Robert Ochtel’s Blog

An Experienced Approach to Venture Funding

Entrepreneurs, Finding Strategic Partners Can Create Significant Value for Your Start-up Company

One of the key issues to be addressed by start-up companies is the ability to gain credibility in the market.  You may have the greatest technology since sliced-bread, but if no one endorses it, the road to success in the market will be a long one. On the other hand, if you are able to secure one or more strategic partners early on, your road to success will be that much easier.  As strategic partners bring instant credibility in the market place and can open product distribution channels that will allow your start-up company to gain significant, early market traction.  So, it is in the best interest of you and your start-up company to work to secure one or more strategic partnerships early so that you can expedite your success in the market. In what follows is a short discussion on how to locate these same strategic partners as an early stage start-up company.

Go to Networking Events

One of the easiest ways to get your name out there is to go to networking events in your area that focus on start-up companies. These events are attended by entrepreneurs and investors from all backgrounds, including large corporations.  This provides you with the opportunity to meet individuals from various large companies that may have a strategic interest in your start-up company and its technology, product or service offering.  This contact point may be a direct contact from a panelist at the event or indirect contact through an individual who either currently works at a large company you are interested in talking with or has worked there in the past and is willing to introduce you to a key contact point.  Any way you slice it, it is worth getting out there and go to targeted networking events that cover start-up companies and their issues or a topical matter you are interested in for you and your start-up company.  So, put yourself out there and attend networking events, you never know who you are going to run into.

Work Your Own Network

Most entrepreneurs have a long career before they strike out on their own to start their own company. Often this career was spent working for or engaging with large corporate entities. So to help yourself as an entrepreneur, work your personal contact network. Call your past friends and colleagues to tell them what you are up to.  These conversations will often lead to follow-on discussions which allow them to help you with potential key contact points within their or another organization. Nothing is better than and direct introduction through a trusted friend or colleague.  This provides you with instant credibility and will often walk you in the “front door” of an opportunity that you would never have found out about by cold calling, let alone getting directly into the person in charge of the project or opportunity.  So, take the time to connect with your person network.  This type of networking has the ability to open doors that you would not have through cold calling and more often than not, will expedite the discussion process.

 Attend Trade Shows

Finally, you need to attend targeted trade shows.  You can attend as an exhibitor or just an attendee walking the floor.  This approach to getting your name out there will allow you to meet with individuals from targeted companies that may have an interest in your product offering from either a strategic or tactical point of view.  Take the time to “work the floor” by going up to the booth of targeted strategic partners and explain to one of the booth attendees what your company does and who you are interested in talking with. More often than not, if the appropriate contact person is not at the show, the individual you are talking with will provide you with the appropriate contact point within the company. Also, be sure to get the business card of the person you are talking with, as when you contact the appropriate individual within the company, you can tell them that you were referred by this individual.  This will instantly open the door and at the same time provide you with a certain level of credibility to initiate the conversation.  So, take the time to attend targeted trade shows, it can open doors to potential strategic partners for your start-up company.                                

Gaining early credibility in the market is one of the keys to success for a start-up company. This credibility is most often accomplished through developing a partnership with a large, established corporate partner.  To facilitate the engagement with potential corporate partners you need to attend networking events, work your own network and attend trade shows. This will allow you as an entrepreneur to get your name out there and engage directly with potential strategic partners.  It will also help propel your start-up company forward and ensure both near term and long term success in the market.

This information was taken from Robert’s new book: “Business Planning, Business Plans and Venture Funding – A Definitive Reference Guide for Start-up Companies”.  Available at www.amazon.com.

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August 23, 2010 Posted by | Venture Capital | , , , , , , , | Leave a comment

Entrepreneurs, Identify and Secure Your First Class Executive Team Using Small Amounts of “Sweat Equity” and a Consulting Contract

Start-up companies are notorious for not having any money to pay for anything. This is especially true regarding paying for the salaries of potential, first class, executive team members. Often, this is seen as a crutch to bringing a first class executive team on board.  On the other hand, indentifying those individuals that are willing to work for “sweat equity” are most likely your best bets.  Why, because it is these same individuals that understand that nothing in life that is worth anything is free and they are willing to prove it to you by contributing their time, effort, skills to create value for your start-up company.  On the other hand, individuals that want to be paid a salary up front to prove that they can perform are probably not worth the money they are asking for. So, as an entrepreneur take your time to indentify a first class executive team.  While doing so, you will find the right individual contributors that have the appropriate skill sets and are willing to commit their time and energy for a small amount of “sweat equity” to get your start-up company off the ground.  These same individuals are the ones that are willing and have the capabilities to create significant value to your start-up company.  To keep the ball rolling in this manner, you must check your rolodex, network and sell your vision, keep potential executive team members informed on company progress, and identify near term responsibilities and tasks for each potential executive team member.

Check Your Rolodex, Network and Sell Your Vision

Finding the right executive team members for your start-up company takes time.  It is not an overnight task. So, take your time to identify the right executive team members, as it is much better to find the right individual the first time, than it is to go through multiple iterations on bringing on the wrong individuals, only to have to let them go within three to six months. 
To find the appropriate executive team members, you need to check your rolodex, spend time networking and sell your vision to everyone you meet.  Selling your start-up company’s vision is the key, as you never know who will be the right individual with the appropriate skill set to help move your start-up company forward. With this in mind, finding the right individuals with the appropriate skills and capabilities is an active process.  Don’t always pick the first person you find, as this is often a big mistake.  Through networking and talking with colleagues you will necessarily find the appropriate executive team members that are willing to put in the time and effort in to move your start-up company forward.  In fact, if these same individuals buy into the vision of the company, they will be willing to “walk through walls” to get things accomplished. It is at that point that you know you have found the right executive team members.  Finally, with each executive team member you bring on, you necessarily exponentially expand your network and the pool of individuals to choose from, as each new executive team member has their own rolodex and network of colleagues to help develop your start-up company. This is absolutely beneficial to your start-up company and moving it forward and building a successful executive team.

Keep Potential Executive Team Members Informed on Company Progress

Often with the “virtual” nature of start-up companies, many of your potential executive members or significant individual contributors will be geographically disperse and can often take some time to convince to come on board.  With the support of the internet, you can keep these same individuals informed of the progress of your start-up company. This is important, as you want these same individuals to be excited about the possibility of coming on board your start-up company.  So, every couple of weeks or so, as the CEO of your start-up company, you should set aside a time to contact potential executive team members to keep them informed on the progress of the company. If these are significant events that are upcoming, or meetings that have the potential to create substantial value for your start-up company, these potential executive team members will want to know.  Keeping potential executive team members informed will raise their energy level and get these same individuals excited about joining your start-up company.  So, take the time to keep potential executive team members informed on the progress of your start-up company as this will keep them excited and get them to commit to joining your start-up company.

Identify Near Term Value-added Tasks for Each Team Executive Member

Once you have identified an executive team member that you want to bring on board, the best thing to do is to bring them on as a consultant for a fixed period of time, usually three to six months.  This can be done with a standard consulting contract, with a small amount of “sweat equity” for compensation.  This arm’s length relationship is invaluable, as you need this time to determine whether you want to bring this person on board full time as a contributing executive team member of your start-up company. So, use a consulting contract to identify the near term value-added tasks this individual needs to accomplish as a team potential executive member. This will allow you to determine if this individual is able to contribute at an executive team member level. If the potential executive team member does not work out, you are out is a small amount of equity based on the terms of the consulting contract.  On the other hand, if this person works out, you have identified a high-level, contributing executive team member.  So take the time to indentify the appropriate value-added tasks and time frame, so that you can get an appropriate assessment of potential executive team members.  This will save you lots of time, money and equity in the long term.                                                                                                           

Start-up companies typically do not have any money to pay for the salaries of potential, first class, executive team members.  This, often seen as a crutch, can be used as a positive to indentify and bring on board executive team members that will add significant value to your start-up company.  Through a process of networking and selling your vision, keeping potential executive team member excited, and offering “sweat equity” through a consulting contract, you can identify and evaluate potential executive team members’ skills, capabilities and commitment. By taking this approach, as an entrepreneur, you can secure a first class executive team to make your start-up company successful in the market and at the same time minimize any associated risk and expense to your start-up company.

This information was taken from Robert’s new book: “Business Planning, Business Plans and Venture Funding – A Definitive Reference Guide for Start-up Companies”.  Available at www.amazon.com.  For more information on the book go to www.carlsbadpublishing.com.

April 12, 2010 Posted by | Venture Capital | , , , , , , , | Leave a comment