Robert Ochtel’s Blog

An Experienced Approach to Venture Funding

Being a Successful “David” in a World of “Goliaths”

Entrepreneurs need to fight the good fight every day.  Often the situation you find yourself in is much like the story of David versus Goliath.  As in this story, you are going up against insurmountable odds.  Accordingly, you are taking on a challenge that most individuals would not attempt.  As with David, the odds are long and the probability of success is small. In addition, you do not necessarily have all of the tools your competition has to be successful in the upcoming battle. This will make your road to success that much harder. But you take on the task anyway, because something inside of you tells you that you can be successful and create a product offering that is substantially better than that of the Goliath competition and at the same time be a success in the market.  In what follows is a short discussion on how to be a successful entrepreneur as a “David” in the world of “Goliaths”.

Believe in Yourself

As with any entrepreneur, the first thing you need to do to be a successful “David” in a world of “Goliaths” is to believe in yourself and your vision. Hoping that others will believe in you and see your vision of the future is not something that will happen. More often than not people will tell you that you cannot accomplish your goal of competing in a market of players that are much larger than you.  In addition, they will try to convince you to give up your plans and follow the road more traveled.  This, they will tell you, is a much easier road and much more reliable.  In this situation you need to ignore your critics.  They do not understand your will and desire to build a successful company, and more often not are telling you what they are comfortable doing.  So, ignore your critics and believe in yourself.  More often than not, in your journey as an entrepreneur, you will be the only one that believes in your vision and you ability to accomplish your task of building a successful product offering to compete in the market against your much larger “Goliath” competitors.  Many times, during this journey, colleagues will fall by the wayside, customers will tell you they are not interested, and vendors will not take the risk of working with a small start-up company.  Ignore them all and keep moving forward, it is your belief in you and your vision that will make your start-up company successful. 

Invest In Yourse

With the changes in the investment community, you need to do a lot more work to get investors’ attention and ultimately secure funding for your start-up company. The old “back of the envelope” investment scenario is all but non-existent in today’s funding environment.  If fact, having a strong plan, a differentiated product offering, and a first class team will not necessarily get you funding in today’s investor environment.  In addition, investors want to see that you have “skin in the game”.  This will not only include non-monetary time and effort, but they will also expect you to have invested “hard money” into your company.  Today’s investors do not what to be the only ones putting money into your company.  They will expect that you and your team will have invested not only time and effort, but hard money into your start-up company to move it forward.  Like “David”, you have very little funding resources at your disposal compared to your “Goliath” competitors. Therefore, you need to be prudent and “capital efficient” with your monies in order to get to a prototype early on, the general expectation of today’s angel and venture capital investors.  So, take the time, to come up with a plan and the necessary funding resources to move your start-up company to the next level. If you do not invest in yourself and your start-up company, more often than not, your potential investors will pass, as there are many other entrepreneurs that have invested their own monies to get them to the point of having a working prototype in today’s environment.

Take Your Product to Your “Goliath” Competitors

Often entrepreneurs do not put in the effort to contact their customers early on.  As a “David” in the world of “Goliaths”, this is something you necessarily need to do.  You are not walking in the door with “Intel” on your back, and as such setting up meetings with potential customers will be a much more difficult task than that of your “Goliath” competitors.  But, as the entrepreneur and “chief evangelist” of your “David” start-up company, you need to contact your customers and find a way to get you and your product offering in front of them. In addition, you need to remember to differentiate your product from your “Goliath” competitors. This is very important, as being the small player in a market dominated by large “Goliaths”; you need to convince these same skeptical customers to purchase your product offering.  So, take the time and effort to introduce your product offering to your customers and at the same time create a differentiated position yourself against “Goliath” competitors.  This will provide you with confidence in front of your investors and provide you with much more insight as to what will make your “David” start-up company successful in a world of “Goliath” competitors. 

As an entrepreneur, you need to fight everyday to move your start-up company forward. Being a “David” in the world of “Goliaths” you will often find yourself being the only one that sees your vision.  In order to be successful in this situation, you need to necessarily believe in yourself, invest in yourself, and take your product to the competition. Only by taking this approach will you be able to create a path forward to success in the market.  Remember the business world is full of “Goliaths”, but it only takes one “David” to slay the giant and change the world.

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.

July 26, 2010 Posted by | Venture Capital | , , , , , , , | Leave a comment

Entrepreneurs, Vision, Strategy and Tactics will Take You on the Road to Success

“Ready, fire, aim” is the approach most entrepreneurs take to developing their start-up companies from the ground up.  They do not do any planning or have a vision in which to base their follow-on strategy and tactics to develop their “concept” or “idea” into a fundable business proposition.  This approach to initiating your start-up company will not take you on the road to success in the market.  What it will do, is to lead you down a meandering path to various dead ends and re-starts only to result in frustration, lost time and a lack of focus.  By beginning with a vision for your start-up company and its “concept” or “idea”, this will allow you to necessarily to create a top-down focus from the beginning and help when you initiate your strategy to entering the market and the follow-on and measurable tactics to implement your execution plans. In what follows is a short discussion regarding the requirements of developing a vision, strategy, and tactics to take you on the road to success in the market.

Create a Vision

When Henry Ford started the Ford Motor Company he had a concept and an associated vision to develop inexpensive automobiles for the masses.  He had observed that most if not all automobile companies of the day focused on developing automobiles for the rich, but he wanted to bring these same advantages and privileges that went along with owning an automobile to common folks.  So, his vision, from the beginning, was to develop an automobile company that was clearly differentiated from the other automobile companies of the time that focused on low volume production of expensive cars for the rich. Henry Ford’s original concept and vision was to develop a high volume production automobile company that focused on producing low cost automobiles.  This was unheard of at the time and seemed virtually impossible given the “state-of-art” of production methods at the time.  But with this vision and focus, he set out to accomplish this goal – develop a low cost automobile for the masses. This same top-down visionary-based approach to developing a start-up company should be emulated by today’s entrepreneur.  By developing a concept and vision you create focus and do not get distracted by other market opportunities that do not fit your vision, but only focus on developing the a product offering that satisfies the vision and long-term goals of your start-up company. Anything less will result in distractions and not allow you to focus on your vision, take you down many dead-end paths and not provide a road to success for your start-up company.

Develop a Strategy

Once you have a vision, you need to focus on developing a corporate strategy to follow this vision.  With the goal of developing a low-cost automobile, Henry Ford’s overall strategy was to become the “lowest cost” manufacturer in the automobile business. This meant:

  • Developing an automobile design that had a low bill-of-materials cost,
  • Develop a simplified manufacturing process,
  • Lower corporate overhead and
  • Minimize channel costs.

No one individual item would result in becoming the lowest cost manufacturer in the market, but all of these things together would result in implementing his strategy of becoming the “low cost” automobile manufacturer in the market.  So, as an entrepreneur you need to focus on developing a strategy that uniquely positions your start-up company in the market.  Do you provide the best service?  Do you offer a unique user experience? Do the most value to your targeted customers?  By developing a strategy that follows the vision for your start-up company this will allow you as an entrepreneur to focus and uniquely position your start-up company and its product offering in the market.

Define Your Tactics

While vision and strategy together set the direction of your start-up company, it is the definable and measureable tactics that are used to implement a successful vision and strategy.  In the case of Henry Ford and the Ford Motor Company, the overall measureable tactics were associated with the “cost” of producing an automobile. While Henry had had some success with his low cost strategy for producing an automobile for the masses, it was not until he moved from a “work group” production line to a “specialized task” production line when his goal of developing and producing the industry’s “low-cost” automobile was achieved.  The idea for this “specialized task” production line was taken from his visit to a meat packing company in Chicago.  By implementing similar production tactics of “specialized tasks”, common in the meat packing industry, into his automobile production line, Henry Ford was able to achieve his vision of producing the lowest cost automobiles for the masses. This tactic truly differentiated the Ford Motor Company at the turn of the 20th century and allowed it to produce products for its target market – the consumer masses.  Today’s entrepreneurs also need to develop measurable tactics to support their company’s vision and strategy.  This will again provide focus and allow for measurable results that can be quantified and move them toward success in the market.

Entrepreneurs often take a “ready, fire, aim” approach to developing their start-up companies from the ground up. This approach to the market is does not provide focus and will result in a start-up company meandering and as a result losing valuable time and  energy focusing on market opportunities the do not make sense for your start-up company.  Alternatively, by taking time to plan and start from a “concept” and vision for your start-up company and then following this with an associated strategy and the appropriate tactics, this will allow you to develop a straight forward path and create a differentiated start-up company and product offering in the market.  In addition, this will also substantially increase your chances for 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.

June 28, 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

Entrepreneurs, A New Vision and New Executive Team Members can Move Your Company Forward and Create Significant Momentum

Start-up companies often get stifled with an old vision and legacy executive team members that lack of motivation to move the start-up company forward.  This is usually due to the fact that the start-up company has been through multiple incarnations, and as a result, the original vision for the start-up company is old and the associated legacy executive team members lack the desire and motivation to move the company forward due to multiple failed attempts to do such.  With an underlying technology, product or service offering that still has significant merit and associated upside in the market, the founder(s) of the start-up company must significantly change direction to get the company moving forward again.  To do this, the start-up company must come up with a new vision, secure a new executive team that have the motivation to move the company forward, and develop a near term plan to create significant momentum to begin engaging with investors.      

Create a New Company Vision

The vision of a start-up company can be a great motivator.  If this same vision is inappropriate or does not match the needs of the market, a start-up company can get stalled and not have the ability to move forward and secure funding. Sometimes to create a new vision for the company the founders must step back and relook at their target markets to identify new trends and strategic opportunistic needs that are addressable with their underlying technology, product or service offering.  Often the original direction of the company is based on a vision that will not come to fruition in the near term.  This is generally due to the underlying fact that the entrepreneurs and their executive team of the start-up company initially targeting the wrong market and associated customer base. As a result, there are many start-up companies with visions that are fraught problems, including, being too early to market, targeting markets that lack significant market size, or identifying markets that lack the necessary and immediate customer demand for their technology product or services offerings. Consequently, as an entrepreneur you must recognize this and create a new vision based on near term market opportunities that take advantage of your technology, product or service offering.  This is often a difficult task, as changing the vision of your start-up company and how it will ultimately create success in the market requires entrepreneurs to separate themselves from the past “vision and focus” and create a completely new “vision and focus”.  As a result of this separation and re-thinking, a start-up company can often create a new vision that will bring more success as it moves forward.  

Find New Executive Team Members that Buy Your Vision

Often with the change in “vision” for your start-up company, there comes a completely different change in direction.  As such, old, legacy executive team members may not buy into the new vision or focus of the start-up company.  This is not unusual, as restarting an early stage company can often cause nervousness and trepidation with the old, legacy executive team members.  At this point in the development of your start-up company the founding team members must find new executive team members that buy in to the new vision of the start-up company. Unencumbered with the past and legacy issues, these new executive team members can bring new energy and significant motivation to your start-up company and its new vision.  These same new executive team members often bring a new perspective and outlook that will enhance your ability to move forward in the market.  Finally, these same new executive team members often and necessarily bring a whole set of skills that are required for the change in direction and new vision of the start-up company.  So, make the effort to find and secure new executive team members that buy into the new vision of your start-up company as this will necessarily allow your start-up company to move forward toward future success in the market.

Develop a Near Term Plan that Will Create Significant Value and Momentum

With a new vision and new executive team members, the next thing to do is to develop a near term plan that will create significant value and momentum for your start-up company. This plan should fit into the overall long term strategy of the start-up company and at the same time allow you to engage with your targeted customer base. Doing this will provide you with the ability to validate your new vision with “real” customers, create momentum and at the same time create significant value as you move your start-up company’s technology, product or service offering development forward. In developing this near term plan, you will provide an opportunity for the new executive team members to add value to move the start-up company forward with their individual skills and capabilities. This will bring these new executive team members together by contributing to a new term plan and will ultimately provide baseline for success of the new vision of the start-up company and at the same time provide the necessary value and momentum to move forward.                                                                                                     

Start-up companies often get stifled with an old vision and old, legacy executive team members that lack of motivation to move the start-up company forward.  This lack of motivation often comes from multiple incarnations and associated failures that have left this same start-up company standing still with no direction.  To move the company forward, the founders must separate themselves from the old company, vision and focus and create a new company with a new vision and focus. This new vision and focus often necessarily requires a new executive team.  It will also require a new near term plan to help create both value and momentum in moving the start-up company forward.  By doing so, the start-up company will create new opportunity for success in securing funding and ultimately securing 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.  For more information on the book go to www.carlsbadpublishing.com.

April 5, 2010 Posted by | Venture Capital | , , , , , | Leave a comment

Entrepreneurs, Heart, Brains and Courage Do Not Come from Your Investors and the “Land of Oz”

Many entrepreneurs expect investors to solve their problems. They firmly believe that investors with their investment funds will provide them with the necessary heart, brains and courage to develop a successful start-up company.  In addition, more often than not, these same entrepreneurs believe that securing funding from investors is like the “Land of Oz” – anything is fundable and all you need to take the journey and in the end, the investors (or the “Wizard”), will solve all of your problems by providing your start-up company with the necessary funding that you require to be successful.  Nothing can be further from the truth.  In fact, once you receive funding that can be your worst day as an entrepreneur of a start-up company, as third party funding money comes with demands, rules, and expectations. So, don’t approach investors expecting that their investment monies will provide you with the necessary heart, brains and courage to develop a successful start-up company.  If you did not have these characteristics before you approach investors, any amount of funding in the world will not provide you with these same characteristics.  Therefore, before you approach investors, you need to step out of the “Land of Oz” and first convince yourself that you have the necessary characteristics to be a successful entrepreneur. This includes having the “heart” to follow your vision, the “brains” to properly develop the investment opportunity, and the “courage” to cold call your customers and execute your plan. If you do, you will ultimately be a successful entrepreneur, and that securing funding from third party investors is just a bonus on the road to creating a successful start-up company.

You Must Have the Heart to Follow Your Vision

Most opportunities do not create themselves, as they are often a result of an entrepreneur having a “vision” based on experience and a set of market truths.  More often than not, at the beginning this vision is not very clear, but with time and effort, an entrepreneur can develop their “concept” or “idea” into a clear vision that addresses an underlying strategic opportunistic need in the market.  Hence, as an entrepreneur, you need to follow this vision with all of your heart.  And often along the road you will have many “naysayers” telling you that you cannot accomplish your goals or that you that there is not use in trying as other, larger competitors will crush your start-up company.  This is exactly the time when you need to believe in yourself and have the heart to follow your vision, as more often than not this is what will drive you to success. And often as things evolve your vision will allow you to create a technology, product or service offering that is truly differentiated from your competitors and provides your start-up company with a long-term, sustainable competitive advantage in the market.  So, as an entrepreneur you need to have the heart to follow your vision, as no investor with all the money in the world can provide you with this.    

You Must have the Brains to Develop the Proper Investment Opportunity

One thing is for sure, most investors are generally “smart guys”.  Whether they have been through the school of hard knocks or are Ivy League educated MBAs, they often have the necessary insight to properly evaluate and quickly discern an appropriate investment.  So, as an entrepreneur, you need to have the “brains” to put together a “cogent” plan that creates a necessarily attractive investment opportunity for these same investors.  This means that you need to do the hard work and use your brains to do the research to develop a well thought out plan that makes both logical and financial sense from an investors’ point of view.  In the “Land of Oz” too often, entrepreneurs believe that anything is fundable and that their investors will not only provide the money, but the “brains” to help them create a successful start-up company. Nothing can be further from the truth. With only three percent of all start-up companies receiving outside investor funding on an annual basis, it does take a fair amount of “intellectual” savvy to develop a well thought through plan that is fundable form and investors’ point of view. So, take the time and use your brains to develop a well develop business investment opportunity.  Investors will not help you with this.  You need to develop this investor appropriate investment opportunity on your own.

You Must have the Courage to Cold Call Your Customers

Many entrepreneurs have all both the “heart” and “brains” to develop attractive investment opportunity, but lack the “courage” to cold call their customers and as such, they will not be successful in the market or have the ability to execute their plan. Cold calling customers is often the hardest thing to do for entrepreneurs. Why, because this is where thinking and planning hits the pavement and there is the always the potential for rejection.  Hence, cold calling often paralyzes these same entrepreneurs.  Even if you have a great plan, you need to be able to execute this plan and in a definitive time frame.  So, as an entrepreneur you need to have the “courage” to cold all your customers and generally do what it takes to “press the flesh” to close the necessary number of deals to develop a successful start-up company. Remember, as an entrepreneur you are in business to secure customers and not to develop a cool technology, product or service offering.  So, buck up and have the courage cold call your customers and execute your plan. Nobody else will do it for you; especially your investors and all the money in the world will not help you with this task.

Many entrepreneurs expect investors to solve their problems.  They firmly believe that investors with their investment funds will provide them with the necessary heart, brains and courage to develop a successful start-up company.  This is not the case, as securing funding does not necessarily result in success in the market.  Therefore, as an entrepreneur you need to step out of the “Land of Oz” and decide that only you have control over the ultimate success of your start-up company, not investors and their funding sources.  To do this you need to have the “heart” to follow your vision, the “brains” to properly develop the investment opportunity, and the “courage” to cold call your customers and execute your plan.  If you take these steps you will go a long way toward ultimately securing funding and developing a successful a 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.

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

Entrepreneurs, Use General Technology and Market Trends to Define the Future for Your Start-up Company

The stock market always looks to the future.  This should also be true for first time entrepreneurs.  When defining your start-up company’s business proposition, you need to look at both the general technology and the general market trends of the future.  Why, because it is these general trends that will define the future market place for your technology, product or service offering.  General trends are often over looked by entrepreneurs, but venture capitalists always take a “big picture” view as to what technologies and markets will be pervasive five to ten years out in time. As is often the case, what is true and certain today regarding technologies and markets will not be true and certain five to ten years in the future. Therefore, as an entrepreneur you need to have a “big picture” view of the future and make sure your technology, product or service offering will have a role to play in the future, when defining a given market “problem” or “need”.  This article discusses the importance of creating this future frame work, based on general technology and market trends when presenting your technology, product or service offering to your potential investors.

Develop a Clear Understanding of the General Technology Trends

General technology trends change over an extended period of time.  Unlike the predictions often set forth by the technology pundits, a new technology does not take hold in the market in a year’s time frame. It often takes five to seven years or more for a new technology to take hold.  It even takes longer than that for a new technology to become pervasive and accepted by the general public.  Why, because there are many issues that come into play when rolling out a new technology.  These include the following:

  • Initial costs of new technologies are generally high,
  • Infrastructure roll-out takes time and is very expensive,
  • The new technology may not be ready for prime time, and
  • End-users do not always readily embrace new technologies.

These issues can substantially delay the rollout of new technologies.  But in the whole scheme of things, the entrepreneur must be aware of new, general technology trends, their timing and availability to the market.  In this context, having a good understanding of general technology trends, their availability, and how they can affect your start-up company’s product or service offering, in a positive or negative manner, is key to positioning your start-up company and its product offering in the future markets. Knowing and properly presenting your start-up company’s technology product or service offering in the context of these general technology trends will not only gain you credibility with your potential investors, it will provide the underlying and necessary credence to overall potential value of your start-up company and its technology, product or service offering. This is important, as investors need to know and believe that your start-up company’s technology, product or service offering has the ability to create long-term value in the context of the general technology trends of the market.

Review and Understand the General Market Trends

Knowing the general market trends is often a key to positioning your start-up company’s technology, product or service offering to your investors.  General market trends provide the “big picture” of what the future markets are going to look like.  What are the long-term market growth areas?  Will these market growth areas be the same as those markets today? What will the population look like in five to ten years? What will drive the long-term economic engine of the US and world economies?  These high-level general market trends need to be considered, understood and addressed by entrepreneurs looking to define the future for their start-up company’s technology, product or service offering.  Knowing and being able to appropriately define the general market trends of the future will provide potential investors with the necessary context as to how or why your start-up company’s technology, product or service offering will be important to addressing the “problems” or “needs” of future markets.  This is very important to investors, as they need to understand the “big picture” and how your start-up company’s technology, product or service offering will impact the markets of the future.

Define Your Start-up Company’s Product Offering in the Context of These General Technology and Market Trends

As an entrepreneur, remember you are trying to sell your technology, product or service offering to potential investors.  To properly do this you need to sell a vision.  Why, because a vision necessarily provides context, looks to the future, and requires an appropriate presentation of how your start-up company’s technology, product, or service offering fits within the general, future technology and market trends.  This vision necessarily needs to define your start-up company’s product offering in the context of both future technology and market trends.  Not doing so will necessarily hurt your efforts to convince investors of the potential future value of your start-up company and its technology, product or service offering.  By properly painting both the general technology trends and associated general market trends and how your start-up company’s technology, product or service offering provides an opportunity to secure a unique position with regard to these general trends, investors will then buy in to your vision and are much more apt to invest in your start-up company and its technology product or service offering.  Therefore, take the time to step back from your start-up company and its technology, product or service offering and take in the “big picture” in terms of both general technology and market trends.  This will allow you to develop the necessary context and associated vision for your start-up company. It will also allow you to provide the “big picture” contextual view to your potential investors, providing the necessary road to securing funding.

As an entrepreneur looking to present the future to your potential investors, you need to necessarily have a good handle on both the general technology and market trends.  This will allow to you provide the appropriate context as to how and why your start-up company’s technology, product or service offering will be both important to addressing these trends and how at the same time you are solving future “problems” and “needs” in support of these overall trends.  The bottom line is that by addressing these general, future technology and market trends, you will be providing your investors with a vision that allows them to see the future appropriately and how your technology, product or service offering will create value and play an important role in this 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.

September 28, 2009 Posted by | Business Planning, concept, Venture Capital, venture finance, Venture Funding | , , | Leave a comment