know when to hire and when to turn to service providers
- Burn rate: cash that you spend in one month by average
- Length of the runway: how long your money lasts
- Milestones: you have to reach certain milestones with the cash you have (for example a beta version of an app)
- Do your revenue forecast as there’s a risk of running out of money. (Raise as much as you need from investors and if you earn some money, it’s a plus. It takes a time to get profitable.)
- Relationship with your investor can outlast your current romance
You need to choose your investors well – maybe even more carefully than your spouses as the relationship might last 10 years. That is longer than the modern romantic relationships.
Know your investors and when choosing them, do some cross-checking on at least the following:
- what phase of the startup lifecycle they invest in
- what kind of industries they invest in
A rule of thumb with getting investors involved is to never give away more than 20% of your company in the first seed round. You still need shares after the 7th investment round or it might be difficult to get other investors onboard. Don’t get overwhelmed – good investors are most likely aware of this and you just need to know the basic framework.
- Tell a Story
Stories are an appealing way to bring out a problem that your company wants to change, your solution to overcome that problem, your pitch to get the investors involved and finally to get your solution to the market.
- Be Prepared to Answer Questions
Investors ask about these seven aspects; Market, Product, People, Business model, Customers, Competitors and Data.
Be ready to answer both promotion questions (“What would be your potential estimated market size?”) and prevention questions that are asked in order to minimize risks (“Are you going to get enough customers to build a real business?”).
Legal Stuff and Intellectual Property
- Intellectual Property should always be owned by the company
Legal needs are different in different stages of the startup lifecycle but one thing is a necessity from the very beginning: documentation that the intellectual property belongs to the company. Consider this as an insurance if things get ugly. It’s like getting a prenup before getting married.
- Copyrights, Patents or Trade Secrets
Intellectual property laws may vary by country but some main principles are the same.
- Copyright & related rights: Creators rights protect original works of art but also other original outcomes such as software and architectural design from financial misuse. You don’t have to apply for copyright as you are the owner of your work as soon as it has been created. Copyright does not protect ideas.
- Industrial property: Patents give an exclusive right to use an invention – a new product or process or a new technical solution. Trademarks distinct a company from its competitors and are a significant tool for marketing and brand building. You need to apply for both patents and trademarks.
- Trade secret: Knowledge that has commercial value and it can be proven that the company has taken action to protect it.
- Don’t be afraid of GDPR
Anyone operating in Europe needs to consider the General Data Protection Regulation (GPDR). This means respecting your clients’ personal data, gathering only relevant data for your business and storing it safely. Remember to ask permission to keep client data saved!