The strength of the team

The team - diverse and dynamic - sat down with a potential investor recently.

It went better than any of us expected it to go.

We didn't walk out of the meeting with a fat check and series A investment, but we did walk out with a feeling of success, confirmation that our idea is good, that our team works well, and that there is a market for what we are doing.

TPWNN and O insisted on a full day of practice ahead of time, the day before, which was a bit much for this Crazy Chicken. But it was a productive and energetic day.

And it helped on the day of the pitch when the potential investment angel said, no, he didn't want to do this in English. We had gotten to know the pitch and each other so well, that a last-minute change of language didn't throw us.

Apparently, our ideas are things they (the angel and his company) have been thinking of already, we already have developers on our idea, we have started the research. We have a date for a proof of concept at a high profile business.

The angel praised the team and gave us several points to think about, critic and suggestions. Things we all had been thinking of and want to address.

All in all, wow. A promising meeting that gave us a boost to our confidence that we needed. A new shot of energy.

Now we need to decide if, as he said, we want to get into bed with him. And what it would cost us initially for a "sweat" investment before any pre-seeding investment.

Venture Wiesn takeaway

The main takeaway from this year's Venture Wiesn is don't go to the next one.

• Very poor presentations - from the VCs (!)
• Not very good Bavarian food
• Not such a good environment for networking.

Burda bootcamp

Yesterday went to the Burda Bootcamp for digital startups.

A few takeaways:

• Av size of startup is 7.5 people in Munich
• Investors should be thrilled with the business
• Best of investors were entrepreneurs

Topping from the bottom

Someone actually used this term at a panel discussion yesterday on the topic of corporate entrepreneurship. Apparently I was the only one who noticed.

His usage on the term was on how to innovate in a large company. I spoke with him afterwards, stressing that actually I'm not into that scene but am aware.

The lesson learnt in this post is that if you want to remember something write it down.

Several of the panel talked about the need of a good mentor. I agreed and made a note of it. A mental note which I immediately forgot.

That's also my take-away: we (and all startups) need a mentor.

Take-aways from Startup failure

Another good panel discussion, this time on failure.

There was a lot of talk about German attitude to failure and almost whimsical debate on whether failure is a good thing.

Anyway here are my takeaways:

• according to research entrepreneurs on average succeed on their fifth venture (!!!)
• startups tend to fail for these three reasons:
• poor marketing
• poor team
• running out of cash
• get and check references for investors (one of the panellists had a galling story of how she was conned into leaving a company and joining a new VC funded by someone who turned out to be a fraud)
• get a good lawyer on your side, early on.

Take-aways from the fireside chat

Yesterday evening I attended a local Silicon Valley Fire Chat - Entrepreneurs Night.

At it the organisers, Axel and Marita, talked about their view of the startup scene in Munich.

In particular, they repeated their view that there is no need to go to America for funding.

A lot of what they said they have said - and I have blogged - before but here are some takeaways:

Here are the four big things you need to get investment:

• communication skills - including being able to articulate your vision (which goes beyond having so money customers or making so much money)
• extraordinary people in your team - and you need to be able to find them. Our business has two co-founders but we definitely need more and are struggling to find
• have an MVP - reduce it to the absolute minimum, even ignore differential features unless it is core to the product and get it out there. Hint: don't wait for bugs to be fixed but add them to a known issues list on your blog
• valuation - in Silicon Valley it's about 10x forward looking revenue. Remember that valuation is basically just a guess and there is no reason why European startups shouldn't receive US levels. If investors disagree challenge them.

Some other advice:

• co-founders need an equal share and big staken in ensuring that the business survives and thrives
• find a mentor - often they want nothing in return or maybe say around 0.5% equity ... something small
• add to the Munich startup ecosystem, offer to help without expectation of reciprocation

Oh, and I just remembered, I also met an investor at the event. Will chase him up today.

Take-aways from yesterday's pitch event

Last night I went to another Entrepreneurs Night - pitch event at werk1.

Here are my takeaways:

• European investors are funding European companies which have gone to the US to find funding.
• US valuations are significantly higher than Europeans ones
• Valuations cannot but be disproved - if someone says your company is not worth €8m or whatever ask them why not, how much is it worth and why.
• Better valuations are needed because by series E funding of €50m is not really enough for a company.
• No European angel has been outstandingly successful with a European startup. On average they are losing money.

And Axel's advice:

• 8x20 on forward looking revenues (I really must get the slides for his presentation)
• get revenue as soon as you can
• ideally grow by 1% per day
• have a disruptive business model

For the pitches they were judging on:

• Team
• Idea
• Growth Strategy
• the pitch itself.

At the end he reminded us that entrepreneurs are, at most, 0.1% of society.

Take-aways for Funding for Startups online seminar

 Yesterday I watched an online seminar on this subject - it's focus was doing this in Europe.

Here are my takeaways (with some names remove but - for co-founders - in our samepage site).

• Seedcamp - good way to progress your startup
• It is now easier to find funding in Europe
• Crowd funding here is alive and well - I've heard this elsewhere, it's difficult to do this in the US due to their overbearing regulations. It's also a great way to involve your customer. It is most definitely not Kickstarter which they called a demand generator. Notable platforms include Seders and Crowdcube.
• Angels - seed funding up to €1.5m. They may not, however, be so involved as before. Some names will be in our samepage version of this:
• Keep going to events to meet potential angels.
• Also, get to London and Berlin to get into the startup ecosystem there
• "Timing is important" in terms of product 
• Investors are now spoilt for choice
• Quality of founders has improved.
• Have a comprehensive team
• Make sure you can differentiate against similar ideas from competitors
• Be global - you can no longer build a one-country-only business and expect funding
• "Once Delaware can't go back" - meaning if you register there you are stuck
• UK registration is still recommended - despite all that Brexit nonsense - because of transparency and respect for the rule of law.
• There are several government grants (Honey 2020, Marco Polo 2, London Investment Fund, Enterprise Capital Fund, Angel Co fund) although they may be costly in terms of preparation of the materials (need lawyers etc.)
• "Capital in King" - approach funders before you need the funding
• Investors are looking for:
• Team
• Proper incorporation
• Thorough understanding of the business area you are in
• Traction
• Engagement - understand the value to, and use by, users
• The solution should be
• big
• needed
• and talk about it, get feedback

Take away from the PAN investment seminar

Another excellent seminar, the third and last in this series.

A pitch deck was given out but here are my additional take aways:

• This talk was focused on VCs and seemed to have a slight German edge
• Get financing for 15 to 18 months, not fewer 
• VC ownership can range from 20 to 30%
• The initial pitch deck should be no more than 20 to 30 slides
• It takes six to eight months to close
• You must have questions for the VC
• Lawyer up
• Angel investment ranges from very small to 10m(!)
• Next stage investors will ask them to compare your previous round's pitch deck with what you are now presenting
• So you should allow your seed round to have a decent amount of time to show achievements  and traction 
• Guaranteed catalog is hard to negotiate 
• By series A show there is at least a plan to eventually get a CFO

Fighting

I went to the Tech Founder's meetup on Wednesday mainly because a possible investor was there.

He wasn't.

So, on Thursday morning I dropped him a message via LinkedIn. He said he was going to the Founder's Fight Club - which I hadn't heard of - that evening.

I put myself on the wait list and was soon accepted.

It was a very good evening. We were put in teams and as to propose a business solution to a stated problem.

Our team did well, we almost one but didn't, and got a special prize. I did my usual assertiveness thing to make sure that I was noticed by everyone, including the investor I wanted to talk with.

I will try to catch up with him when he's next in Munich but at least he is more aware of me now.

There were some take aways:

• Don't worry about exit
• Find an itch - so that it's something you really want to work at
• Read about Google Sprint which is an alternative to Lean Startup.

It was a very fun evening and I met some good people.

Take-aways from the lean startup meetup

Not much really as I knew most of what was being talked about but ...

• when doing user interviews, maybe 10 to 20 would be sufficient
• as an inducement maybe vouchers (€50 value) or prizes but generally people are happy to help

Questions worth asking (this is around web usability):

• go to a page - what does it tell you?
• what do you see?
• Complete a task - think out loud.

Take-aways from the lean startup event on traction

This evening's event focussed on traction and the main speaker talked about his fintech startup.

Ironically - because of financial regulations - they couldn't start with an MVP.

Key takeaways were:

• Find investors who think like founders - so don't accept money from just anyone or someone who demands a detailed business plan.
• Focus on your immediate target customer
• Hire on a continuous basis - avoid contractors  - a bit contentious here though it was pointed out that it is often cheaper
• Focus on the product - say no to most feature requests
• Don't scale - again keep to the focus on target customers.

Take-aways from the investment 101 part 2

Another great event even though only three people turned up (12 said they would).

But that was two more than I expected, looking at the event on meetup.com

Turns out others had booked directly on Eventbrite.

Now I have used Eventbrite before but mainly go to meetup.com

So, on my return home I made sure the app was loaded on my iPhone (my main phone now, ladies) and had a butcher's (= look).

There is a lot of stuff on there.

The VC speaking was from a clean tech VC firm but his points were still pertinent. Here are the takeaways  (omitting any ones that have been mentioned by others before):

Things VCs like:

• fast market entry
• early adopters
• short sales cycles
• fast feedback
• steady growth (they love them some steady growth)
• coffee kitchen culture
• kiss

also:

• don't follow every opportunity
• when communicating with key or potential stakeholders, CC the others who should (but maybe aren't) aware that you are in contact with their colleagues

• revenue x up to 10 as valuation

• Munich Venture Partners invest 1 -5m€, then 3- 5m€ often with other investors.

• Expected 3 to 5 times investment as return, ideally 10x

• Accept a lower valuation rather than impossible milestones, crappier liquidation preferences and persuade your exiting investors likewise. Also a valuation which is too high leads to a down round at the next funding series.

• Talk with VCs before you need investment, keep it informal

• Growth expectation is officially 10x but lower growth acceptable

• Aim for 50 - 100m€ to arouse the VCs interest

VC equity:

• 10 - 50%
• 15 -25% is healthy
• call the ball park 20%

Take-aways from 12min.me

Yesterday evening I attended the Munich chapter of 12min.me

This is where people talk for - wait for it - exactly 12 minutes on a subject close to them.

Yesterday's talk was in English and although focussed on intrapeneurship did have some useful takeaways:

• Planning more than one year is senseless
• Business plans are fake
• Start from the user
• Focus on customer lifetime value

• Team
• Fast decisions
• Know who does what when
• Timing - to market, technology waves
• Get the word out
• Signals and supporters
• 24/7
• Stopwatch v calendar
• Market check
• Send not only your show master but also your nerd when pitching

Take-aways from the AGBC Exchange

The Munich chapter of the American German Business Club once or twice a year has a Saturday morning event where there are various seminars held on different themes.

And this year it started with us, The Crazy Chicken and I, giving a three minute talk about our business's product.

Our approach was to start by telling (true) stories where businesses would have benefited from using our product - "if only there was an app for that".

Then The Crazy Chicken interrupted me and reminded me that I have been working on the app and carried on with a couple of more slides.

It seemed to go down well (I was congratulated by the president).

Then the seminars started. The most relevant one was also the most excellent, not least as it was run by a former professor who has worked in startup here and in Silicon Valley and has been involved in getting funding. We will be contacting him soon as he was happy to talk to us about the business and give feedback.

Here are the take-aways from the event:

• Customers should love the product and cannot do without it
• You need a revenue model, perhaps copy an existing one (as that should work) and know that a subscription model has advantages. Also the revenue stream should have low friction so it is trivial to understand and submit payments
• listen to customers and potential customers
• It's bad to not look closely enough at existing customer behaviour.
• Also bad not to be watching the competition and emerging trends
• Fund raisers should see a clear path to revenue

To summarise:

have a clear revenue model and product fit.

Takeaways from the Entrepreneurs Night - Silicon Valley Style Pitch Event

It was a toss-up between going and doing more app stuff but I decided to go.

Just before leaving for the event I had, in any case, fixed a major problem I had spent several days working on (and on which a real developer would have spent an hour on).

It was worth attending. As Axel Schultz, the organiser, said, it was the best pitch event so far, even against San Francisco and Berlin.

Here are my takeaway:

• should have a significant number of businesses who have been canvassed, preferably before writing code, but in the double figures
• "obsession makes a good entrepreneur"
• consider equity-based crowd funding where you actually get a 100 or so experienced investors who can help you. This becomes part of the value added investor thinking which also includes "smart money" 
• Axel like the idea of two people developing a business to actual traction
• Munich will probably take over from Berlin in terms of startup activity in two or three years
• For startups speed beats perfection

Take-aways from the Fintech panel

This evening I went to a German American Business Association meeting where there were two panels holding discussions around Fintech.

I attended one focussing on regulation.

It's actually been a while since I worked within the Finance world.

Anyhoo my takeaway was:

• Berlin used to be the only place for startups in Germany but now Munich is catching up (we're not in Fintech but it is good to know. Also, I am not totally sure what was said because it was said in Foreign).
• As a culture Germans tend to go for reference-able products and services. It's also a "me-too" attitude and I read of one entrepreneur who was told that he would only get investment if his idea was a copy of something in Silicon Valley. All this, however, is now changing.
• Something else about something that we will keep within our business and will sort out pretty damn quick.

Despite there being a lot of people it was a great networking opportunity.

Investors' seminar

Yesterday I went to an "Investment 101 Part 1 - Post Accelerator - A Three Part Series", a two hour meetup event whose guest was Kevin Czok (who totally deserves this name check, as did the organiser Jewell Sparks. As you know, when you are named checked in the ultimate startup blog you are living large).

Unlike some other startup meetings this was a tight two hours, around a conference centre in a law firm, with a slightly older, less hipster-ish, but still relaxed (the organising partner was also dressed down) attendance.

Here are my take-aways:

• a lot of VCs don't advertise, you have to seek them out and if you do, get an introduction rather than cold call.
• VCs tend to look for seven to 10 years of involvement in the business, well at least German ones do
• read Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist by Brad Feld - I've already downloaded it to my Kindle.
• also check out Brad Feld's blog 
• if you have to incorporate in the US, it will probably be best in Delaware or California

When you approach VCs you have to:

• have a real business which has a solid, scalable model
• be respectful to everyone, some VCs are quite small and you may be lucky just to talk to a junior
• show traction and how you would use the money
• disclose anything (e.g. dormant co-founders) before you are found out
• take projections seriously - don't be glib
• don't forget to include legal costs
• have scenarios on what would you do if you raised more/less/none/exactly what you wanted
• some VCs will do convertible loans before series A round
• VCs might take 5 to 25% of equity depending on investment
• ultimately the deciding factor for VCs to invest is the team (including are they fun to work with - answer: yes we are)
• beware of liquidation preferences - better for a co-founds to have less equity 
• documents can be in English (yay!)
• business plans are less required by VCs (than by, for example, banks).
• a pitch desk can be 10 - 15 slides (with even ca 60 backup slides) and take 45 minutes of a 1.5 hour meeting with VCs - though the initial meeting may just 15 minutes. 

Meetups

Yesterday I went to a pitch event.

I had a few take-aways but the only one I can remember (because I wrote it down) was that there are about 1000 apps  produced per minute in the world.

Actually there were some others such as:

• need to have a very solid business model
• (once again) if your business can be global say so
• (once again) it's the solution not the technology
• have a robust capitalisation plan - don't take more than is needed as that will dilute your ownership more than needed ...
• ... and don't be too blase about dilution because if you no longer have ownership of the business your investor may panic one day and tell you to take a course of action which you don't believe in. 
• It can take 5 or 7 years for investors to get a decent return (via IPO or whatever) and some of the mainstream hi tech companies that are around (e.g. Facebook, Twitter, Google etc.) were started 10 or more years ago.
• Once established companies, which are successful, don't really pivot.

This morning I went to a startup event covering the legals around data protection. The main takeaway was:

• learn more German.

This evening I want to a lean startup event about Concierge MVP and "don't think about scaling when starting".

No real takeaways - it was thought provoking not that I necessarily agreed with everything, oh wait, there was one:

• develop lean and incrementally (I won't say Agile because that is hipster bull shit) but don't spend 10 months getting a system implemented and then immediately realise that it is hopelessly wrong.

Just to check

Watching Dragon's Den does count as startup research, doesn't it?