Category Archives: Funding

27Mar
3 Considerations When Planning to Sell Your Business

Reply

3 important considerations when planning to sell your business. It’s common knowledge when business owners reach retirement age that they lack a workable exit strategy. This is a step-by-step guide to help you get your company ready for sale while steering clear of any possible pitfalls. When getting ready to sell your company, bear these three points in mind.

Depending on the owner, this may entail selling to a third party or passing the business on to the next generation of the family.

The good news is that you can manage the financial aspects of exiting. Especially, if you want to sell and must find a buyer for your business. Many owners wait to deal with this issue until they are ready to move forward. Often, this causes one to feel stuck. It is not uncommon for the search for the ideal buyer to take three to five years. It’s important to keep in mind that, regardless of a company’s worth, the selling process can take a while. Here are three strategies to start planning your exit in order to do so on your terms:

1. Establish a timeline in advance.

The best time to decide how and when to sell your business is when you’re at the top of your game and not when you’re starting to slow down. Most business owners are most likely in their early 50s. They are not yet ready to retire but have plenty of experience to get the job done.

Having a timeframe will help you make decisions in the interim and give the sale a clear structure.

2. Specify who the buyer is.

A crucial part of preparing your business for sale involves finding a possible buyer. As was previously mentioned, this is a lengthy process that should involve thoroughly vetting prospective purchasers to see if their values, objectives, and ideas for the performance and culture of the company coincide with yours. This is a drawn-out process that needs to be carefully considered. In this manner, you may guarantee that the business is run in your style even after your departure. (This still applies if you’re giving the reins to a close friend or family member.)

3. Consider the how carefully.

Once you have found your buyer, it is critical to think about how the deal will be financed. One possibility is that your buyer has enough cash on hand or bank financing to buy your company entirely, which is fantastic! However, another possibility is that the buyer lacks enough capital (either owned or borrowed) to finance the deal in a single transaction. Instead, you will complete an installment sale in which you agree to the buyer’s repeated payments to you.

These three steps can help you proceed in a way that assures you obtain the best financial result. This result can be good for yourself and for future generations of your family. Preparation is key to success, regardless of the path you choose, the value of your company, or the timing of your exit.

Furthermore, allowing yourself more time to get ready can lessen the emotional toll of departing. When the time comes, it will therefore feel less unexpected and more like a seamless transition into a joyful and carefree life after becoming a business owner.

15Dec
 Understanding Term Sheets: A Comprehensive Guide

Reply

Term sheets are crucial elements in various business transactions, especially in the world of startups and venture capital. Although they can be daunting at first glance, understanding them is key to successful negotiations and partnerships. This blog post will demystify the term sheet, guiding you through its complex nuances in a clear, accessible manner.

 What is a Term Sheet?

A term sheet serves as an agreement that outlines the fundamental terms and conditions for making an investment, without being legally binding. It serves as a template to develop more detailed legal documents. By setting forth the key terms of the investment agreement, it provides a fundamental framework for business negotiations.

The Anatomy of a Term Sheet

Typically, term sheets consist of two main sections: the economic terms and the control terms.

1. Economic Terms: This aspect covers how the financials of the deal will be handled. The terms include details such as the valuation of the company, investment amount, price per share, and liquidation preferences.

2. Control Terms: This outlines how control will be divided among shareholders. It discusses the details about board composition, voting rights, anti-dilution provisions, and protective provisions.

Let’s delve into these key terms a bit more.

3.  Valuation

Valuation refers to the worth of the company. It can be before or after investment. The pre-money valuation plus the investment amount equals the post-money valuation. Understanding this is vital as it affects the percentage of ownership you get for your investment.

4. Investment Amount

This is the total capital that investors provide to the company. The amount is usually provided in exchange for an equity stake in the company. The exact amount of equity depends on the valuation and the total investment.

5.  Price Per Share

You can calculate this by dividing the pre-money valuation by the number of outstanding shares before the investment. This determines how many shares an investor will get for their investment.

6. Liquidation Preference

The order of payment in the event of a company sale or liquidation is determined by the liquidation preference, which dictates who receives payment first and in what amount. A “1X” liquidation preference means investors get their money back before other shareholders see any return.

7. Board Composition

This section specifies who will sit on the company’s board of directors. It’s essential because the board has significant influence over the company’s direction.

8. Voting Rights

These outline how major decisions are made. Investors often ask for voting rights on certain significant issues, such as issuing new shares or selling the company.

9. Anti-dilution Provisions

The protection mechanism ensures that investors’ stake in the company remains intact even if the company decides to issue additional shares at a lower price per share than the investors’ initial investment.

10. Protective Provisions

These are rights that allow preferred shareholders to veto certain actions by the company, giving investors a degree of control over decisions that could affect their investment.

11. Deciphering the Term Sheet

Term sheets have significant implications. It’s crucial to understand that the terms stated will lay the foundation for the final, legally enforceable investment agreements. Therefore, while the language of term sheets may seem dense, a thorough understanding is critical. Consider consulting with a legal professional who understands startup financing to ensure your interests are adequately represented. While doing so may incur some expense, it could potentially save you a significant amount in the long run.

Conclusion

Understanding term sheets can feel like learning a new language. With a clear breakdown of the core elements, it becomes less daunting. These documents are crucial to ensuring all parties have a shared understanding of the investment terms. Having a solid grasp of the structure and purpose of term sheets will better prepare you to navigate the world of business finance and investment.

7Aug
How to Craft an Investor Update

Reply

Crafting an investor update can, at first glance, seem like a challenging endeavor, but let’s demystify the process. As a budding entrepreneur, understanding that this task is a crucial element in maintaining a transparent and symbiotically beneficial relationship with your investors is key. It’s not merely a corporate requirement; it’s an exceptional opportunity for you to pause, look back at your journey, pinpoint any stumbling blocks you’ve encountered, and envision a path forward. This guide is designed to help you navigate this seemingly complex task with ease and efficacy. 

We’ll kick things off by digging into why these updates are so important. Regular and clear communication with your investors provides a peek into the engine room of your business. This allows them to spot potential hurdles and golden opportunities, sometimes before they even become apparent to you. This proactive participation not only keeps them actively involved but also engenders a feeling of mutual advancement and success. Moreover, there’s compelling data backing up the importance of these updates – according to research, startups that offer regular investor updates are three times more likely to receive additional funding from existing investors. So, it’s crystal clear; crafting effective updates isn’t just a polite gesture, it’s a strategic move that could positively influence your venture’s durability and expansion. 

Understanding the significance of these updates, let’s delve deeper into their composition. Your guiding principles should be simplicity, brevity, and clarity. An investor update need not be a lengthy or elaborate document; in fact, a well-crafted update can be as succinct as it is insightful. Here’s a suggested framework to help you structure your updates: 

1. Highlights: Kick off your update by sharing the positive strides you’ve made since your last check-in. These could be critical milestones reached, new clients brought on board, innovative features unveiled, or any other accomplishments indicative of forward momentum. Remember, your investors are looking for signs of progress, so take this opportunity to showcase your wins. 

2. Lowlights: This is your chance to demonstrate your transparency and resilience. Share the difficulties currently on your plate, and elucidate the strategies you’re utilizing to surmount them. This forthrightness not only bolsters trust but also exemplifies your proactive approach towards problem-solving. 

3. Asks: A golden opportunity lies here to leverage the collective wisdom and far-reaching networks of your investors. Whether you need introductions to potential customers, help with recruitment, or advice on a critical issue, make your requests here. Remember, specificity is crucial – the clearer your asks, the better your investors can assist you. 

4. Thanks: A simple but essential gesture – acknowledge the investors who’ve lent a helping hand with your previous asks. This not only promotes active participation but also nurtures a feeling of community and shared victory among your investors. 

5. Customer Story: Add a vibrant splash of human interest by incorporating a compelling customer story. This breathes life into your product or service, showcasing its impact in the real world and resonating emotionally with your investors. 

6. KPIs: Wrap up your update with key performance indicators, restricting yourself to five or six vital metrics. These could be revenue figures, headcount, runway, or a “north star” KPI that suggests future earnings or traction. 

As for how often these updates should be sent, it largely depends on your startup’s stage. If you’re in the very early phases, consider weekly updates. As your venture finds its footing and matures, transition to monthly updates. Once you’re a growth-stage company, a quarterly rhythm usually suffices. Investor updates aren’t mere paperwork; they’re a fundamental aspect of demonstrating to your investors that you’re an engaged entrepreneur and a responsible custodian of their capital. It’s a mechanism that builds trust, stimulates open communication, and ensures swift intervention can be taken if things are veering off course. Your investors are not just check-writers; they are partners on this exhilarating journey. They can provide invaluable help and guidance when they’re in the loop, regardless of whether the news is upbeat or somber. 

So there you have it. Crafting investor updates isn’t just a mundane task; it’s a process of introspection, communication, and active engagement. It’s about showing your investors that you genuinely appreciate their partnership and are dedicated to keeping them involved in your voyage. With these guidelines, you’ll find this task less intimidating and much more rewarding.

9Feb
The Types of Investor Funding

Reply

investor funding

When it comes to funding a business there are many options. Before you decide to seek funding from investors, it’s important to know that there is more than one type of investor to fundraise from. So, how are they different, and how are you going to do it?

There are three basic types of investor funding: equity, loans and convertible debt. Each method has its advantages and disadvantages, and each is a better fit for some situations than others. Like so much else about the fundraising process, the kind of investor-based fundraise that is right for you depends on a number of factors.  The stage, size and industry of your business. Your ideal time frame; the amount you are looking to raise and how you are planning to use it; as well as company goals for both the short-term and long-term.

EQUITY

Pursuing an equity fundraise means that, you are buying an ownership stake. Equity investors provide capital  in exchange for a percentage of the profits  (or losses).

Equity is one of the most sought-after forms of capital for entrepreneurs. In part because it’s an attractive option: no repayment schedule and high powered investor partners.

How It Works

At the outset of your fundraise, you set a specific valuation for your company. Based on that valuation and the amount of money an investor gives you, they will own a percentage of your company. For which they will receive proportional compensation once your company sells or goes public.

When to Do It

Not every business will start generating income as soon as it launches. Spending a few years in R&D doesn’t mean your company isn’t a viable business proposition. Internet companies, for example, are notorious for going years in operation without even attempting to charge their customers. If you’re going to need a lot of operating cash to sustain your business before it starts turning a profit, equity investments are the only form of capital that makes sense.

When there is no collateral

To obtain a loan, you must have something to provide as collateral in the event that things do not go as planned. If you don’t have something of value to give loan providers as collateral, your only real choice for funding is to find equity investors prepared to take a risk on your idea with nothing to “sell” if it fails.

When you can’t possibly bootstrap

While home-growing your company from your garage or spare bedroom bit by bit may not sound as glamorous as hitting the ground with investors already in your lineup, most investors will expect you to start there before they invest. But some businesses  require a massive amount of capital just to get off the ground. In those cases, you have little choice but to go directly to equity.

When you’re positioned for astronomical growth

Equity capital tends to follow businesses and industries that have potential for massive growth and exponential paydays. Your local coffee shop concept may do really well, but it doesn’t have the potential to become Facebook. Therefore,  you’re not likely to attract many equity investors. On the other hand, if you’re looking to build the next Starbucks chain, chances are investors will be very interested in jumping onto your bandwagon on the road to IPO.

Consider the following:

Your options are whittled down when you have equity:

When it comes to the future of your business, going the equity route drastically limits your options. One thing is essential to equity investors: liquidity. That means they won’t be happy with a percentage of your annual income. They’ll assume that once you’ve accepted their money, your company’s endgame will be a sale or an IPO. They’ll want guarantees that your idea will sell and sell big before they invest in the first place. But, before you go the equity fundraising path, make sure that this is indeed your vision.

For high risks, equity investors expect big rewards:

Many entrepreneurs would take advantage of the fact that they could walk into a bank and get a loan to fund their business idea. Banks, on the other hand, are extremely risk averse and only want to provide loans that they are certain can be repaid. That’s where equity investors come in: they’re willing to take chances that lenders aren’t willing to take. However, there are two sides of that coin: an equity investor isn’t looking for a quick return on their investment. They’re taking on a lot of risk in exchange for a lot more reward, and they’re going to want to see results.

There’s a lot of competition for equity investments:

The number of people searching for equity investors far outnumbers the number of checks being written. In a given year, most equity investors will see hundreds of transactions before funding even one. Obtaining an equity investor is extremely difficult!

Raising equity capital takes time:

Finding the right investor will take anything from 3-6 months. That doesn’t include the time it takes to finish the final legal papers that release the funds. If you and your company are in a hurry, equity funding may not be the best option.

When it comes to relinquishing equity, it is a one-way path;

You can’t get your equity back after you’ve given it up. It’s extremely unlikely for an entrepreneur to repurchase the equity they gave away early in the company’s growth. If you’ve sold a certain amount of your business—say let’s 40 percent—you won’t be able to sell it again. Whether you like it or not, once you sell equity to an investor, they become a part of your life. As tempting as it may be to shake hands with anyone willing to write you a check, it’s critical to seek out investors with whom you feel comfortable working for years to come.

LOANS

Loan or debt-based fundraising is the easiest to understand: you borrow money now and pay it back later, with an established rate of interest.

Debt is also the most common form of outside capital for new businesses. While angel investors and venture capitalists get all the big headlines for funding exciting companies, it’s the debt providers that are behind most of the investment dollars.

How it Works

When you opt for debt-based fundraising, you specify the interest rate associated with loan repayment in your fundraise terms. Additionally, you may include an estimated time frame for loan repayment.

The other critical component of the loan puzzle is collateral: something tangible, sellable that lenders can take from you if your business fails and you are unable to repay your loans. The more collateral you have, the more likely you are to secure substantial financing.

When Do You Do It?

There are a few situations where debt, like equity, is the best choice for funding your business.

When you don’t require more than $100,000

Debt raises are well-suited for small amounts of capital. Giving up equity makes little sense at such small amounts; and with smaller goals, there is less risk—for investors and entrepreneurs alike—than when large sums are involved.

When you urgently need funds

Is there a market opportunity for your company that you would miss if you do not raise money immediately? Then you’d be wise to avoid equity—a procedure that is notoriously time-consuming. Debt increases pass more quickly, increasing your chances of having the money you require when you require it.

When there isn’t any equity available

If you are unable or unwilling to begin offering equity, a debt raise may be the best course of action. Many business owners are hesitant to give up control of their company and a straightforward debt raise offers the appealing benefit of retaining ownership and control.

Consider the following:

Collateral is king: Contrary to popular belief, banks and other lenders do not profit handsomely from a single loan. As a result, they say “yes” to only those transactions in which they are certain they will not lose money. Their sense of security is derived from collateral.

Explore your options: When considering funding options, it’s critical to thoroughly investigate all of your debt options to determine what’s available and from whom. Our approach to debt is as follows: it is always preferable to have financing and not need it than to require financing and not have it!

CONVERTIBLE DEBT

Convertible debt is essentially a hybrid of debt and equity: you borrow money from investors with the understanding that the loan will be repaid or converted into shares in the business at a later date—for example, following another round of fundraising or reaching a certain valuation.

How It Works

At the time of the initial loan, the specifics of how the debt will be converted into equity are established. Typically, this entails offering investors some sort of incentive to convert their debt to equity, such as a discount or warrant in the subsequent round of fundraising.

If investors are offered a discount-the most common are 20% and 25%- it means they are able to convert their loan at a reduced rate of 20% or 25%. For instance, if an investor lends you $1 million to you in the first round, they would expect to get $1.25 million in return.

Likewise, a warrant is also expressed in percentages—for example, 20% warrant coverage. Consider the same $1 million case with 20% warrant coverage. In the subsequent round, the investor receives an additional $200,000 (20% of $1 million) in securities.

You will also need to set an interest rate, just like you would for a straight debt raise, to reimburse your investors until they convert, as well as those who do not convert.

Additionally, convertible debt fundraises typically have a “valuation cap,” which is a maximum company valuation at which investors can convert their debt to equity, after which they will have missed the boat and will have to settle for having their loan repaid or reinvesting in the company on new terms. However, over the last few years, an increasing number of companies have chosen to leave their convertible debt offerings uncapped.

When To Do It

For start-ups that are not yet prepared to evaluate the company, a convertible debt fundraise makes the most sense either because it is too early to determine one, or because they believe the value will be much higher later.

If you believe that the valuation of your business may well be skyrocketing soon, but you can’t wait and raise your equity straight away later—the ability to offer convertible debt offers you the money you need right now while enabling you to protect your equity’s value later.

Things to Keep In Mind

The best of both worlds; Convertible debt offerings offer investors the best of both worlds. For the time being, they have the debt structure’s exit strategy and the associated security; however, they also have the potential for a discount on your equity if they choose to convert. Additionally, investors get to observe how your business performs, which enables them to gather additional information and determine whether they like your direction before jumping on the equity train.

Know what you’re doing:  Because convertible debt raises are by definition more open-ended than debt or equity, it’s critical that you can articulate both the rationale for your decision and an expectation of how things will unfold, both for yourself and for the investors.

Conclusion

Prior to committing to a structure for your fundraise, it’s prudent to delve deeper into the specifics of that structure—or, better yet, thoroughly explore each option.

Avoid becoming frustrated or discouraged: this is a large question to address, and even experienced entrepreneurs are not comfortable with all forms of capital. The more informed you are about your options, the better equipped you will be to make the best decision for you and your business, and the more likely your fundraising efforts will succeed.

4Nov
First impressions make or break you when meeting with investors

Reply

first impressions

Securing early funding is critical to a company’s long-term success. As a result, there is a lot of pressure when seeking investors and participating in fundraising rounds. Company leaders must ensure they are completely prepared. For this reason, first impressions are crucial to the success of your business. Creating a good first impression all comes down to one thing: PREPARATION. Founders who think they can bluff their way past anything and can always “wing it”, are setting themselves up for a loss and a missed opportunity. Every opportunity that comes your way is crucial because you might not get an opportunity like it again. You need to give 150% in everything you do.

Be Prepared

No matter how amazing your start-up is or how incredibly faring it is financially-speaking, the fundraising pitch has to be: polished, rehearsed and factually on point. Investors will quickly lose interest if they feel they are dealing with a leadership team that doesn’t understand the market or the most critical business metrics. You need to show up prepared and have practiced your pitch to the point where you can recite it in your sleep.

Not only should you prepare for your pitch but you need to prepare for your audience and anticipate any questions that is going to be thrown your way. This comes down to knowing every detail that matters about your business. Being unable to answer even just one question will give the impression you are not prepared. So be ready for anything. Bluffing your way through it takes a lot of preparation, it is something you will not be able to do. Investors will see right through your bluff. Of course, making the pitch too over the top, especially if the numbers are not quite there will likely make it clear that you are trying to substitute flare for substance. To establish a long lasting investment relationship, being transparent, realistic, and concise will go a long way.

TIP: Send Preview Information Beforehand
It is a good idea that you send a sneak preview of your pitch before your meeting. Any teaser information should be sent just a few days before the big presentation. It is best to keep this preview short, including just a few snippets about some of the key data. Do not reveal too much, but you want to ensure that the information sent proves promising so that it piques the investors interest.

 Differentiate From What’s out there

In general, investors want to be involved with companies that are innovative. This uniqueness can be product-related, clientele-related, or perhaps related to the way the company handles its operations. In order to do that you need to show how your business differentiates from anything else out there. You need to highlight your uniqueness, your unfair advantage that will have investors interested in your business. The key is to demonstrate your company’s singularity and how that translates to handsome returns down the road. This is where companies can get really creative with the pitch, and hopefully share their story in a way that entices those listening.

TIP: Cover all the key points:

● The problem that you’re solving
● Describe your customer
● Market Size (Problem? How big is it? )
● Why are you best suited to address this?
● Be passionate about the problem you are addressing
● Your solution, why is it 10x better than the state-of-the-art?
● Distribution strategy?
● Monetization strategy
● Current stage
● Competition
● How will you get to the next stage?
● What will it take to get to 10x from that point on?

This may sound like a LONG list, but it is all the important points to articulate in a short presentation and when you are clear in your flow, it can happen in under 10 minutes.

You might have an amazing product but it is how you communicate it and execute it that will sell your product. Just because you have a great product does not mean it will get you anywhere. It’s all about the first impressions you make. It all comes down to how prepared you are and how you differentiate from everyone else. Being prepared will give you the confidence you need to surmount any presentation you give. Exuding confidence is crucial because it will completely change how your audience perceives you. Your body language will change as will the way you deliver the presentation.

The image you first present usually lasts longer and has more impact than any document you will prepare. Many of these are common sense  but I’ve rarely met an entrepreneur who does this well . The fact of the matter is, you only get one chance to make a first impression  so do it right!

29Jan
What’s next once you have your million dollar idea?

Reply

business ideaEither you have been racking your brain for weeks trying to come up with a business idea or a struck of genius just came to you. Regardless of how it came to you, you believe that this is the business idea that is going to make you an entrepreneur! Great, now what?  You are probably very excited to get the ball rolling and you have so many different thoughts going through your mind. It becomes little overwhelming as you don’t know where to start or how to start. How do you start taking action in order to create your dream into a reality? Here’s how! Read carefully as we will give you some guidelines that will help push you in the right direction.

  1. Tell people about it

There is a common myth that you should not tell your business idea to anyone. This is false. The first thing you need to do is reach out to your network and share this business idea with as many people as possible. Now, we didn’t say give away your IP or secret sauce, we said talk about it with people who you think would have the same type of problem like you. Getting insight on your business idea from a different perspective will be very informative. By sharing your idea and getting the opinion of other people you will be able to see if what you’re doing has any depth and does it even make sense. Ideally, it would be great to find a mentor or someone with relevant experience but you can also share your business idea with just about anyone. You can share it with perspective customers and see if they would be interested in using your product/ service. Any form of constructive information helps. Talking about your business idea will be extremely beneficial and can easily be done to take you one step closer.

  1. Research

Do your market research. What need does your product or service meet? How is that need currently being serviced? Who are your competitors? Find out what competitors exists and who they are. Research each one of them and find out how your business idea differentiates from theirs. Why would your product or service be superior form everyone else on the market? You need to be better than the rest in order to make it. If your business idea is something that is not even on the market yet, you should research why. Figure out if other people have attempted this or why nobody else is doing this. Is there is a reason for this? It’s also important to research if this something people will buy or need? There is no point in creating something that people will not use.  Who is your customer? What are the demographics of your customer?  Why would they buy from you? Do you have any evidence that they will purchase your product/service? What differentiates your product/service from the competition? What are the strengths or weaknesses of your product/service?

  1. Draft a business plan

Once your market research is complete and you have validated the need, it’s time to write your business plan. A business plan is a written description of your business’s future. In essence, it is a document describes what you plan to do and how you plan to do it. This might seem like a long boring task to do however, it will prove to be very beneficial. At the beginning, it does not need to be elaborate it’s just a good idea to write everything down to organize your thought process. Writing everything down will allow you to see the big picture and put things into perspective. This will enable you to ask yourself the important questions. It is also good to have when you need to refer back to it. It’s hard to keep track of everything when you don’t write it down. Creating a business plan will also help you when you decide to start pitching later on to investors or even just too potential business associates to gain their help in your project.

  1. Prototype

Start building/ designing as soon as possible! Start making sketches, templates, designs. The quicker you start putting something together, the faster you can start getting feedback to improve your original design. Your original idea is never going to be perfect, there will always need to be improvements made and this can only be done once you start actually putting it together. Building a prototype will put your idea to the test. The faster you can get it out, the faster you can bring this idea to market. Today’s world moves quickly, so you want to be able to be the first to do it before any one has a chance. The more feedback and criticism you get, more improvements can be made to obtain a better product outcome.

5. Funds

Start saving your money! In the beginning, it’s best to invest your own money into your project or use money from friends and family. When you are just at the idea/prototyping stage you still have a lot to do and adding in investors will only cause you more stress and pressure. You might underestimate how much money you will need to pour into this project so save and spend wisely.

I hope that this guide has given you some structure on where and how to start once you have your million dollar idea. Taking action on an idea is the most challenging and intimidating part. However, if you really believe in the business idea and your capabilities then the possibilities are endless. Start by taking small steps in the right direction and slowly things will come together. If you have the passion and drive to keep you going then nothing else will stop you in creating your dream into a reality!

8Jul
The Right Way to Do a Cold Call

Reply

cold call, phone call
Cold calls often come with a negative connotation. However, when done correctly cold calls can successfully turn into lucrative business opportunities. As an entrepreneur you will have to make many cold calls, whether it be to a potential investor, supplier, distributor, etc. The goal of a cold call should not be to close a deal or get an investment. To the contrary, it should always be to open a line of communication with the other party. These 6 tips will teach you about the right way to do a cold call.

  1. Do your research-

Before making the call make sure you know as much about your prospect as you possibly can. If you are looking for an investor check to see if they have invested in other start-ups in the past, their interests, the industry in which they work, etc. In order to appeal to your prospect, this will help you frame your approach for the best outcome. This includes answering questions such as, what is the goal of the call? What can you offer the person at the end of the line? Why should they care? And why is your solution worth their time?
 

  1. Focus on starting a relationship-

Don’t sell anything, other than yourself, on the first call. The first call should be about the early building blocks of a relationship. This means that you should not be trying to get an investment. Making a good impression will be worth it down the road, even if you do not get the investment or partnership you desire. On this first call you should be introducing yourself and your business. Briefly explain why your business is worth the attention of this party, and work towards booking an in-person meeting. Describe your talents, ask questions, and more importantly, carefully listen to what the person on the other line is saying. They may casually mention things about themselves that will allow you to build better rapport down the line.

  1. Look for a second-degree connection-

Having a mutual acquaintance will help you with credibility. People are likely to take calls from others when they have been recommended by someone they trust. Prior to conducting a cold call, check your network to see if you know any of the same people. If you are on good terms with your mutual acquaintance, ask them to put in a good word for you. Also, ask people in your network if they know anyone offering what you are looking for. If you get to their voicemail make sure to mention referrals, as it is likely to lead to a call back for you.

  1. Get to the point-

Time is money. People are busy and usually have their days planned out. An unexpected cold call may interfere with what they have scheduled. Make sure you are efficient and quick to get to the point. Prepare your talking points beforehand, and address only the matters that will spark enough attention for a second meeting.

  1. Get to the second meeting-

Once you’ve shared enough information to pass the introductory stage, ask to book second meeting. If your prospect seems to have a busy schedule offer to email a slide-deck summarizing what you’ve just discussed until you are able to meet again.
 

  1. Keep records-

Document those you’ve called, for what reason, when you called, and how many calls have resulted in scheduled appointments. Doing so will not only keep you organized, it will allow you to keep tabs on cold-calling techniques have worked and which have not. Furthermore, a “no” from a prospect, can simply mean a “no” for the time being. This will let you know which prospects you can follow up with in the future.

Cold-calling can seem intimidating. But, if done right, it could lead to a promising partnership. Do not be discouraged with rejection either. Many opportunities can arise in the future with these same prospects, and you’ve also garnered many tools and lessons along the way. Just remember to be informed, quick, and efficient.

4Mar
Why Investors Like Startups Focused on Solving Social Problems

Reply

The social impact of businesses has been held to the highest of regards in the past decade. Part of the reason for that is millennials have grown up with a more socially responsible mindset than previous generations. Though this has now become today’s norm, many entrepreneurs have gone the extra mile by making solving social problems their main focus. Companies such as Thread International, TOMS, Belu Water, and CellInk are just a few example. With unfortunate social problems making news headlines, one thing is for certain, solving social problems has become what the corporate world would refer to as “good business”.

An uneasy relationship has always existed between investors and entrepreneurs when social problems were in question. If you planned on utilizing socially friendly practices the hope was that it did not excessively affect your profit margins, and if you’re main focus was solving a particular social problem the worry was that you wouldn’t be making enough revenue. All this to say that many investors were hesitant to put too much focus in such businesses. However, with changing societal climates, we are in the midst of a shift. What we see today is that investors no longer have to choose between money, and their values. Hence, the rise of sustainable investing. The reason for its rise in popularity amongst interested investors is simple. People want to make a difference, and figuring out which companies are truthful to their social initiatives has become easier to monitor.

Sustainable investing is a term for investment approaches that consider environmental, social and governance (ESG) factors and their impact. Point in fact, after the controversial era of banking secrecy, sustainable investing has come to the forefront and become one of the fastest growing segments in finance. It is an opportunity to make money and make a difference in the world. By acknowledging its importance and popularity, organizations have further facilitated and incentivized investments in companies focused on solving social problems. For instance, PME funded company Co-Power, identifies energy efficiency projects that generate, or are expected to generate steady, predictable revenue streams by either selling clean power or by reducing energy consumption.

With societal consciousness becoming of increased importance in today’s corporate culture, investors have begun to fish out companies promoting such agenda simply for positive PR. Genuine social impact companies integrate doing good into everything they do. Successful social impact ventures balance for-profit work with community-oriented resources. Failing to do so diminishes credibility and increases customer mistrust. Therefore, entrepreneurs should make a habit of working with institutions and platforms that help verify and certify social impact, examine their supply chain, look for like-minded investors, and build a team that understand the importance of its principles. Act on your beliefs instead of just talking about them.

Making the world a better place and making money can go together. Startups focused on solving social problems endure many challenges that other businesses might not. However, it is important to remember that this is a better time than ever before to appeal to investors. Assuming millennials continue to make social responsibility a priority when it comes to where they work, what they buy, and whom they support, it is safe to say that many investors out there are open and willing to contribute to a greater good.

3Dec
What to Do Before Accepting VC Funding

Reply

All start-up investors are not the same. Struggling entrepreneurs are often so happy to get a funding offer that they neglect the recommended reverse due diligence on the investors. Taking on equity investors to fund your company is much like getting married, it is a long term relationship that has to work at all levels.  Investors will conduct due diligence and  have a number of questions about your startup . But it is equally important that you understand the venture firm and the individual venture capitalist or angel investor who is considering an investment in your company. Though likely tempted to accept more capital, there are certain things all entrepreneurs must consider before accepting VC funding. More money is great, but weighing what this can imply for the future of your startup is crucial. In order to avoid accepting an investment you will regret down the line, here are a few things you should do before accepting VC funding.

  1. Think about whether your investor can offer more than just a check

    It is crucial that you research VCs thoroughly before you submit your pitch deck. Every venture capitalist has an investment thesis, strategy and approach to making decisions. If your business is technological, seek venture capitalists who help entrepreneurs in the tech field. Likewise, seek VCs who fund businesses in your stage of development whether it is a startup or an expansion.  Having more capital is great, but think about other attributes that can benefit you long-term. Your research will help you determine if your business and team are aligned with the venture capitalist’s process.

    You should ask about your investor’s investment track record. This is a follow-on about domain expertise and the experience of the specific VC. What are they most proud of? What was their contribution to the success of startups? This is also a way to identify other CEOs that have worked with this VC and get their perspective about the contribution the VC. Also, all investors do their due-diligence about a startup before investing. Entrepreneurs should be doing the same regarding investor. Reverse due-diligence is a process whereby entrepreneurs seek to validate the track record, operating style and motivation of their potential partner.

  2. Analyze the terms of the investment

    If a VC plans to embark on the journey with you, make sure you understand what his intentions are. Read the contract terms carefully. Have an experienced third party review the conditions of your partnership. For instance, it is important to know how involved they plan to be in the decision-making, and the stake they want to take. If a VC plans on taking a board seat, you want to make sure they will add value. Making sure you have the best people at the table is important.

More money is definitely tempting, especially for startups lacking capital. But it should be understood that receiving money from a VC has long-term consequences. For this reason

don’t succumb to the temptation to take funds from investors that you are not totally comfortable with. It is important to make sure that the partnership is a good fit, and compatible with your goals and ambitions.That means you and your business must benefit from both the money and mentoring from the investor, and the investor will win from getting a larger return sooner. Win-win relationships get better over time, whereas win-lose go downhill fast. Never underestimate the importance of doing your due-diligence, and reading the fine print.

19Oct
Businesses You Didn’t Know PME Helped Propel

Reply

Over the past 18 years PME has helped guide many diverse businesses to success. Often, entrepreneurs come to us with just an outline of what they aim to achieve. With added assistance from our program leaders, mentors, and committee members, we are able to turn this vision into reality. Here are just a few notable mentions of companies that have been able to turn ideas into lucrative business opportunities with help from PME.

Budge Studios
Not only do they have millions of downloads for their games, they have become members of the PME committee. The mission of Budge Studios is to thrill, educate, and entertain children around the world through creative and innovative apps. They have won numerous notable awards for their accomplishments. This includes the Google Play ‘Best of 2016’ App Selection Award for their app, My Little Pony: Harmony Quest. Additionally, they won the Apple Store Best of 2016 for Miss Hollywood Vacation Canada. Budge Studios may be in the business of creating games but their business strategy and objective is rigid and direct. It’s all about being family friendly and universally playable.

Naked and Famous Denim
Naked and Famous Jeans has come a long way since we first met Brandon Svarc. Simply put, the company focuses on one thing only. As they so eloquently state: “No marketing, no washes, no pre-distressing, no nonsense. Just excellent denim at a reasonable price.” Naked and Famous Jeans uses Japanese selvedge denim which is woven slowly and painstakingly on old shuttle looms. Svarc travels to Japan numerous times a year to find new fabrics, and denim mills. Nicknamed the Willy Wonka of denim, he has been interviewed by popular publications such as GQ to share knowledge about his expertise. With all their products made and sewn in Canada,their sole purpose is to sell the highest level of quality to their end-user.

Copower
CoPower is where impact investment meets Wall Street. We met founders David Berliner, Larry Markowitz and Raphael Bouskila in 2013. Since then, CoPower has continued to strive and make the world a greener and more sustainable place. CoPower’s team works with clean energy firms to identify clean energy and energy efficient projects that generate steady and predictable revenue streams. CoPower is all about impact investing. For those of you who are unsure of what this is, impact investing is a strategy that involves the investing in companies and projects with the intention of generating measurable, positive, and environmental benefits alongside financial returns.

Revols
Not only are Navi and Daniel kick-ass entrepreneurs, but did you know they had the biggest kickstarter campaign in Canadian history? Revols has come a long way since its founding in 2014. Navi and Daniel were endlessly frustrated with finding the perfect pair of earphones. While they understood that ears are as unique as fingerprints, all custom-fit earphones came with a high price-point and long wait times. The dynamic duo decided to take matters into their own hands and create Revols: a pair of wireless customized earphones that provide the same comfort and sound benefits as traditional custom-fits, at a fraction of the cost and time.

All in all, PME has had some pretty driven, and ambitious entrepreneurs come through its doors. This is just a glimpse of many of our success stories. We provide them with the most essential tools entrepreneurs need in order to succeed.