Connect with us

Startups

5 pieces of advice for today’s technology entrepreneurs

Published

on

This article was contributed by Mike Fey, CEO and cofounder of Island.

It’s a fortunate time to be a technology startup. Global venture capital investments reached over $157 billion in fiscal year 2021 alone, a record high. Despite the unpredictable economic landscape brought about by the pandemic, or perhaps because of it, investors have demonstrated a nearly insatiable appetite to back technology companies —searching for the next unicorn. But while there is currently a surplus of capital available to technology startups, the onus is on founders to not only successfully engage with financing partners, but the right financing partners.

As cofounder of software startup Island, I have seen firsthand how partnering with forward-thinking investors with sterling reputations can radically change a startup’s trajectory, and even attract like-minded financing partners. While there’s no shortage of playbooks out there on the basics of fundraising, the guidance I received from my fellow founders proved to be invaluable during the financing process. Below are five pieces of advice that can be leveraged by technology entrepreneurs in the early stages of funding to attract top-tier investors. 

Build a peer advisory group to improve your technology startup

While there is cash available to startups, investment firms receive on average 1,000 proposals each year, meaning there is stiff competition when targeting a specific venture capital firm. Before a start-up ever approaches an investor, they need to validate their idea and take a game theory approach to their funding strategy. They must anticipate every possible question, objection, or suggestion they could receive during the funding process to ensure they are bringing forth a fully formed vision. The most effective way to do so is by building a peer advisory group. 

By consulting the best and brightest minds in their network, startup founders gain access to a host of objective perspectives that can help them solidify, or in some cases completely reimagine, their businesses. Founders must enter these meetings with an open mind, and be prepared to listen and pivot quickly based on their advisors’ feedback. For Island, we spoke with over 100 industry experts to validate what use cases and core functionality was essential to our early design partners. 

During this consultation process, it’s critical that founders avoid the mistake of confusing “peers” with “buddies.” Their advisory group should be made up of respected thought leaders who will challenge the founder’s ideas when necessary, and who genuinely wish to see the industry improve. Founders must also resist the urge to treat their advisors as future buyers. The guidance they provide in a start-up’s infancy can be infinitely more valuable than any potential sale down the line. 

A technology startup’s founding team matters more than you may realize

There’s a reason it takes some startups approximately six months to hire an employee. A founding team is the engine of a new technology company and can make or break its success. However, many startups fail to realize how much impact the team’s makeup can have during the funding process. In the early stages of a company, before there is even a tangible product, the founding team is a startup’s greatest asset when approaching investors, and every team member should be selected with this partially in mind. Technology vision and products naturally morph over time, but a good founding team can be relied upon to succeed through these changes. In some of Island’s early funding meetings, investors spent more time reviewing our founding team’s backgrounds and expertise as they did to evaluate our offering. 

Having the right founding team gives investors confidence. Therefore, it’s important to take a people-first, roles-second approach. Founders can start with a list of everyone in their network who has proven to be rock stars with the passion and selflessness to build a company from the ground up. They should then cross-reference that roster with a list of needed skills and expertise that will complement founders and speak to investors. The overlap will provide a solid prospect list with which to start the recruitment process.

Strive to demonstrate market fit

Post-mortem studies by CBInsights found that 38% of startups fail due to a lack of cash flow or capital, while 35% of startups never deliver a positive return for investors due to insignificant market demand. Unsurprisingly, these two causes of new business death are linked, making it vital to demonstrate a high likelihood of market fit to potential investors early in the funding process.

Technology startups must first establish what market fit and demand look like for their company. Is it displacing competitors? Is it producing tangible results for a key customer set? Or, in the case of Island, proving demand for a new category based on repeatable use cases? Once a startup has set a goalpost for market fit, it’s much more evident to potential investors how and when it has been reached. To further assuage any hesitation, founders should come prepared with the customer data to prove to financing partners that there is a market need. By defining their total addressable market (TAM) and then demonstrating step-by-step how they will penetrate that TAM and monetize their product, startups will tangibly illustrate a market need through hard data. 

Discerning investors will be looking for market fit red flags during the proposal process, including a low barrier of entry. We found investors were less concerned with whether we could build what we were pitching and more focused on whether the market would be there if we did. Top-tier investors are comfortable funding hard problems; in fact, they welcome it. They understand a high barrier to entry creates a sustainable advantage. Building a great new company is packed with risk, but if you succeed, the win is worth it to everyone who took on the risk with you. 

Identify and engage with investors thoughtfully

Startups must identify the investors who are not just willing to fund them, but can actively help shape their technology company with their unique knowledge and experience. In the early stages, too much emphasis is often placed on the terms of the money and not enough on the firm you are receiving it from. While economics matter, they mean nothing if the company is not successful. So partnering with the investment team that raises your chance to be successful should be at the forefront of the decision process, ahead of valuation. After all, owning a larger percentage of a failed company does not pay well. 

Performing an internal audit, founders can identify their strengths and where they need support, allowing them to partner with the investors who can augment any weak points. Each founding team is different — for instance, I, personally, wanted investors that could collaborate with us on building our category and provide guidance on how aggressively we should apply funding against the efforts. Other founders may need help in building out their team, product design, or messaging.  Firms may have different expertise, but the board member who joins you also adds to the dynamic and should be in consideration. 

As the startup engages with investors, it is tempting to treat it like a common sales process, but the reality is, it is a team-building process. The goal is not a round of funding. Rather, it is to find the partners who will make your company successful, especially in early rounds where hundreds of decisions will be made at the board level that could make or break the company.

Early alignment makes a difference

In my experience, different founders can have completely different experiences with the same investors. The difference was one of alignment. Not just picking the right investor but the right board member can have a dramatic impact on the value that can be delivered to the startup. During the process of selection, we discovered that the best firms actually add value with great feedback and insight from the first meeting on. The line of questioning they engage in is often a clear indication of their expertise and a harbinger of your future collaborative process. 

After the term sheet is signed, both parties are now on the same team. As such, expectations must be aligned before a cent is invested. For example, some technology products can go to market in six months, while others may take years. Without setting expectations early on, it’s easy for both sides to get frustrated. Firm leaders should share the returns they expect, while startup founders must propose when and how they can deliver them. Through a frank and open conversation, a timeline and KPIs can be reached to ensure all parties are satisfied with the business strategy.  

The right strategy attracts the right investors

With the market seemingly saturated with firms ready to invest, there’s no shortage of capital available to today’s technology startups. The challenge no longer lies in scarcity, but in engaging with the right investors through the right channels. By taking the necessary time to deliver a refined offering and approach every step of the funding process with intention, startups can reach the investors who are true believers in their vision and have the capacity and capability to help them achieve it. As founders, we can never lose sight that the goal is not just to fundraise, it’s to build a successful business. Each step we take should be measured on that progression. 

Mike Fey is the CEO and cofounder of Island.

Source link

Startups

A Business Owner’s Operating Guide

Published

on

Running a remote business comes with a different set of challenges to having a team who all work from the same office. Things that once made sense now don’t. Lines that were definite are now blurred. There’s a new set of expectations and myriad ways to operate.

The events of 2020 forced many companies to adopt remote work with zero training or guidance. It’s no surprise that feelings of burnout and a lack of work-life balance were at an all-time high. Not only that, but the definitions aren’t widely understood. Working remotely does not mean working from home. Truly location independent companies understand the nuances and are creating a structure that means business success and an enjoyable life for everyone involved.

Mitko Karshovski is the host of That Remote Life, a top 2% podcast covering the remote work revolution and the digital nomad lifestyle. Since 2018, his work has helped remote companies establish operations and culture from a remote-first perspective. After guiding hundreds of entrepreneurs looking to better run remote teams, Karshovski created a set of rules for effective remote work.

Karshovski believes following these 12 simple rules will mean you and your team are, “more productive, less anxious, and positioned to grow and thrive.”

1. Look for answers before you ask questions

Karshovski believes that all companies working remotely not only need to make good use of Google, but they also need to have “a handbook that keeps track of how things are done in the company.” Your manual, playbook or collection of SOPs. Whatever it’s called, it needs to exist.

He advised that, “before asking anyone in your team how to do something, check if the answer is in the company’s handbook.” If it takes more than five minutes to find the answer, that document needs to be improved.

2. Only solve problems you are qualified to solve

“The person that is closest to the problem is usually the one that is best suited to make decisions about that problem,” said Karshovski. They have the most information and are most likely to come up with the best solution. “Trust t hem to make the right call.”

You wouldn’t “ask managers how to solve a coding issue” or a developer how to solve a marketing issue and Karshovski agrees this “will likely end in disaster.” But, similarly, avoid weighing in on decisions you aren’t best placed to make, because this overcomplicates and creates unnecessary lines of enquiry.

3. Create physical and mental boundaries

Avoid burnout by creating “a sacred work space both digitally and physically.” Karshovski advised you don’t work where you relax. Instead, “Go to a coworking space, find a coffee shop you love, or even try working from a local museum. You’d be surprised how good the internet speed is at museums.”

If you use the same computer for work and fun, use different profiles and accounts so you keep work and home separate. Karshovski uses Notion to create dedicated spaces for work and life.

4. Identify and share your weaknesses

Karshovski encourages his clients to, “share their weakness with the team.” This doesn’t “make you a bad worker,” he said. Instead, it will make it easier for them to know where you might need support and how they can help. “No one is perfect, we all struggle with something.”

Your team exists to cover your weaknesses, and you theirs. Accepting that you each have downfalls focuses your mind on the solution; on solving the puzzle of how everyone’s strengths are best utilized.

5. Maximize your non work time

If you work largely asynchronously or have the ability to get your work done without a time overlap with the rest of your team, make the most of it. “This allows you to work around your life, rather than the opposite,” which means you can rethink your time. Use this to “do epic stuff,” said Karshovski. There’s no excuse.

Get your work done to a high standard and use every other second to “travel the world, take on side projects or experiment with a new hobby.” Karshovski said having fun remote working is the whole point.

6. Create and stick to a routine

As a wise man once said, discipline equals freedom. Routine doesn’t stifle creativity; it allows for it. Karshovski guides his clients to, “create boundaries for your work so it doesn’t blur into the rest of your life, and vice versa.” He knows that in the long run, “your family, coworkers and mental health will thank you for it.”

Your default day could be exactly the same, as long as the structure works for you. Perhaps you do deep work in the morning, exercise and eat in the middle of the day, then do manager work and smaller tasks in the afternoon before exploring a new city in the evening. Whatever works for you, just make sure it’s intentional.

7. Only your results count

The golden rule of remote work, according to Karshovski. “How you get work done doesn’t matter as long as you deliver.” Duration, effort and input doesn’t matter, it’s the results that count. But while you can only be judged on your results, if they’re not up to scratch, your methods will be questioned.

“If you’ve found a way to get something done in less time while meeting expectations, more power to you,” he said. “But if you’ve found a way to do get things done faster, cheaper, or more efficiently, it’s your responsibility to show the rest of your team so they all benefit.”

8. Invest in your hardware

If you aren’t seeing people face to face, how you appear on a screen matters, so Karshovski wants you to “invest in a good microphone and webcam.” For less than $100 your video can, “look and sound as good as your local TV anchor,” an investment that you should absolutely make.

Karshovski compares this to office work, where you wouldn’t, “turn up wearing a stained shirt and dirty sweatpants.” For working remotely, don’t show up for a video call sounding like you’re in a hurricane.

9. Plan for no response

Being left hanging isn’t ideal in a work situation, and with a remote team it’s inevitable as you all clock off at different times. Karshovski advised you “always add a ‘dead man’s switch’ for decisions.” This means you let people know what action you will take if they don’t respond.

For example, “let them know which option you will go with if they don’t answer in a certain number of hours,” but give them plenty of time. No one wants to work in a place that forces urgency and hurried decisions, so aim to overcome blockers to action without enforcing them on others.

10. Improve your written communication

Without face-to-face interactions happening (unless they are planned), written communication becomes even more important. Karshovski said you should take extra care to improve your emails and messages.

Ask, “Is your question clear? Did you make any silly spelling mistakes? Did you include answers to any obvious follow up questions?” Finally, did you signal the best solution or the next steps, or is the way forward ambiguous? Karshovski believes “your team will appreciate the extra effort.”

11. Assume positive intent

“Communicating through text can sometimes make things sound sharper than they were intended,” said Karshovski. “So always assume that messages are positive.” As the writer of messages, remember text will be inferred in the worst way possible, so read it as such when you proofread and adjust.

Karshovski knows that emojis are your friend. “They may be silly, but they are a great way of making sure that a message that may come across as sassy is received in the positive way that it was meant to.”

12. Overcommunicate your availability

Working remotely puts you on a different schedule to your team and your availability is likely not to overlap very much. Karshovski says overcommunicate your availability to avoid issues. “Make it clear when you won’t be at your computer,” which he said avoids the team, “assuming you’re available and waiting on your response.”

Similarly, respect the stated availability and working patterns of your team members.” Overcommunicate to find a cadence that works well. If you absolutely need crossover time with certain members, agree on this together.

Follow the 12 commandments of remote work to communicate effectively, do your work to a high standard and enjoy your life when you’re not working. Edit these rules to suit your workplace and share them somewhere everyone can see.

Continue Reading

Startups

HUL, other FMCGs in acquisition talks with Oziva: Report

Published

on

Hindustan Unilever (HUL) is in talks with Oziva for a strategic acquisition of the plant-based nutrition brand.

The development, first reported by The Economic Times, comes at a time when niche brands—which saw accelerated growth amid the COVID pandemic-led online shopping boom—are now struggling to grow during a funding winter.

According to the report, the nutrition brand is also in talks with Dabur and Tata Consumer for a possible acquisition.

A query shared with Oziva did not elicit any response at the time of publishing this story.

Oziva was founded by Aarti Gill, an MBA graduate from INSEAD, along with Mihir Gadani in 2016. The direct-to-consumer (D2C) brand operates in nutrition categories, including immunity boosters and organic plant protein.

Last year, as the pandemic shopping boom started to subside, the brand introduced products in the clean beauty category. Oziva also started making inroads in physical retail stores by launching sachets of its products, priced between Rs 15 and Rs 20 to appeal to a wider consumer base.

“Our current price points are slightly premium due to the quality. But we want everyone to be able to afford our products,” Aarti told YourStory in July 2021. However, growing digital marketing costs and investors backing firms with caution has been hard for many direct-to-consumer brands.

According to Abneesh Roy, Executive Director at Nuvama Institutional Equities, Oziva could be valued at Rs 400-Rs 500 crore.

“We like HUL’s strategy of acquiring small companies in spaces where it doesn’t have a presence. HUL ramped up Indulekha, V Wash, sharply post-acquisition,” says Abneesh.

Earlier in November, clothing firm Bewakoof Brands Pvt. Ltd. got acquired by Aditya Birla Fashion and Retail Ltd. (ABFRL) in a distress sale. Moreover, Marico has been actively acquiring more than 50% stake in D2C brands, including Beardo, Just Herbs, and True Elements.

Source link

Continue Reading

Startups

BharatPe claims over Rs 88 Cr in damages from Ashneer Grover and family

Published

on

The Delhi High court on Thursday issued a notice and summons to Ashneer Grover, former Managing Director of BharatPe, and his family members, in a suit filed by the company seeking orders to restrain them from making defamatory statements against the company. 

Meanwhile, the fintech unicorn has also slapped a lawsuit against former head of controls and wife of Ashneer Grover, Madhuri Jain, under Section 420 (cheating and dishonestly inducing delivery of property), said various media reports. Besides the couple, the other defendants in the suit are Grover’s brother-in-law, father-in-law, and mother-in-law.

The couple has been granted two weeks time to file their response to BharatPe’s application seeking interim relief. BharatPe has sought:

  • Disclosure of assets of Grover and his family members
  • Interim injunction against the defendants restraining them from making defamatory/derogatory statements concerning BharatPe, its directors, employees and/or publicising the same
  • Direction to defendants to delete/remove within a period of five days all statements, tweets, social media posts, books, re-tweets, hashtags, videos, press conferences, interviews, comments, etc., made against the company
  • Orders granting liberty to BharatPe to approach all social media platforms, media organisations, publications, websites, blogs, etc., to seek deletion/removal of all such material. 

The matter will next be heard in January 2023.

During the hearing, which took place on Thursday, Senior Advocate Mukul Rohatgi, representing BharatPe, pointed out various tweets made by Grover after his resignation earlier this year.

As per the reports by LiveLaw, Rohatgi said that Grover should be restrained from running a “vicious campaign” against the fintech company. He cited various tweets posted by Grover and his family members following his ouster. 

“These are all his family. They were sacked from the company. We have suit for damages as well.”

Counsel for Grover claimed that the suit was not served on his client, said Bar and Bench report, to which Rohatgi responded, “We didn’t serve them because the moment he knows about it, he will again go on a rampage.”

Further, Rohatgi said that while being the former Managing Director, Grover brought in his entire family.

“To fleece the company, they (defendants) created fictitious vendors from Panipat who were paid 50-60 crores and nothing was purchased. The vendors don’t exist,” Rohatgi submitted, adding that there was a massive hiring of employees, said LiveLaw. 

BharatPe has also claimed damages of over Rs 88 crore from Grover, his wife, and his brother. This includes a claim for payment made against the invoices of non-existent vendors, amounting to Rs 71.7 crore; a claim for penalty paid to GST authorities amounting to Rs 1.66 crore; payments made to vendors purportedly providing recruitment services totalling Rs 7.6 crore; payments of Rs 1.85 crore made to a furnishings company; payments for personal expenditures of Ashneer and Madhuri Jain Grover amounting to Rs 59.7 lakh and Rs 5 crore damages for loss of reputation to the company caused by tweets and other statements made by Grover and his family members.

Source link

Continue Reading

Trending

URGENT: CYBER SECURITY UPDATE