Robert Ochtel’s Blog

An Experienced Approach to Venture Funding

Some “Truths” About Networking for First Time Entrepreneurs

The term networking itself and networking as an activity can be very intimidating to first time entrepreneurs.  Many of these same individuals have never have had to network or believed that they needed to network to enhance their career, and as such, are unfamiliar with networking and its benefits.  In fact, many first time entrepreneurs, not only need to learn what “networking is and is not”, but they need to learn “how to network” to benefit of both themselves and their start-up companies.   This article outlines some basic “truths” regarding networking and how it can benefit entrepreneurs and their start-up companies.

Networking is Really Focused “Socializing” 

Networking is really no different than any other socializing activity.  In fact, if it were referred to as “socializing”, instead of networking, I believe it would be less intimidating to first time entrepreneurs.  The word “networking” seems to have an underlying performance-based stigma associated with it. That is, to be a success at each networking event they attend, one needs to come away with something that they value for themselves or their start-up company.  This, “what can I walk away with mentality”, with virtually no effort on their part, is not really productive for the first time entrepreneur, as promotes undue pressure that requires this same entrepreneur to actively seek a “quality” connection each and every time they attend a networking event.  This is a non-realistic expectation and definitely not a “good” networking mentality.  A better approach is to attend each networking event with a positive attitude and hope to meet one to two individuals you can possibly create a personal connection with.  This is really what should be the expected “positive” result of a successful networking event.  Therefore, if you look at networking as focused “socializing” you will be more relaxed and ultimately more successful at each networking event you attend.

Not all Networking Organizations offer the Same Level of Benefit to the Entrepreneur

First time entrepreneurs need to be very particular regarding which networking events they decide to attend.  The reason for this is that all networking organizations have a particular focus. In addition, each networking organization also has unique presentations and participation formats. Therefore, out of the gate, first time entrepreneurs should first identify the various networking organizations in your area. After this, one should ask their friends if they have attended any of these networking events and get their overall opinion on the networking organization and its utility, effectiveness and friendliness.  Also, as a new participant, one should take time to attend at least one to two events, for each targeted group, before they decide to join any one networking organization. This will give you a true feeling for the networking organization and how it operates.  Finally, one should make an effort to meet the individuals that run each networking organization.  To do this, just introduce yourself and tell them that this is the first time that you are attending.  This is important, as each group has their own “personality” and that personality always comes from the individuals who run the network organization.  As you will learn through this process, one networking organization will most likely “fit” you and your personality better than the others.  This comfort level will allow you to be more effective and enjoy the events you attend. 

In Business, People Like to “Work” with People They “Know”

Have you ever noticed that entrepreneurs that start companies surround themselves with people they know?  In fact, many start-up company’s founders have worked together, in the past, at one or more companies.  This collegial bond and common experience base allows these same individuals to “know” each other, their personalities and most importantly their skill sets. 

To take this “known entity bond” a bit further, there have been whole industries that have developed based on personnel from a single company. In fact, the wireless industry in San Diego, Ca was founded, developed, and expanded by insiders that originally worked together at a single company, Linkabit. Since the early 1980’s there have been hundreds of wireless start-ups, in San Diego, that come from this lineage, most notably including: Qualcomm, Hughes Network Systems, ViaSat and many others.   This provides you with an understanding of the “basic” desire and “need” for people to “work” with individuals they “know”.  As such, this is what networking is all about — it provides a forum for you, as a first time entrepreneur, to present yourself and your start-up companies, so that others can get to “know” you and your start-up company.

Networking is Not a “One Time” Activity

Many first time entrepreneurs mistakenly believe that they can attend a “single” networking event and will walk out with funding and many “great” contacts. This is far from the case.  In fact, only by attending targeted networking events multiple times, do the individuals at these socializing functions get to “know” you and your company, its technologies, products or services, and your needs. Realistically, it usually takes three to six months or more, of continually attendance, for people begin to “know” you, and recognize you as a quality, reputable individual.  Only after this amount of time, individual effort, and interaction will other fellow networkers be willing to open up their networks and contacts with you.  This may seem like a long time for first time entrepreneurs, but look at it this way — you would not introduce someone you don’t know to your best friend unless you “know” them and can be assured it is a “quality” introduction.

 Getting Involved is the Best Way to Start

The best way to become quickly recognized and known among a networking organization you are interested participating in, is to become involved in their “executive committee”.  As most networking groups are volunteer networks, they are always looking for individuals to: organize events, recruit new members, run committees, etc.  This is done by the executive committee members.  This type of volunteer work generally only takes a few hours a month and you then have access to all of the “key” individuals within the organization and their networks, which are generally extensive. 

The Long Term “Benefits” from Networking are Many

The long term benefits of active networking are many for you and your start-up company.  Remember, no entrepreneur can successfully develop and expand their start-up company in a vacuum.  All start-up companies require “key” individuals with broad and deep skill sets, industry connections, and a continually expanding network to ultimately be successful in the market. As a minimum, some of the long term benefits of successful networking to entrepreneurs include:

  • Meeting new acquaintances,
  •  Acquiring new friends,
  •  Being exposed to new ideas,
  •  Expanding your industry contacts,
  •  Securing long-term business contacts,
  • Developing strategic business partners, and
  • Securing an extensive amount of resources at your immediate disposal.

So, as a first time entrepreneur, get out there and network, both you and your start-up company will benefit substantially from your efforts. 

March 30, 2009 Posted by | Business Development, Nwtworking, Venture Capital | , , , , , , , | 3 Comments

Venture Capital – It’s Not “Welfare” for Start-up Companies

Most of the time, when I first meet with entrepreneurs and their start-up companies, they are usually focused on the money they think they “need” to make themselves successful. More often than not they say, “If I just had a $1.0M to get my company off the ground that would solve all my problems.” This “money-focused” mentality often makes these same entrepreneurs take their eye off their real objective — making their company an attractive investment opportunity for potential investors. As I always tell them – “money never solves your problems, either in your personal life or in business, but being prepared, focusing on your company and securing customers will.”

Venture Capitalist focus on the “Best in Class” Investment Opportunities

Venture capitalists and other private equity investors, by the nature of their business, are “risk adverse” and not “risk takers”. This line of thinking seems to escape entrepreneurs and their start-up companies. This is especially true for “first-time” entrepreneurs. These individuals do not take the time to look at their start-up company and its associated “investment risk”, from the venture capitalists point of view.

A venture capitalist has a fixed amount of money in their private equity fund. This fixed sum is used to invest in a limited number of companies over a given period, usually 7 to 10 years. With these limited number of investments, the venture capitalists and their funding sources (e.g. pension funds, private individuals, etc.) know that a number of them will fail, a number of them will break even or do a bit better, and a couple will be highly successful. Therefore, from their point of view, venture capitalists are taking a traditional “portfolio management” approach to minimizing the inherent “risk” of their individual investments. As such, venture capitalists only look for the “best-in-class” investment opportunities to ensure that their “portfolio risk” is minimized and their individual investments succeed over the life time of their investment fund.

Not all Companies are Candidates for Venture Funding

All of the entrepreneurs I meet believe that their companies are fundable by third-party equity investors, be it angel investors, venture capitalists or other private equity sources. The truth is that very few of these same companies will be able to secure monies from these same funding sources. The statistics show that only about 3% of start-up companies, which are reviewed annually by venture capitalists, secure funding from these same funding sources. Therefore, it is not hard to believe that the other 97% are either not fundable or have to secure funding from other sources (boot strap, friends and family, etc.).

As an example, recently, I received a request to help secure funding for a start-up company that was looking to develop a service offering addressing a new, bleeding-edge market that had yet to develop. They were looking for $1.0M in investment capital, but were only projecting $5.0M in revenue in their fifth year of operations. This company is clearly not a candidate for venture capital or any other third party equity funding. On the other hand, suffice it to say, that if a company, at some point, succeeds in generating revenue of $5.0M a year, with high gross margins, this will end up being a fine “life-style” company for its founders. This type of start-up company and investment opportunity is not a bad deal for the founding team over the long term, but is definitely not a candidate for third-party equity investors.

Start-up Companies are in Business to Secure Customers

As a start-up company, entrepreneurs need to remember that they are in business to secure customers and not just to develop a technology, or service offering. By focusing on securing customers early on, these same start-up companies will provide substantial benefits to themselves in both the short and the long runs. In the short run, the start-up company will have demonstrated to potential investors that there is a “market need” for its product and that customers are willing to pay for it. This is very attractive to investors as it reduces their investment risk and demonstrates the potential for market traction. Also, by securing customers early, this will provide this same start-up company with a “lead” customer. This is often key to securing long-term success in the market. A lead customer will help drive a start-up company’s technology, product or service features, functions and capabilities. This is very important to a start-up company’s success in the market, as end customers always know more about the market application requirements than the start-up company developing the technology. Finally, by securing customers early, this will allow a start-up company to generate revenue. This will reduce both the start-up company’s short term and long term capital needs, requiring the founders to give up less equity over the long term.

Planning, Preparation and Securing Customers is the Best Plan for Receiving Funding from Venture Capitalists

Entrepreneurs should not expect that angel investors, venture capitalists or other private equity investors will provide them with money, just because they have an idea. This is an unrealistic expectation. Entrepreneurs need to work hard in planning and preparing themselves and their company to be ready to present their investment opportunity to potential investors. Remember, venture capital is not “welfare” money for start-up companies. Investors are looking to secure a significant return on their investments in a predictable time period. If an entrepreneur and their start-up company do not offer, as a minimum, the following, it will most likely not secure funding.

  •  A “best-in-class” team,
  • A disruptive technology, product or service offering,
  • A sustainable long-term competitive advantage in the market,
  • The ability to secure customers and market traction,
  • A proven business model, and
  • The ability to scale and dominate the target market(s) of interest.

So, as an entrepreneur, focus on your start-up company. Take the time to plan and prepare yourself and your start-up company for the rigors of securing funding in this tough environment. This includes securing customers as early as possible. This will substantially increase your odds of securing funding and make your start-up company a much more attractive investment opportunity for venture capitalists or other private equity investors.

The information outlined in this article comes from my new book entitled “Business Planning, Business Plans and Venture Funding – A Definitive Reference Guide for Start-up companies.” Signed copies of this book are available at Robert also provides business planning, and venture funding consulting services to start-up, small and mid-sized companies.

March 23, 2009 Posted by | Venture Capital | , , , , , , , | 4 Comments

Burgeoning Markets –An “Uncontrollable” Risk for Start Up Companies and Investors

There are many different types of risks that entrepreneurs face when starting their companies. This can include technology risk, product development risk, market channel penetration risk, staffing risk and others. Many of these risk factors can be “controlled” by investors, in the short term, by investing more money and/or by adding more resources to mitigate these risks. The risk factor that is out of investors’ control and often causes a start-up company to fail is market risk. Market risk, as defined here, is multifaceted, and is a result of the targeted burgeoning market not developing in the anticipated time frame to support the product demand required by the start-up company. This often results bad news for both the start-up company and its investors.

Emerging “Bleeding-Edge” Burgeoning Markets Take Time to Develop
Often, in order to differentiate themselves from large, established competitors, start-up companies believe that they should address emerging markets with “bleeding-edge” technology. More often than not, this “bleeding-edge technology” strategy comes with a large amount of risk. The most important risk factor here is that the underlying, emerging market that supports this “bleeding-edge technology” does not develop in a predictable, near-term time frame. In this situation, the technology pundits always claim that their targeted market or market segment will “take off” within the next year, providing their company with a substantial return on investment in a very short period of time. This optimistic view of the world, usually does not consider the time it takes to roll-out new technology infrastructure or to establish this same new technology with the target customer base. More often than not, this one-year time frame turns out to be five to seven years or more. This makes it virtually impossible for a small, venture-funded company to finance the multiple generations of product development that are required before their burgeoning target market supports the shipment of significant enough volume to make their business model self-sustaining. This often makes this burgeoning market strategy more of a “hope” than a “reality” for the start-up company and its investors.

First Generation “Bleeding-Edge” Technology – Not Be Ready for Prime Time
Many times the first generation of a new “bleeding-edge” technology is not ready for prime time, as it does not meet the expectations of the target customer base. This will also result in substantial delays in market demand for the start-up’s technology, product or service offering. This again can delay any substantial revenue flow for several years.

As an example of this, in the early 1990’s when cellular phone technology was transitioning from analog technology to digital technology, all of the pundits claimed, that due to the benefits of digital technology — higher capacity and better voice quality, the transition would be immediate. As it turned out, the new digital technology made a person’s voice virtually unrecognizable to other callers. This resulted in many digital phone users turning in their phones for their old analog versions. From the users’ point of view, a little background noise was more tolerable than that of the “bad” voice quality of the digital cellular handset. In addition, given the time requirement to roll out the digital infrastructure, to get ubiquitous digital coverage, individuals did not see any real immediate value to the new digital technology.

Therefore, when developing and then deploying new technologies targeting burgeoning markets, often second generation and sometimes third generation technologies need to be developed to meet the consumers’ expectations. This, again, requires additional investment from the venture capitalists and delays any potential for revenue generation for the start-up company.

Burgeoning Markets – Often Result in More Losers Than Winners
Very often new burgeoning markets and their associated technologies attract a lot of investment monies from the venture capitalists. The result is often a “heard” mentality among these same investors to get in these targeted burgeoning markets at all costs, and be a part of these new “homerun” market opportunities. This, more often than not, results in too many new start-up companies chasing the same burgeoning markets. Where are there are often six to eight start-up companies looking to secure a successful market position in an early stage market, the truth is that only one to two will ultimately be successful. This again, results in higher risk for both the start-up company and the investors. In the end, there will be more losers than winners.

Required Investment May not Bode Well for the Start-up or the Investors
As a result of targeting these burgeoning markets, in many cases, these same start-up-companies often secure a tremendous amount of funding (e.g., $50M to $100M) and then as some point cannot secure additional funding from third-party investors. In this situation, the amount of funding secured significantly outweighs any financial value of the company or its technology, product, or service offering, requiring its investors to sell it to the first large company that will pay pennies on the dollar just to get out of the investment.

This scenario is not unusual. In fact, it has been my experience that within the high-technology wireless markets, this has happened to many start-up companies in the digital cellular, Bluetooth, the wireless LAN (WiFi) and WiMAX markets. For all of these markets, the pundits had projected substantial immediate growth in short periods of time, only to have the markets develop over much longer periods of time, causing many of the early, venture-funded start-up companies that targeted these markets to go out of business or to be sold to larger competitors for an insignificant valuation for the company and their investors.

Market Risk – Must be Thoroughly Evaluated by both Start-ups and Investors
The above does not to imply that there are not many cases where venture-funded, start-up companies, developing “bleeding-edge” technologies for burgeoning markets, do not secure significant returns for their investors. In fact, in the high-technology boom of the late 1990s, many large semiconductor companies were purchasing small start-ups to hedge their bets on some of the emerging wireless markets. At the time, many of these small companies were being purchased at valuations between $200M to $400M. These unheard of valuations, although good for the start-up companies and their investors, rarely made significant returns for the acquiring company, which often shut down these operations within one to two years after their purchase.

The accompanying lesson here is that the “market risk” associated with targeting a new burgeoning market is NOT a “controllable” risk. In fact, as outlined, the associated risk from targeting these emerging markets is multifaceted and many times results in significantly higher investment requirements and long delays in anticipated revenue streams. Therefore, both investors and start-up companies must thoroughly evaluate these risks before targeting a burgeoning market as their primary revenue generation opportunity.

The information outlined in this article comes from my new book entitled “Business Planning, Business Plans and Venture Funding – A Definitive Reference Guide for Start-up companies.” Signed copies of this book are available at The book is also avaiable at Robert also provides business planning, and venture funding consulting services to start-up, small and mid-sized companies.

March 16, 2009 Posted by | Business Planning, Target Markets, Venture Capital | 4 Comments

When it Comes to Venture Fund Raising, Many Entrepreneurs Don’t Know What They Don’t Know.

The challenges are many for entrepreneurs looking to start their first company. There is business planning, the business plan, and securing venture funding.  All of these endeavors require experience. Too often, entrepreneurs go into these endeavors with “blindfolds” on. If you are taking on these challenges for the first time, you don’t know what you don’t know. This can be a very overwhelming, and more often than not results in many restarts that don’t get you to the end goal – securing funding and delivering your start-up company’s technology, product or service offering to market.


With this in mind, it is important for entrepreneurs to realize this early, as approaching investors with a “half-baked” business proposition and/or plan will cause you to lose credibility with investors.  More often than not, there are no second chances to present yourself to investors and just so you know, the investor world is very small and word gets out quickly on “bad” deals.


I know from experience that private equity investors are very risk adverse and therefore I have developed a list of 12 Essential Elements they look for in new potential investment opportunities.  If you don’t hit these 12 Essential Elements up front you will not get any “face time” with potential investors – be it angels, venture capitalists or other private equity investors.


To facilitate entrepreneurs through the  venture funding process, I recently wrote and published my book entitled “Business Planning, Business Plans and Venture Funding – A Definitive Reference Guide for Start-up Companies.”  This book provides proven processes and methodologies for securing funding for any start-up company. In addition, unlike other traditional “business plan” books, this book provides a “concept” to “funding” approach to securing venture funding.  Hence, no matter where you are in the development of your start-up company, the information contained in this book can provide you with the appropriate materials to think through, successfully plan, and then execute, so that your start-up company will achieve its vision. 


I am also available as a consultant to help support you through the trials and tribulations of your start-up company and securing funding.  The proven processes and methodologies I provide will allow you to accelerate your start-up from concept to funding.  So, invest in yourself and take a proven road map to developing your start-up company and securing funding.


For more information on Robert’s consulting services go to Robert can be reached at


Robert Ochtel is a successful serial entrepreneur. The processes and methodologies, outlined in his book have been used to successfully raised over $50M in early stage funding from such firms as Sequoia Capital, Brentwood Associates, Oak Investment Partners, AT&T Ventures, and Intel Corporation. Robert also, successfully sold a start-up company to IBM for $180M.

March 12, 2009 Posted by | Business Planning, Business Plans, Venture Capital | Leave a comment

Five Degrees Off-Center – Often a Key to Success for Start-up Companies

When focusing on developing their businesses and business plans, many times entrepreneurs have a preconceived idea of their target primary market and customer base. This preconception more often than not “clouds” the strategic vision of the company and its technology, product or service offerings. In addition, it may result in the company not thinking “outside the box” in addressing potential market opportunities which could substantially increase the return on investment for the start-up company and its investors.

Due Diligence Expands Your Company’s Strategic Vision

As a way to expand a start-up company’s strategic vision, begin by doing a general market trends due diligence analysis. This requires the start-up company developing a given technology, product, or service offering to do their homework. To get a feel for the general market and the current and future trends, one must study the market(s) of interest. Doing the appropriate amount of market research will provide your start-up company with the overall basis in which to develop an understanding of the general market trends as well as the strategic opportunities that exist in markets. Generally, start-up companies in developing their market due diligence analysis should focus on three areas of research, including:

• Markets,

• Competitors, and

• End customers.

By focusing on these three areas, the entrepreneur can develop a quick assessment of the overall general market trends and the strategic, opportunistic market needs for a company’s technology, product, and service offerings. It also allows the entrepreneur to step back and separate themselves from their original preconceived notions, based on actual market research, to determine the appropriate path forward, which more often than not is different than their original plan. I refer to this as the “five degrees off center approach.” By doing your homework and now armed with real market due diligence, often entrepreneurs find new and/or hidden market opportunities that are more interesting and facilitate higher return on investment for their start-up company and their investors. Secondary and

Tertiary Markets May Provide More Market Success

Based on market due diligence, often newly identified secondary or tertiary markets can provide excellent opportunities for a start-up company and its technology, product or service offerings. These new market opportunities were not originally available to the entrepreneur and hence limited the overall company strategic focus and potential. By thoroughly evaluating these secondary and tertiary markets, the start-up company will now have the ability now substantially enhance its success in the market. These new market secondary and tertiary market opportunities can benefit the start-up company in the following ways:

• Provide new initial market entry points with substantially less risk,

• Provide a higher potential return on investment,

• Support an expanded customer base,

• Support multiple revenue streams,

• Provide a stronger competitive position in the market, and

• Substantially reduce the market risk for your investors.

All of these benefits will increase the start-up company’s potential for success in the market place. The Original

Primary Market – Still a Target

In many cases, after the market due diligence analysis process, the original primary market is still a market of interest for the start-up company and its technology, product or service offerings. But, with the new found market opportunities it may not make this original market opportunity the primary or initial market entry point. This does not diminish the need to address this original primary market, but it may prioritize the development of the associated features, functions, and capabilities of your initial technology, product or service offering. The end result will most likely be a change in the following:

• The market entry point,

• The target market application,

• The required product features, functions, and capabilities, and

• The target customers.

Reduces Investor Risk and Increases Chances of Funding

By doing the appropriate level of market due diligence, the start-up company now has a cohesive market entry plan and associated technology, product or services features, functions, and capabilities development plan. This plan more often than not is different than the original “preconceived” plan that was being considered before the entrepreneur did their market due diligence. In addition, this new plan may be only “five degrees off center” from the original plan, but it often provides for substantially less risk, higher return on investment and more cohesive approach to addressing the market with the start-up company’s technology, product or service offering. The end result is that this new plan substantially reduces investor risk and increases the potential of securing funding for the start-up company.

The information outlined in this article comes from my new book entitled “Business Planning, Business Plans and Venture Funding – A Definitive Reference Guide for Start-up companies.”  Signed copies of this book are available at  The book is also avaiable at Robert also provides business planning, and venture funding consulting services to start-up, small and mid-sized companies.

March 9, 2009 Posted by | Business Planning, Venture Capital | 2 Comments

The Business Planning Process: Large Companies vs. Start-up Companies

During the early stages of development, many start-up companies overlook the business planning process. More often than not these same companies opt to focus on their proprietary technology offering as a basis for success in the market. This “technology-oriented” approach to addressing the market may not result in ultimate success for the company or maximize the return on investment for the shareholders.

The Business Planning Process

Business planning is a process. If your company does not engage in a well defined business planning process, many things can happen. But more often than not, the overall result is that your company will not achieve the financial success desired, because you do not know or understand where your company is going, how the market is changing, or how to appropriately respond to these changes.

Many times, companies that do not participate in the business planning process go after everything and anything that is in front of them. They do not have a clear roadmap to define where they are going, and why they will be successful in a given market or sub-market segment. In many cases, these same companies that do not engage in a diligent business planning process will ultimately end up investing in multiple, non-competitive products, addressing disparate markets, and consuming their limited resources. By doing this, these same companies end up foregoing any possibility of securing a strong, competitive position in their target markets, and ultimately will not be successful. In the end, they will not maximize their return on investment for their shareholders, either private or public.

To skip the business planning process means that these companies are willing to gamble with their shareholder’s money, and in many cases, angel or venture capitalists’ money, with no roadmap to success. It should also be mentioned that participating in the business planning process does not guarantee success in the market. After all, the day a business plan is written, it is obsolete. But, what it does is provide your company with is a roadmap to determine your next steps toward moving forward in the development of your technology, product, or service offering, to meet the market requirements, and obtain a sustainable, competitive advantage in an ever-changing environment.

Large Companies vs. Start-up Companies

Business planning for large, established companies versus start-up companies is not substantially different. Traditionally, the only real underlying difference for these two entities was the availability of human resources and market research sources. Today, and for approximately the last 15 years, the Internet has been a great equalizer in the business planning process for these two types of entities. Now, there are some exceptions regarding access to expensive market research reports, but through diligent research and time, start-up companies can develop business planning documents and business plans, equal in quality and content, to that of large corporations. In many cases, due to the ultimate importance of these planning documents to the overall success of the company, these same start-ups generate much better business plans. In addition, the advent of the Internet has allowed both large, established corporations and small start-ups to expedite their business planning process due to the relative ease of access to information.

Start-up Company Business Planning

In many cases in start-up companies and even in medium-sized or large companies, the business planning process is not well defined, or in many cases, even non-existent. This can be for many reasons, most often of which is due to lack of experience of having participated in such a business planning process in the past, and therefore, there is a lack of understanding of the merits of such a business planning process. I have worked for multiple start-up companies developing high-technology products, services, and technologies targeted for specific markets or market-sub-segments. In all cases, whether defining the next generation product’s functions and capabilities or determining competitive positioning within the market and ultimate revenue flow and return on investment, I engaged in a disciplined approach to the business planning process. This approach has allowed me to successfully raise angel and venture capital and to position these same start-up companies as strong participants in their targeted markets or market sub-segments.

Many times, start-up companies are only interested in focusing on their technology, product, or service offering. That is, they have an internal, “technology-oriented” focus that they believe will provide them with ultimate success in the market. This is a very narrow and uninformed approach to addressing the market, and generally does not provide a successful path forward. In working with start-up companies, my goal is always to move these same internally focused, “technology-oriented” companies to externally focused, “market-oriented” companies. This approach ultimately provides these same start-up companies a much higher probability of success in the market.

This “market-oriented” approach to addressing the needs of market for start-up companies begins with the business planning process. Inevitably, each time I begin working with start-up companies there are many skeptics, from the CEO all the way down to the engineering manager(s). They often firmly believe that they have the technology, product, or service offering that will provide them success in the market. Many times, these same skeptics cannot even define their target markets, let alone their target customers.

In addition, whether initially I thoroughly understand all aspects of the start-up company’s technology, product, or service offering is irrelevant. What is important is that through the business planning process, and ultimately the generation of the business plan, that I work to determine the market dynamics that drive the product features and capabilities that are required for the start-up company to be successful in the market. Often, through the business planning process, I identify multiple market segments or sub-segments that were not originally on the start-up company’s radar screen and that will ultimately provide for a much higher probability of success than originally anticipated. Also, it is through this business planning process that the start-up is able to determine and articulate their long-term and defensible competitive position in the market.

Therefore, as outlined, the business planning process is as important for large, established companies as it is for small start-up companies. Ultimately, it is this business planning process and not the end result, the business plan that determines a company’s technology, product, or service offering’s success in the market.

Same Process, Different Audience

I have developed business plans for large corporations and medium-sized corporations, and angel or venture capital-based start-ups companies. The thing that is common to all of these entities is that the business planning process is the same! Some people may believe that it is different for these various types of entities, but it is not. The truth is that if you do not do your homework, you have very little chance of being successful no matter what the size of your company. The business planning process does not differ due to the amount of resources available, the underlying technology, product, or service offering being developed, or your company’s current competitive position in the market.

What differs in the business planning process, between these two entities, is the ultimate target audience, including:
• Large Corporations: Corporate investment committees,
• Start-up Companies: Angel investors, venture capitalists, etc.

These different audiences, I have found, can be friendly or hostile. Therefore, during the business planning process, one must be very careful to develop all aspects of your technology, product, or service offering so that you are ready for all questions, comments, and underlying agendas within your target audience. It may be that the underlying purpose of your target audience is different than what you expect. Or it may be that individuals within your audience relate to the different aspects of the business planning process and your technology, product or service offering according to their background, experience, and current corporate concerns. But, the truth is that for each entity, big or small, the business planning process remains essentially the same. And in the final analysis, it is the marketing or business development person, team, or group that has spent the time to cover all aspects of business planning for their technology, product, or service offering that will best serve their target audience.

The bottom line is that through the business planning process, both large corporations and start-up companies have the same objective – that is, to maximize the return on investment of stockholders.

The information outlined in this article comes from my new book entitled “Business Planning, Business Plans and Venture Funding – A Definitive Reference Guide for Start-up companies.”  This book is available at

March 2, 2009 Posted by | Business Planning, Venture Capital | , , , | 2 Comments