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.

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

Assimilation of the Appropriate Research Data and Real World Input will Help Impress Potential Investors

Many times entrepreneurs believe that having a business “concept” or “idea” is enough to get their potential investors interested in investing in their start-up company.  Nothing can be further from the truth.  This may work for “friends and family” investors, but sophisticated investors often take three or more months to do their due diligence on potential investment opportunities to make sure that they are credible and have a good chance of being successful.  That is why smart entrepreneurs take their time to develop their business “concept” or “idea” in to a value-added business proposition that offers a long term sustainable competitive advantage in the market and the same time is scalable in an expedient time frame. To do this, entrepreneurs need to do their appropriate research, call real world customers, and talk to potential strategic partners.  Once this is complete, these same entrepreneurs need to assimilate this data and real world input into a value-added business proposition. By doing so, you will impress your investors and increase your chances of receiving funding.

Do Your Research

Doing research takes time and is hard work.  That is why most entrepreneurs try to skip this step in developing their “concept” or “idea” into a real business proposition.  The thing that most entrepreneurs do not really understand about doing research (market, competitor, etc.), is that it provides you, as an entrepreneur, with much more value-added information than you realize.  As you take the time to work through the research process and learn more about your target market(s), competitors, general trends, price points, etc., there comes a point where all of this data starts to make sense and at the same time provide invaluable insight.  That is, at a given point in your research process you begin to assimilate all of this data and then are able to:

  • Determine the strategic opportunistic needs of the market, 
  • Develop a value-added proposition for your start-up company’s technology, product or service offering, and
  • Develop a long term defensible and sustainable growth position over your competitors.

This assimilation process does not happen overnight.  It takes a significant amount of research, time, and effort, but in the long run will put you in a strong position when talking with your potential investors. As you now have real data to back up your value-added business proposition and at the same time, you can also substantiate your ability to enter a given market or markets to create a long term, differentiated, competitive position.

Call your Real World Customers

Once you have completed your research and created a business proposition that you believe is of significant value to your customer base, the next important step is to focus on calling your real world customers.  All of the research in the world is of little value unless it is verified with actual, real world customers.  This is where most entrepreneurs fail and it is what differentiates a good investment opportunity with a great investment opportunity in the eyes of your potential investors.  More often than not, many entrepreneurs believe they are smart individuals and that their technology, product or service offering will be accepted with open arms by their targeted customer base.  Nothing is further from the truth.  Even if you have a product offering that offers substantial cost savings or other significant advantages, there are other issues that will affect potential customers’ decisions in using your start-up company’s product offering.  This can include:

  • Integration time and effort,
  • Customer product planning schedules for new product offerings,
  • Completeness of the product offering,
  • Product rollout schedule and future product roadmaps.
  • Availability of important product features, functions and capabilities, and
  • Other.

Therefore, as an entrepreneur of a new technology, product or service offering, the most important thing you can do to differentiate your investment opportunity from the other start-up companies looking to secure investment monies is to call your real world customers!  These same customers will inform you of the important aspects of your “proposed” product offering that make sense and what things that do not make sense.  In addition, they more often than not will provide you with invaluable input that will often change your initial product focus or require you to prioritize necessary features and functions for your product offering. All in all, valuable customer input, from various potential customers, will allow you to assimilate this data and then create a much more attractive product offering for both your initial product offering and follow-on products outlined in your start-up  company’s product roadmap.

Talk to Potential Strategic Partners

Generally start-up companies, require strategic partners to become successful in the market. These strategic partners can come in many forms including:

  • Complementary technology partners,
  • Manufacturing partners,
  • Channel partners,
  • Marketing partners,
  • Others.

All of these potential strategic partners are not only valuable to your start-up company with regard to what they bring to the table in terms of their products, capabilities, technologies, etc., but they more often than not bring invaluable input in terms of their insights to helping you bring a successful technology, product or service offering to market.  Often these same potential strategic partners can provide invaluable insight to help facilitate both your near and long-term success in the market. This can include:

  • Determining your go to market strategies and tactics,
  • Defining your initial product offering’s features functions and capabilities,
  • Developing your initial rollout schedule and securing early revenue,
  • Identifying new market opportunities and revenue sources,
  • Lowering costs,
  • Other.

The insight, products, technologies and capabilities of these real world strategic partners can create significant value for your start-up company and its technology, product or service offerings. They may even cause you, as an entrepreneur to change direction and focus on new opportunities with much greater potential investment returns. Therefore, by talking to potential strategic partners early on in your start-up company’s development you can assimilate this information to create significant long-term value for your start-up company.

Interesting business “concepts” or “ideas” do not generally get sophisticated investors excited to the point that they are willing to invest in your start-up company. These same investors more often than not have a defined due diligence process that they need to go through to determine if your start-up company offers a business opportunity worth investing in.  By doing your research, calling your real world customers, and talking to potential strategic partners, you have ability to absorb a significant amount of data that can be invaluable to the near and long term success of your start-up company. In addition, assimilating this data and developing a value-added business proposition that provides a long term sustainable competitive position in the market will not only impress your potential investors, but it will help your start-up company secure funding with these same individuals.

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.

February 22, 2010 Posted by | Venture Capital | , , , , , | Leave a comment

Entrepreneurs, Trade Shows Can Be Useful Events to Move Your Start-up Company Forward

As the entrepreneur of a start-up company you need to take advantage of anything that will help move your company forward.  Trade shows are focused events that often only take place once a year.  Generally, these events bring together a broad set of senior management and other individuals with a common interest in technologies, products or services for a specific industry.  As a start-up company looking to get your name out there, you need leverage these trade show events to your advantage. To do this, as a start-up company with limited funds, it is most cost effective to just attend these events as a “registered attendee”. This does not cost much money and will provide your start-up company with the maximum amount of exposure for a limited amount of money. This article focuses on some of the things to consider and do when attending a trade show.  If done properly trade shows can be useful events to move your start-up company forward.

Focus on the Correct Trade Show Events

As part of your business planning process and ultimately outlined in your business plan, you need to focus on attending a limited number of trade shows each year.  If you are an industry insider you will know which trade shows that are important to your targeted industry.  If you are not, talk to your customers and ask them which trade shows they regularly attend on an annual basis.  All trade shows, even within the same industry, have different focuses, and as such, some trade shows, although similar in theme, are much more important and effective to attend than others.  Unless you have attended a specific trade show, you will not really know which events are more valuable to your start-up company and its technology, product or service offering.  Therefore, it is very important to not waste your time and money on trade show events that will not bring significant value and result in a productive experience for you and your start-up company. 

As a minimum, you should plan on attending three to four trade shows a year.  This will provide you with a broad exposure to what is going on within your industry and will also allow you to consider which trade show you will need to exhibit at in the future.  So, as an entrepreneur, you need to focus on the correct trade shows that will bring the most value to your start-up company. Generally, these are trade shows that are focused on your end customer base and at the same time are closest to the end market application that you are targeting as a vendor.  Doing this, will allow you to focus only the necessary trade shows that will help move your start-up company forward.

Set up Your Important Meetings Ahead of Time

One of the keys to having a successful trade show is to set up your meetings with important current and potential customers and possible strategic partners a head of time.  This is very important, as with most industry focused trade shows, they are widely attended by the senior management of virtually all customers and vendors that are important to that particular industry.  Therefore, you have the ability to meet with all of your potential customers and many possible strategic partners, and show them your technology, product or service offering by only having to travel to a single event. Therefore, you need to necessarily take advantage of this opportunity.  So, several weeks to a month ahead of time you need to get on the phone with your current and potential customers and set up times to meet with their senior management at the trade show.  These meetings generally last an hour and are often where start-up companies can meet “face-to-face” with their key senior management of their customers for the first time.  These events and associated meetings are often very productive for both parties and can be the beginning of a long term relationship. 

The same is true for potential strategic partners.  If you are aware of a company that has a technology, product or service offering that can complement or supplement your start-up company’s product offering, it is important to set up a meeting with the appropriate individual within senior management from this company so that you can meet them and properly explain the potential value and synergies of your company’s working together.  Therefore, for each trade show you attend, it is very important to get on the phone and set up as many potential meetings as possible. This will provide for a productive event and allow you to move your start-up company forward.  

Prepare and Attack the Trade Show Floor

As a start-up company, attending a trade show, it is important to set aside the appropriate amount of time to walk the trade show floor.  This walking the floor of the trade show should not be a random event.  To take the most advantage of your limited time available at the event you need to first prepare and then attack the trade show floor.  To do this, after you register, you need to sit down and spend the appropriate amount of time to go over the trade show guide and exhibitor map and identify those exhibitor booths that you would like to visit as potential customers and strategic partners. In addition, you need to identify all of your competitors and visit their booths to better understand what they are showing, and to pick up as much G-2 that you can on their technology, products or service offerings.  By diligently mapping out your targeted customers, strategic partners and competitors, you can then put together an attack plan to make the best use of your time while you are on the trade show floor.  Also, remember, it is very important meet and talk with the appropriate senior management at your targeted companies of interest. This should also include your competitors.  If these individuals are not available, get their card and contact information.  This will be invaluable for follow-up to the trade show and will allow you to contact them as appropriate after the event.  Therefore, it is very important to make the best use of your time while you are on the trade show floor by first planning and then attacking the floor to the best advantage of your start-up company.    

Trade shows can be very useful events to help move your start-up company forward. By focusing on the correct trade shows, setting up your important meetings ahead of time, and properly planning and attacking the trade show floor, even with a limited budget, you can make the most of these events. This can include meeting and engaging the appropriate potential customers, strategic partners and competitors.  Therefore, as an entrepreneur, you need to identify and attend a limited number of targeted trade show events each year.  By doing so, you will have the opportunity to identify and then develop and nurture the necessary relationships to move your start-up company forward in the future.

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.

January 11, 2010 Posted by | Venture Capital | , , , | Leave a comment

Entrepreneurs, Expanding Beyond Your Core Competencies will Help You Define Success in the Market

Start-up companies and large companies alike have a set of core competencies that define the company, their product and service offerings, and their position in the market.  More often than not it is this set of core competencies that provide the company with their baseline competitive advantage in the market.  Often, for start-up companies, these core competencies although unique do not necessarily provide them with a complete product offering or the ability to offer a new and different go to market strategy.  Many times these same start-up companies must look beyond their own core competencies to complete their product offering and at the same time provide a unique end-user experience.  This article focuses on looking beyond your core competencies to differentiate your start-up company and its product offering to help define your success in the market.

Beyond Core Competencies

Every start-up company must have a core competency that uniquely defines the company and at the same time provides a long-term competitive advantage in the market.   For most start-up companies this core competency is based on a patented technology, process or service offering.  Many times, this core competency, although unique, is not enough to define a “complete” product offering in the market.  So, as a start-up company, you need to define what it takes to compete in the market and at the same time differentiate your product offering beyond its baseline core competency.  This requires you, as an entrepreneur, to take a holistic approach to the market and define what other capabilities, features, functions, and services are required to compete in the market. Many of these market driven requirements are well beyond the core competencies of your start-up company and will require you to partner with other companies to provide a complete product offering and at the same time differentiate your product offering in the market.  So, as an entrepreneur, you need to realize that your start-up company’s core competencies may not be enough to effectively compete in the market.  At the same time, because of the investment requirements, and time to market issues, it is often more expedient to partner with other companies to complete your product offering and compete with a differentiated product in the market.

Strategic Partners

Strategic partners can often be the key to expanding your start-up company’s product offering beyond its core competencies.  At the same time, strategic partners can provide your start-up company with the following:

  • Access to new markets,
  • Insight to the overall product development requirements,
  • Sources of new revenue streams,
  • Help to uniquely position your company in the market, and
  • Provide a new and differentiated go to market strategy. 

Therefore, by working the appropriate strategic partners you can develop a “complete” product offering that you would not be able to develop and offer on your own.  This will help to define your product offering and in the long run will more often than not help provide your start-up company with additional success in the market.

The User Experience

One other consideration, when looking to expand your product offering beyond your company’s core competency, is to focus on the end user experience.  Is your product easy to use?  Does your product address all of the needs of the customer?  Does your product provide the customer with a satisfying experience?  Many times these things cannot be only addressed with your start-up company’s core competencies. They often require additional capabilities, features, functions, and services to address the complete end user experience.  This will again require you to look beyond your own start-up company’s capabilities to address these needs.  So when you are considering bringing your start-up company’s technology product or service offering to market, consider the end user experience and expectations. To do so, will allow you to look beyond your own core competencies and address the broader needs of the market.

Looking beyond your start-up company’s core competencies is a key to being successful in the market.  All companies, large and start-up alike need to do this to ultimately define their product offering. This often requires start-up companies to realize that they do not have a complete product offering and need to work with one or more strategic partners to define their final product offering.  In addition, taking into consideration the end user’s experience and their expectations are required to bring a successful product to market.  So, as an entrepreneur, remember, it often takes many more capabilities, features, functions, and services, than your start-up company’s core competency offers to provide a “complete” product offering to the market. So when you look to define your product offering take this into consideration as it will ultimately your start-up company with more long term success in the market.

December 14, 2009 Posted by | venture finance, Venture Funding | , , | Leave a comment