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The Five Steps to Getting Acquired – Highlights from SxSW

I’m currently at SxSW, the worlds’s largest interactive media festival, in Austin, Texas. I will attempt to bring pertinent highlights from the week … I say ‘attempt’ because there is so much to see, consider, think about and absorb at Sx that really … I can make no promises about what I’ll be able to get out of my mind and on to a screen.

One of the streams that has taken my interest this year is start-ups, funding and acquisition. Makes sense really, given I’m running a start-up ;)

One of the sessions was ‘The 5 Secrets of Getting Acquired’, a panel discussion by Gabe Karp from Detroit Venture Partners and Matt Wise from Hello World.

Here are their 5 Steps to Acquired (or getting the funding you want)

1. Have an adult on your team

This was partially tongue in cheek, as yes, most of us are adults. But what Karp and Wise mean in this one is have someone with pedigree or experience that will impress and reassure investors. An ‘adult’ on your team should also show capability to deal with challenges both in the market place as well as in the funding process. Someone with enough life experience to have some commercial resilience.

2. Talk in sound bites

‘Make your business 9-year-old simple’ says Wise. Make sure your business can be described easily in a 30 second elevator pitch, in simple, digestible chunks.

When developing your elevator pitch, Wise recommended this formula:

Category – what category are you in? (HEARIS is in the software category in the social media space)

Differentiator – what makes your business different from the others in your category? (HEARIS specifically solves problem of multiple page management for franchise and other distributed retail networks)

Practical demonstration – give an example to have it all make sense. (… for example, Goodlife Gyms and Fitness First use HEARIS to enable their franchisees to build their local membership engagement while head office can monitor and respond to customer service conversations.)

3. Be appealing

Wise and Karp both emphasised that start ups often spend too long getting to ‘perfect’ before looking for funding, whereas most investors (in the US anyway) are far more interested in the potential of the business. So be appealing in terms of potential, in terms of ‘total addressable market size’ (TAMS), and have an attractive business that can scale profitably.

4. Get your shit together

In others words, know your shit. Have good financials based on sound assumptions (better to be conservative and exceed expectations that bullish and not meet them). Know your market, know your competitors and know how you’ll beat them. Understand your core competencies (yes, that MBA or business degree throes actually adds value here), and most importantly, don’t lie (or exaggerate, or inflate your credentials or school …).

5. Go make friends

Both Wise and Karp said it’s too late to start building your networks, or introducing yourself to investors, when you need the cash. Network, network, network and network they said to build relationships with acquisition targets, investors, influencers and advisors. And by build relationships, stay in touch, follow-up, keep them in the loop of your progress. “I’m not looking for funding right now but I’d like to stay in touch” was their suggested opening line.

Finally their tip was, you need to have an exit plan (investment, acquisition and by whom). Most start ups have a sales plan, technology plan, marketing plan, why not an exit plan?

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Business Start-Up 101 (as taught through website design)

I’ve just spent the morning helping a friend with his new website. Well, that was the original agenda. What we really did;

  • clarify the purpose of the business
  • refine the target market of the business
  • identify the voice and look of the business
  • determine the business model for the business (how it’s going to make money)
  • started identifying priorities
  • determined a realistic launch timeline
  • determined business brand, personal brand, product and service sub-brands
  • identified cross-promotion opportunities to his existing business & networks
  • mapped out his content strategy
  • established tasks for moving forward, staying accountable and getting this thing ‘shipped’, not just an idea
  • found stock imagery to illustrate the new site
  • established the skeleton of the website
  • learned how to ‘do stuff’ in the web platform he’s using (squarepsace, it’s my new fave)
  • identified desired domain name; registered the next best available

He was well along in his thinking about what he wanted to do. And I know him well enough to make some assumptions about his strengths … and what he wants to do. So we were able to do this in a casual three hours. And I think the business has now moved from idea to something very tangible, very real. As he said, ‘this shit’s getting real’.

It’s one of the reasons I love website design – not because I can design (I can’t), but because, when you decide to build a website you HAVE TO answer all those questions above. Well, you should. And those questions are far more about your actual business than they are about your website.

Business start-up 101 – taught through website design.