4Mar
Which Social Media is right for you?

Social media runs our world, there are so many different types of platforms available each with its advantageous and disadvantageous. Choose the right platform for you and your business based on your goals. Develop a plan on what you want to get out of from using social media whether its to create brand awareness, sell product, marketing etc.

Facebook

Pros: Marketing, brand awareness, feedback, communication with target market, advertisements for your business

What is now great about Instagram is that it is now connected with Facebook. You can post simultaneously on your Facebook and Instagram all through their publishing tools. Its easy to use and you can share content all from one platform. What puts Instagram ahead of the others is its ability to use user generated content marketing. This is a type of marketing that is created and shared by your consumer. There’s an ever growing popularity with influencer marketing and it is a very easy and cheap way to market your business. Instagram is your best place to leverage this. It can also easily be used as a sales platform.

Instagram

Pros: UGC/influencer marketing, young target audience, sales platform

Instagram can connect with your Facebook accounts, making your lives 10 times easier. You can post simultaneously on your Facebook and Instagram all through their publishing tools. Its easy to use and you can share content all from one platform. What puts Instagram ahead of the others is its ability to use user generated content marketing. This is a type of marketing that is created and shared by your consumer. There’s an ever growing popularity with influencer marketing and it is a very easy and cheap way to market your business. Instagram is your best place to leverage this. It can also easily be used as a sales platform.

Instagram does have limited capabilities compared to Facebook in terms of content to post. You also need to put in a lot of time in creating content that matches your brand and overall create content that will appeal to the audience.

Pros: Networking, business information, advice, opportunities, contacts

This is the place to go when you want to find new opportunities and create new contacts. You can easily grow your network through this and prompt direct business relationships. You can share knowledge and expertise and get advice. LinkedIn focuses on building business relationships and not for marketing to your consumer but rather to create business opportunities. You should create a page to share information about your business and provide updates on its performance.

Twitter

Pros: Ideas, discussions, information, Discoverable on Google

You can generate content on Twitter through tweets and messages. It is a good place to share ideas, thoughts and to share information. Tweets can also appear in google results, which is unique to the other platforms since Facebook and Instagram do not do this. You can promote content through hashtags and find tweets with a Google search.

The variety of content you can post is limited. If you have visual content created for marketing, leave those for Instagram or Facebook.

Using social media has become the primary method for marketing for many companies. Marketing strategies are consonantly evolving to leverage each social media platform. Keeping an active social media presence for your business is extremely important these days in order to reach your audience and raise brand awareness.

18Feb
How to Tell your Startup Story

The key elements to include are:

Problem
Solution
Product
Traction
Team
Vision

It is always difficult piecing together your start-up story in a deck at the very early stages of your business venture. The early stages are crucial in the growth of a business and acquiring investors are quite tricky. Creating the perfect pitch deck will allow you to smoothly deliver your start-up story to investors to secure that funding. It requires a lot of time and detail and how you piece this together will be the foundation in delivering the perfect pitch to investors. The key elements that are essential in the deck are as followed: problem, solution, product, traction, team and vision.

Tag line

At the very beginning of the deck, the slides should start with a one-liner description of the business. This slide is literally one line or tag line that gives some insight on what the business is at the start. Its short and sweet, be creative!

Problem

The first key element you want to jump into is the problem. This is a great start to the pitch deck as it will allow for the smooth transitioning of the rest of your story. Identify the problem in a clear bold manner. This will intrigue the investor to continue onto investigating what solution you bring to the table and in finding out how big and real is this problem. Its important to keep this slide short, you can go into further detail in person or in a document. For the purpose of the pitch deck, it should remain short and straight to the point

Solution/Product

You pointed out a problem now provide your solution! A good format is description of the solution followed by a few points as to why your way is the best way. Following that, you can proceed two ways either: go into how it works with a few screenshots/demonstrations or go right into your vision. Since all stories are different and depending on what your business is, choose as you see fit based on your start-up. If your startup does not requires much explaining, go right into the vision of where you see your simple concept growing into something massive in the future. If the vision slide is not included in this section it can be included in the end as well.

Traction

Convince your investors your solution is scalable! Its time to give your start-up some credibility with some data. This slide can be “where were at today” showing the kind of attention and momentum your start-up has gained. For early stage companies, this momentum can be the amount of users on a wait-list for when the product is ready or some early users your product has gained. Investors care about the last 3-6 months and the next month. Having a weak 3-6 months prior will lose many investors, if your next month is weak then you’ll lose your momentum. If you can, time your raise according to that.

A great additional add to this section would be to add testimonials from some of the users or clients. This shows that your product is already in use by real people and is already creating a buzz. This is the section that will excite investors.

Market Opportunity

You’ve sold the investor on your ability to execute your solution, so now you should tell them how big the market is. Using graphs and charts from credible sources that can easily present that there’s a huge market opportunity is and that this company is venture scalable.

Vision

What is in store for your company in the next 10 years? If you did not already include this slide now would be a good time. This will show how you plans to take this simple solution to a massive company and what great things it will accomplish.

Team

Introduce the dream team who is going to build this. Include the main team members with titles and summaries of past roles. This will indicate why they’re fit for to build this start-up. This can be done in one slide without going too in depth about each member.

The ask & funds slide

How much funding will it take for you to drive this business? The ask slide should be left for the end of the pitch deck. Include how much funding you will need to bring this company where it needs to be and what does that money get you. How will the funds be allocated and what will you be doing with it. What does that mean for your company?

Thank you/information

A thank you slide with your contact information is appropriate for the very last slide. For example, add an email, LinkedIn, company website or social media.

These are the key elements that every deck needs in order to successfully get across an investor. The order in which you present the key elements should follow the order listed here. However all start-up stories are different and may take a different flow. Some other elements that are optional to add could be competitors, revenue model and financials. Since this is a deck, you don’t need to give away all your information at the very beginning it might be better to include this is a business plan instead, however this is also your business so build a deck that feels right to you!

18Sep
3 most important e-commerce metrics

In e-commerce, data is everything. There are so many different metrics to consider it becomes overwhelming. That’s why we’ve narrowed it down to the three most important e-commerce metrics that you need to pay attention to. E-commerce has become very popular over the years, especially with the rise of social media. When you are new to e-commerce, your time is usually spent on binary decisions and tasks that help you get closer to launching your business. For example, what products you want to sell, who your audience is and how you are going to reach them. You build a website, put the right tools in place and create processes for shipping and fulfillment. However, beyond post-launch date, you will need to step up your game and quickly evolve from business builder to data analyst. Although it may seem like the easier route to take, there are a lot of important metrics to consider and analyze to ensure the success of your business. Here are the three most important metrics that matter.

1. LTV:CAC ratio

The customer lifetime value ( LTV) to customer acquisition cost (CAC) ratio is important in calculating how much you should be spending to acquire a customer. It can help you identify if you are spending too much or not enough on marketing strategies. You can then find solutions to increase profits and revenue. First, we will define both customer lifetime value (LTV) and customer acquisition cost (CAC).

Customer lifetime value (LTV)

Customer lifetime value, or LTV, is one of the most important metrics to track in e-commerce. LTV is the total you earn from a customer over the course of their life. For example, if a customer makes five purchases over there lifetime that was 30$ each then the LTV would be 150$. LTV helps you understand how much profit you earn during the average customer lifespan. Knowing the lifetime value of each customer you acquire can help with forecasting, budgeting and marketing strategy.

Customer acquisition cost (CAC)

Customer acquisition cost ( CAC) or customer acquiring cost is the amount of money spent on acquiring a customer. This value is calculated by taking the expenses that were used on acquiring customers and divided by the number of new customers that were obtained over that given time period. Knowing your CAC is important because it can help you decide how much money you should be spending to acquire new customers each month.

2. Page speed / load time

This metric is extremely important and can be easily overlooked. Just a one second delay can have detrimental impacts on your business. Pay close attention to page load time on your website. Page load time, or page speed, refers to the average number of seconds it takes for a page on your website to fully load for visitors. A slow website can negatively affect user experience, your ability to build trust and your likelihood to convert new visitors. It can also increase your bounce rate. Your bounce rate is the percentage of visitors who arrive on your page and leave before taking any other action.

According to a Financial Times Case Study, a 1 second delay results in a 7% reduction in your conversion rate. Your conversion rate is the percentage of customers who buy something once they visit your site. It takes as little as one second to slow down traffic on your website not to mention, take a toll on your brand. A customer research report indicated that 66% of people said that website performance influenced their impression of the brand. While 35% of people reported they are less likely to shop there again due to poor website performance. Since you do not have the opportunity to meet your prospective customers in person, your website is your primary tool for creating the right first impression with people.

Page speed directly affects both conversion and brand but will also affect your search engine optimization (SEO). Google has stated that they use site-loading page as a factor in the algorithm for ranking sites. Therefore, if your site has a slower loading page it will become less visible to customers when they use google search engine.

3. Revenue by channel

When you are spending money on different marketing tactics, it is important to know what is bringing you the highest conversion. Whether it be from social media, email opts or advertisements it’s key to understand what is fueling business growth. This way if you are generating higher conversion rates from advertisements on social media as opposed to sending out emails, you will want to focus more of your marketing strategies on advertising on social media.

To build a profitable and sustainable e-commerce business, pay attention to the data. Having a firm understanding of e-commerce analytics will help you become successful. You should be obsessing over these analytics as it reveals the current state of your business. You need to be constantly looking to improve the data. However, do not be overwhelmed by the numerous different metrics that are available focus on these three main metrics especially in the early stages of your business.

4Sep
How Etsy Can Help Your Small Business

For those of you who are unfamiliar, Etsy is an online buyer and seller community that focuses mainly on handcrafted and vintage goods. Etsy allows sellers to customize online shops with full e-commerce capabilities. This platform has allowed many people to turn their hobbies into full on businesses. If you are a small business or someone who simply wants to turn their hobby into a source of income, here are a few reasons why you should have an Etsy shop.

It’s user-friendly

You don’t need much technological knowledge to operate your Etsy shop. For your website you would have to do a lot of design and coding in order to get a layout as professional and clean as Etsy’s. To start your shop you simply need to follow a few easy steps that takes just a few minutes. The difficult part is the decision making with regards to pricing, when to offer promotions, how often to add new listings, etc. But these are difficult decisions you will have to make no matter the platform you choose to operate on. Etsy also has an iPhone app, which will help you manage your shop and stay organized. The app’s features will help you manage your orders, access shop statistics, communicate with other buyers, update listings, get alerts when making a sale, and much more.

It’s affordable

Starting a shop on Etsy is free. However there are three small selling fees. You have a listing fee, a transactional fee and a payment processing fee. It will cost you $0.20 to publish a listing. A listing lasts 4 months until the item is sold. Once you make sale there is a commission fee of 5% and a payment processing fee of 3% + CA$0.25 for Canada (domestic orders or orders from the US) and 4% +$0.25 for international orders.

Access to a large yet targeted customer base

>Etsy has approximately 54 million members all specifically looking for hand-made goods and more than 2 billion views every month. The average Etsy consumer is an adult woman between the ages of 18 and 34. She is a member of the working or middle class. Most of her yearly Etsy purchases include jewelry that cost between $21 and $40, often purchased as gifts. She values the variety offered by Etsy in terms of handmade and eco-friendly goods. If your product remotely caters to such a demographic, there is no other platform that will allow you to reach your clientele in such a targeted manner.

Test your new ideas

Being active on Etsy is a good way to see how receptive people are to your new ideas. You won’t feel as tied to keeping products that don’t sell as you won’t need to call up designers or web developers to make the necessary changes to your platform. If you have an existing business and website and are not sure whether or not a particular product or product line will sell, testing it on Etsy first and reading the reviews on the discussion boards can also help you make your decisions.

Can Be Used as a Cheap Marketing Tool

Contrary to popular belief, you do not have to use Etsy exclusively. Your website and your Etsy shop can work hand-in-hand. Once you’ve gained traction to your Etsy shop, you can redirect your visitors to your website. If you getting a decent amount of sales on Etsy, you can stay there but also consider working on your website behind the scenes. In order to lead your Etsy clients to your website offer incentive. This can potentially include offering lower priced goods on your website, including website promotion cards when you ship your orders to customers, or including your website URL to your product descriptions on Etsy.
If your target market consists of the people visiting Etsy on a regular basis, give the platform a try. Whether you are an artist, someone with a hobby, or already have an existing business, many advantages and learnings can come to you by operating an Etsy shop. The worst thing that can happen is that you don’t enjoy your experience. But even in this worst-case scenario you tried out a platform and you’ve learned what works and what doesn’t work for you.

31Jul
The PME Recruitment and Talent Retention Guide

talent, recruitment, guide

Whether your start-up started off as a solo project or with a co-founder, there will come a time where you will have to hire other employees to support your operations. ProMontreal Entrepreneurs` (PME) has created a Recruitment and Talent Retention Guide in order to help you with this difficult and important step in the life of your start-up. Here is just a snippet on the important matters the guide will address. If you would like to download a free copy of the full version of the guide click here.

Pay attention for cultural fit

Of course, having tangible skills and expertise is necessary. However, your potential employees must fit in with your work culture. Asking the right questions that will bring out your candidate’s personality is key. Here are just a few behavioral and situational questions that are crucial to include in your hiring process:

Can you tell me about a past experience where you had to take charge?
Name a time you failed and how you handled it.
Have you ever dealt with a company policy you weren’t in agreement with? How?

Test skill not credential-

Don’t shy away from hiring new university graduates. Because they are just entering the workplace they are motivated, and more importantly, they are coachable. Coaching employees means investing in helping them work smarter instead of harder. You may be asking yourself “what if we train them and they leave?” This is a risky train of thought. What you should be asking yourself is “what if we don’t and they stay?”

Look for passion-

Passionate employees will go through the hurdles with you. Working at a start-up can come with having to go through uncomfortable and unexpected changes. Therefore, it requires much teamwork. You want someone that will be as motivated as those they are working with, not someone that requires to be motivated by others.

Hire Slow and Fire Fast-

You will be more thankful in the long-run when you’ve hired the right people carefully, and let go of unnecessary baggage quickly. As stressful as times may seem, and as urgent as matters may be, remember that your resources are valuable, and so is your time.

This is just a glimpse of what you will learn from reading our Recruitment and Talent Retention Guide. Your employees are one of your biggest investments. They not only work in order to attain company objectives, they are a representation of your business. Having the right people by your side goes a long way.

13Mar
Finding the Right Location for Your Business

Finding the right location for your business is one of the most crucial tasks you’ll have to undertake as a business owner. The matter no longer solely questions the physical location of your business, but also whether a physical location is even needed. It’s a difficult decision that requires you to take into consideration almost all aspects of your business functioning, whether that be cost and revenue, or branding. There are many moving pieces to this puzzle. Here are the most important factors you should consider when looking for a business space.

1. Demographics of an Area.
When considering demographics, you should think about two important angles. First, you should think about who your customers are and how close they are to your location. This is critical for some service providers and retailers but not so for other businesses. The demographic profile that you have for your target audience will allow you to make this decision. The area you plan to establish your business in should be attractive to members of your target market. This, will be more important to some business owners as opposed to others.
For instance, those working in retail or the restaurant business should take this more seriously than those working in legal offices. The accessibility of your location to members of your market should be one of the first things you consider. Secondly, you should consider your community. Is your customer base local, and does a percentage of it support your business or match your customer profile? When choosing communities that are largely dependent on a specific industry, you need to be careful because a slump can be bad for business.

2. Look Out for Nearby Competition
Finding the right location is serious business. There are many factors to consider in your decision making and often times it will require compromise. Whilst a perfect business location is different for every business, covering these crucial areas will certainly give you the best chance of beating the odds and keeping your business on track for future success.

3. Consider the Foot Traffic of the Area
Foot traffic is simply the presence of movement of people walking around in a particular space. It is important for businesses since it refers to those exposed to commercial establishments, whether they are walking or driving by the building. While this may be of more importance for businesses in retail, it should not be undermined by those running offices. Accessibility is important regardless of your industry. It is crucial that you consider the kind of foot traffic you need, and do a scan of the area to see if your goals and foot traffic line up. Remember, not everyone who comes by your business is going to leave with a purchase. So the more people you have in proximity, and the more accessible your business is to the general public, the higher your chances of turning a profit.

4. Look at the Success of Other Businesses in the Area
As the old saying goes, you are who you surround yourself with. Have a look around the area to see how successful the businesses in the area are. If businesses in the area are booming, chances are the traffic they bring in the area will help you out. It can also mean that the area you are in is up and coming. On the other hand, if businesses aren’t doing well, you should probably rethink your move. For one, you shouldn’t be too confident as to carry the burden of reviving the area.
5. Is the Building High Quality with a Good History?
Surroundings aside, you should examine the property itself. Whether it is in good shape or needs renovation matters. Establishing whether the property management company undertakes responsibilities over common areas matters as well. In order to make proper assessment speaking to previous and nearby tenants is a must. If the property requires too much work and money, this is can be a red flag depending on the area and the cost associated. Additionally, if you are buying a large piece of land make sure to check the Registry for servitudes or other rights attached to your property.
6. How Much Would It Cost Monthly and What Does the Lease Look Like
Rent can be heavy burden to businesses located in hot-spot areas. What you must pay particular attention to is not just the cost, but the measures you will have to take if ever you want to get out of your lease. Make sure to read all details in order to see if there are any restrictions to the things you can do to the property (ex. Artwork on your walls, staying open after a certain hours, etc.)
7. Check for Adequate Parking and Accessibility
There is nothing a person hates more than driving around to look for parking, just to realize their time is better spent elsewhere. Being located in an area with enough parking isn’t mandatory. But if this is not the case, make sure the area is easily accessible by public transit. This is not only important for your customers, but for your employees as well. Subsequently, if you decide to create or buy an existing parking lot, make sure it is well taken care of.
8. How Does Your Business Plan to Operate?
This is all about figuring out your style of operation. Are you going casual? Professional? Formal? The area you where you will set up shop, especially for restaurants and retailers, has a lot to do with the vibe you are putting out. You must make sure that your style of operation and the area you are in are compatible. It must be in line with the demographics and audience you are working with.

Finding the right location is serious business. There are many factors to consider in your decision making and often times it will require compromise. Whilst a perfect business location is different for every business, covering these crucial areas will certainly give you the best chance of beating the odds and keeping your business on track for future success.

10Jan
What Is an Economic Moat?

The term economic moat, coined and popularized by Warren Buffett, refers to a business ability to maintain competitive advantages over its competitors in order to protect its long-term profits and market share from competing firms. Imagine McDonald’s without cost, convenience and golden arches, Nike without technological and trademarked innovation, or Amazon without its timely customer service innovations. They would be relatively unpopular companies struggling to survive in their respective industries. Business mogul, Warren Buffet has introduced the world to many of his lifelong lessons over the decades. One of the lessons that seems to have stayed relevant throughout the years is related to the coined term, “economic moat”.

As the age-old saying goes: Being the best is great because you’re number one, but being unique is greater because you’re the only one. Buffet has explained the importance of economic moats specifically when describing his investment strategy. His strategy centers on companies with strong economic moats, as they are more likely to withstand their competitors, and remain successful and unique. A company having a competitive advantage that further differentiates it from the competition will help through the highs and lows of operating a business. In its most basic form, a company without an economic moat is like a movie without an engaging hero, or storyline. In such a situation, there would be no way of creating a loyal consumer following, and subsequently no way of overcoming challenges that arise over time. On the other end of the spectrum, companies with competitive advantages can be threatened by competitors who replicate their methods. Establishing economic moats can therefore help companies protect long-term profits.

Thankfully for today’s business leaders, Buffet didn’t simply coin a theory-based term that required a bunch of scholarly analysis. The concept of building economic moats is a tangible one that can be leveraged through different business strategies. For instance, economic moats can be achieved in five ways: cost advantages, the network effect, high customer switching cost, efficient scale and intangible assets. The way you choose to build your economic moats all depends on the nature of your business. Think about what would be a good fit for the strategy you plan to execute. Buffet emphasizes the economic moat as an institution. It is not the mere elements that customers will like. Companies that build moats carve them around their businesses to keep competitors at bay. For instance, people loved Coca-Cola 50 years ago, and it’s fair to assume that they will 50 years from now. This is because Coca-Cola utilized the five sources of economic moats in order to create a loyal consumer base.

Let’s use the example of low-cost advantage. Suppose you have decided to make your fortune by running a lemonade stand. If you buy lemons in bulk once a week instead of every morning, you can reduce your expenses by 30%. This allows you to undercut prices of competing lemonade stands. While profits would increase, it wouldn’t take long for competitors to notice your method and replicate it. However, suppose you develop and patent a juicing technology. This technology would allow you to get 30% more juice out of the average lemon. This time, it would be a lot more difficult for the competition to duplicate. In this example, your economic moat is the patent that you hold on your proprietary technology.
The nature of capitalism is that others will want to come in and take what you have built. The goal for every business should be to build a durable fort around its castle. The goal is to protect it from any attack that would come from the competition. Sometimes an economic moat is having more talent, other times it’s establishing legally protected patents. Just remember to remain patient. You should stay persistent because it may even take a few tries until you get your strategy right.

6Nov
PME Mentor: David Horowitz

As the saying goes, the best way a mentor can prepare another leader is to expose him or her to other great people. Mentorship is an essential part of the PME Program. On this 18th anniversary, it would only be appropriate to give thanks to our mentors. We may not have all the answers, but what we can do is introduce you to someone who does. We recently got the chance to catch up with our longtime mentor, David Horowitz. David is a seasoned executive always interested in promoting entrepreneurship and international business. With over 30 years at Senior Management level, involved in the manufacturing, marketing and distribution, David wishes to pass on his knowledge gained from 10 years of teaching experience to aspiring entrepreneurs.

Q: What aspects of mentorship do you enjoy most?
A: Gaining the intrinsic rewards of helping others. When you decide to mentor someone, you really do not know how far they will go, but mentoring does make a difference. Whether you help shape the next great entrepreneur or help someone achieve their dreams, making a difference is all that matters. It feels great to know that you are a positive influence in someone else’s life.

Q: How can an entrepreneur make the best out of their relationship with their mentor?
A: Be prepared. Yes, the mentor’s time is valuable, but take advantage by being well prepared. Have an agenda. You want to use the time with mentor on your most pressing business issues. Be humble. Ask for criticism and feedback. Sometimes questions the mentee has are needed to be answered sooner than the planned meeting. Keep a swinging door policy so that ‘smaller but important decisions’ that need answering quickly are just an email away. These fast answers can save the entrepreneur time, but more importantly, can save the young firm money.

Q: What advice would you give an entrepreneur thinking of working with a mentor?
A: The relationship has to be authentic and there should be a baseline chemistry between the mentor and mentee, so pick your mentor accordingly. Be prepared to act on the advice given, rather than think the mentor is there to validate your shenanigans. Always remember the benefits a mentor can bring to the table, and never forget the statistics of small business failure- 80% of business start-ups do not make it past their 5th year. So don’t be shy to ask questions, listen and absorb as much as you can, and you can hopefully avoid getting as many scars as us mentors have had to endure.

Our mentors are passionate people dedicated to helping others. With their help, entrepreneurs have been able to reach great heights. Thanks to the efforts of people like David, we look forward to what the next 18 years has in store for PME.

19Oct
Businesses You Didn’t Know PME Helped Propel

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.

5Oct
Funding Rounds: What Are They?

You see it in the media all the time: Company X raised X amount of dollars at X$ valuation. If you don’t work in finance, have a business background, or have knowledge of venture capital, this may sound foreign to you. It’s pretty simple when broken down. Funding rounds and entrepreneurial jargon can seem intimidating to many. All it takes to understand is a step-by-step explanation of its different components, and that’s exactly what we want to do to alleviate your worries.

What is a funding round?

First off, what is a funding round, exactly? A funding round is what occurs because of a company’s need to raise money with help of investors. This means that new partners enter by acquiring part of the company’s share capital. Subsequently, this entails them having control over a part of it. In return for funding, investors expect the company to grow and succeed, and recover more than what they had invested. There are different types of funding (i.e. seed, series A, series B and series C). But, before going into all of that, let’s cover the basics.

Why is it important for startups to get the money?

When investors give money to startups they receive ownership stake in return. What increased investments does is that it can increase marketing budget, affect your speed to market, increase your visibility, and decrease your personal risk. Most investors usually join the project as partners. Having motivated, smart, and connected partners on your team comes with benefits beyond money.

Does the money have to be paid back?

No. If the startup fails, the investors lose out. But if the company gets acquired or goes public, they could potentially make a lot of money. Investors that take equity stake in a startup expect to reap large returns and rewards.

Why not just take a loan?

Although it is very smart not to dilute your business when you are first starting out, taking out a loan can be challenging for a new business. If you are an entrepreneur looking to keep all equity of your business, loans are the way to go. But, it is important to keep in mind that while loans don’t dilute ownership, they have to be paid back with added interest. All in all, many entrepreneurs opt for loans, in addition to funding rounds.

What’s a valuation? And how is it determined?

Startup valuation isn’t an exact science. A valuation is how much the company is worth. Determining this can get complicated, especially for early stage startups. Many startups raise funding when they are pre-revenue, so it’s really just a bet on how big the company can be in the future. There are many different valuation tools and method that can be used. They can vary in the amount of assumptions you need to make about a company’s future, relative to past performance. Most startups take into account the estimated market size for their product or service, revenue, growth trajectory, and the likelihood of IPO or acquisition.

The higher the valuation, the better?

Not necessarily. Raising the valuation raises the stakes. Not only can valuations be ambiguous, a high valuation doesn’t mean much if a company decides to sell for less than it initially raised. Investors would then lose money on the deal. Also, assuming a company isn’t in their last round of funding, what a high valuation has done is set an extremely high bar for the business to reach before being able to raise more funds. This can also mean bad news for employees with equity compensation.

What is seed vs. Series A, B and C?

These designations relate to the stage of investment. “Seed” refers to the startup’s very first funding round. The subsequent rounds have the letters “A”, “B” and “C” attached respectively. There are investors that specialize in different stages of investment. They often label themselves as “seed-stage funds” or “late-stage funds.”

Is there a difference between an angel investor and a venture capitalist?

Yes. The difference is pretty clean cut. Angel investors are individuals who invest their personal finances in a startup. On the other hand, venture capitalists are institutional investors. They manage other people’s money, which they use to invest in business ventures. Many venture firms have limited life cycles, and are expected to provide returns to their contributors at the end of the period. It is expected that most startups will fail, but that the best ones will provide enough returns to cover all the losses and then some.

What do startups do with the money?

Simply put, the money is used to accelerate growth. It can be used to hire new employees, sales & marketing efforts and any sort of production costs. Obviously, this also depends on the nature of the business.

When and how often should a startup raise money?

This varies from business to business. Generally, startups raise funding every 1-2 years. It all depends on how much money is in the bank, how much more is needed and how much investors want to invest in you. Smart entrepreneurs raise funds before the money is needed, running out of cash is death for businesses. Don’t forget that fundraising is a long and arduous process.

How do you get investors?

Of course you should have a solid business proposal, but forming connections with investors is just as important. There is so much value to be gained by networking. Other than investing in someone with an attractive business, investors look for people they can trust to get the work done. Make an effort to go to industry events, build relationships, and introduce yourselves to people who can help make your goals happen.

How should you pick investors?

Whether you are working with an angel investor or a venture capitalist, one thing is for sure: money isn’t the only thing that makes an investor a right option. If your investor plans to be an active member of your business, it is crucial that there is trust in that relationship. It is also important that you find an investor in line with your interests, and that can solve your current problem. Additionally, keep in mind that diversity matters. In other words, you want investors with a complimentary skill set.

So you’ve raised millions. Does that mean you’re going to succeed?

Unfortunately, probably not. Starting a company is always a gamble. Some win and some loose. It requires much more than money raised. It entails consistent pace of innovation, and an immense will to persevere through hard times. Smart and hardworking people can run into various challenges at different stages. The key is knowing how to solve problems that arise, putting in the hours, being patient, and knowing when to pull the plug.

Hopefully this has covered some of the basic questions you had about funding rounds and why they matter. While your investments don’t necessarily determine how successful your business will be, funding rounds have great impact on your business’ potential. Funding rounds don’t provide automatic solutions to your problem, what you do as a result is what matters.

Category Archives: Growth Hacking