Six factors to be prepared for when raising money from investors

In most startups, getting funded is a fundamental step to get further and grow. Therefore, investors are crucial in the process. You must look for a truly match, where they are engaged to your startup.

In this article, we will explain you, six factors to consider when raising money from investors.

1. Passion. Definitely, passion for the project. Investors are looking for someone willing to invest their own money in their project, which is evidence of the financial commitments and sacrifices you have already made. You must believe in it and be ambitious about it, to achieve the goals you have settled. This also means you must know everything about the startup, even if it is not part of your daily task. If you have a meeting with an investor, be prepared to explain every detail. Work with your team possible questions and answers. This will give you a better idea on how to sell your product with a few lines. Remember time is gold.

2. Traction. You must show investors that you are not just all talk or big ideas but have already begun taking action to build your startup. You must have a proof of concept to show, which validates the viability of the idea. If you do not have the final product, you can have a MVP (minimum viable product), which is the product with enough features to satisfy early customers and deliver feedback for future product development. Sometimes is best to do more than expected, if you are in an early stage and you have the possibility to make an MVP, do it! Investors appreciate every effort you put on your idea.

3. Market for your product. An investor will not be interested in funding an attractive product that has no research or that has a tiny market. You must show a commercial distinction, for example, you could emphasize in customers and/or frequency of purchasing. Therefore, get it ready! You need to make an effective market research that identifies customer needs, drives, fears, and frustrations. Afterwards, you must prepare a resume with highlights that support the idea of your startup.

4. Product differentiation leads to a competitive advantage. You must take time to dig deep in the market and analyze who are your competitors and possible partners. Establish what makes you different. This is product differentiation, to distinguish a product or service from other ones that are similar in the market. Think about this, how do certain geographic, cultural, or strategic advantages play in your favor? Again, you can make a list and select the top facts. When you have settled the product differentiation, it will be easier for you, to develop a competitive advantage, usually based on three sources: price, product and customer experience.

5. Highlight team strengths. It is essential to show investors that there is not a risk concentration in one person and that the formed team is both, complementary and efficient. Ask the following questions: what kind of expertise do we have that makes us visible and competitive in the market? Do we have complementary skills as sales, marketing, product development and operations? Is there a strong chemistry on the team, we help each other and we get along? When you are in front of the investor, you need to mention as many of the team strengths as possible.

6. Financial planning. You should have an idea of where your company can go to in the future. Think about how to answer the investors, the following questions: How much do I need to invest? When do I have to invest it? In addition, they might also ask How much will I get back? When will I get it? For these questions, you can prepare a financial projection to show a solid base. The investor must see you are committed to the idea and that it is worth it.

Have in mind, sometimes investors look for intangibles such us personality, charisma and ethics. Some others look for “someone that is real, that is not afraid to be him/herself, coherent with what it’s said, and what it’s done”.

If you have a startup and you want to increase the value of your business, we can help you! This 26th September, we have an Introduction Day about finance and how to get funded. There are only two spots left, if you are interested, click down here:

Written by Claudia Flores Jiménez

claudia@innovate.today

Why is Design Thinking so important for your startup?

Has It happen to you, that you have a brilliant idea, but it may not solve a main problem that people would pay for? “The number one reasons why startups fail, is because there is no market need for the product or service developed”, affirms Neeraj Joshi. That is why Design Thinking is such a useful tool. This systematic approach helps you to find a problematic that is worth solving.

In this article, we will explain you what are the steps of Design Thinking. This will give you a clear understanding on why Design Thinking is so important for your startup.

What are the steps of Design Thinking?

Empathize.

You need to be patient, open minded and use observation tactics. It is important to put assumptions on a side; put yourself in other people’s shoes, this means you are empathizing. You must analyze your “possible customers” in different matters like emotions, motivations, user’s experience, behavior, between others. Moreover, you will get a clear understanding of who the user is and what his/her needs are. In addition, you need to know the context and make a research about it.

Define.

With all the information you received, you can analyze your possible customers and get insights. Do not forget, that you need to construct a point of view. This will be helpful in order to make a list of problems. Then you will have to define and give priority to a bunch of this user’s problems. Afterwards, you need to define the problem you want to solve.

Ideate.

It is time to do a brainstorm and come up with ideas to give solutions to the problem choose. Have in mind that you need to be as open minded as you can. Do not be afraid of giving “unexpected or impossible solutions”, maybe in the process, you find a good way to make it come true. Besides that, you must research about all the kinds of solutions that this “problem” has so far. Perhaps this problem has no solution yet and your idea in not on the market or you can improve the solution you want to present.

Prototype.

After ideate, you must build the prototype. This means a simple demonstration of a proposed solution used to test or validate ideas. Remember you must show this prototype to people in general, not necessarily the target. The purpose of this test is to obtain information and communicate with general users. It will be helpful to have a general panorama.

Test.

At this stage, it is time to look for the target and test the prototype you made in first instance; during this phase you have the chance to see if you have framed the problem correctly. Remember that the people you select in this stage must be the “possible customer”; you will need their feedback to make the necessary improvements, if needed. In addition, you can repeat this process several times until you have the “solution”.

Launch.

Now that you have the solution, you can implement your vision. Introduce it to the market. In this last stage, you can also get even more feedback, experience and look for investors to scale your startup.

If you have a startup and you want to increase the value of your business, we can help you! Apply for a program.

Written by Claudia Flores Jiménez

claudia@innovate.today

The application deadline of Present Your Startup is approaching

This is your chance to grow your business!

Do you have a startup and you want to get to the next level? We can help you to have professional support scaling your business. This is the perfect chance for you!

The program

On September 26th, we will have an introduction meeting, where you can meet us, our team and you will be able to pitch. After the meeting, we will select a limited amount of startups based on their pitch, business model and motivation.

The selected startups will be invited to participate in “Prepare Your Startup Hotel”, which is a one-week intensive training. And you and other startup entrepreneurs will stay in the same hotel where the training takes place. During the week, you will receive preparation on different areas like business model, finance, pitching, marketing, legal aspects of a startup and you will have some time to put in practice what you have learned before this week is over.

After the “Prepare Your Startup Hotel”, only five startups will be selected based on motivation, business model and pitch. And they will get the opportunity to pitch during the finals of the program on December 4th. Before the finals, the finalists will be introduced to the investors of our network during an exclusive dinner and they will receive extra training just before the finals.

At the end of the finale, our jury panel will announce the winner of Present Your Startup Netherlands 2019.

If you wish to apply, follow the next steps:

1.      In our website, you have to fill out the application form.

2.      You will receive an opt-in confirmation email.

3.      By September 10th, we will let you know whether you are selected and if we will invite you for our introduction meeting on September 26th.

After the Introduction Meeting on September 23rd, we will select a limited amount of startups by September 30th to participate in the exclusive Prepare Your Startup Bootcamp. For the Prepare Your Startup Hotel program, we ask a fee of €795,-. per person. This includes 4 nights in a shared hotel room, 4 lunches and 5 dinners.

How to maximize the value of your startup?

How do yo maximize the value of your startup? In order to maximize the value of your startup, you need to understand how startups are valued. In this article, we explain you how startups are valued and how you as a CEO can maximize the value of your startup.

Understand how startups are valued
One of the most important things to understand when you are creating a fundraising strategy is to understand how startups commonly are valued. You might think that the value of your startup has increased since you have been putting so much work into it. Unfortunately, this is not the way it works. Startup valuations are based on calculations of risks and rewards. The value of a startup rises as risks are being reduced. So milestones like hiring a strong team member or monetization strategy proved to work are contributing to risk reduction and automatically increases the value of your startup.

Customer traction = most important milestone
The most important milestone in reducing risks and creating value is customer traction. When you have evidence of increasing traction of paying customers, you could show that risk is being reduced. It shows that you have reached a product - market fit and your team has shown the ability to execute.

Identify the risks
What is the execution risk of your startup? This varies greatly from startup to startup. If you develop a technological solution, the major risk is if the technology will be working.

If you have a great execution track record, but no experience in developing software and your startup requires software, you would be more likely to get funded when you attract a techical co-founder to minimize the risks.

Other risks include the following:

• Team: unproven team. Not clear if they can execute.

• Competitive: crowded marketplace with significant competitors

• Market timing: you’re confident about the long term market prospects, but it is not clear when the market will take off.

Reducing risk
Now that you have identified the risks of your startup, it is important to mitigate the risks as much as possible. Below, we have listed ways how to minimize the risks and maximize the value of your startup.

• You could show how many potential customers there are. Show that you have been talking with prospects and that you know what the market wants and how much they want to pay.

• If you have a large amount of free users of your service or product with high engagement, this is also contributing to the valuation of your startup.

• In case you have already sold your product to a small amount of paying customers, it is important to show this.

• Returning customers are also a milestone.

Other milestones and risk reductions you could think of are repeatable and scalable sales models. When you have tested your product for the product- market fit and you have increasing customer traction, it shows that you are capable of attracting customers. If you have found a sales model that is scalable and repeatable, it will increase your valuation greatly. This means that your company is ready to grow.

Anything that proves that your startup is scalable and that it fits the market, is a milestone and will contribute to risk reduction. Put this in mind when you are working on maximizing the value of your startup.

Do you want help with increasing the value of your startup? Apply for a free intake with Innovate Today

Checklist to onboard a new employee successfully

You are hiring. Finally you have the money to hire a new person in your team. Creating a strong onboarding process is the best way to welcome and retain new employees. Onboarding does not end when the paperwork is signed.

Hiring a new employee
Although it seems that onboarding only starts when you already have hired a new employee, the hiring process is very important to give that first impression of your startup. Therefore, your onboarding process already starts during the hiring. Make sure you write a clear job description where you manage the expectations of candidates. Make clear how you structure the hiring process as well and last but not least, follow up quickly and make sure you provide candidates with full information on references and background checks.

You have signed the papers, so what’s next?
Make sure you have arranged all necessary accounts and documents for your new employee to start. Go through the following check list:

• Make sure all the necessary papers are signed before starting;

• Do you have an employee handbook? Hand it out at least two weeks before the starting date;

• Did you prepare the new hire’s tech? Do you provide a phone, computer, mouse, keyboard and headset? Make sure it is ready on the first day of your new hire;

• Order new business cards for your new employee;

• Schedule an introduction meeting in the first week;

• Plan your new employees first assignment.

On the first day:

• Create a welcome kit for your new employee which includes a welcome letter and some marketing materials of your startup (T-Shirt, sticker, pens, notebook, etc) ;

• Send a message to your team to remind everyone there’s a new employee and encourage everyone to introduce themselves.

The first week:

• Schedule regular one-on-one meetings with the management for your new employee;

• Set clear goals for the trial period;

• Schedule a feedback meeting for the end of the trial period of your new employee and provide them with meaningful feedback.

Is the new employee working satisfactory? And does your new employee like the job? Congratulations! Keep on scheduling regular one-on-one meetings in the next months in order to make sure you check in with your employee regularly.

Do you want to know more about team and hiring? Between October 28 and November 1, the Prepare Your Startup Bootcamp takes place in the Netherlands. You can apply for this training week through the button below.