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What to Include in an Investment Package

What to Include in an Investment Package

If you are looking for investments for your startup but not sure what pieces of information investors will need, READ THIS ARTICLE!!!! We will be going over documents needed for investment submissions and making sure your more than ready for potential investors. To begin, we will be looking on how to share this type of confidential data with investors.

Data Rooms

To share documents and confidential information about your startup what you will need is a “Data Room,”this is a very safe location that is created by the seller where important data is placed to be viewed strictly by the investor or anyone else who is significant. These data rooms can be created virtually and many firms provide them. Datarooms.com, Drooms, etc. are just some of the few that provide safe due diligence with information like this. In addition to this, you also want to make sure you can track open rates, so then your data is actually being useful to investors. If you see a file being opened more frequently then others than make sure that file is your priority and ensure it is updated frequently.

Documents

1. Historical Financial Statements 

(Here is a Template)

This information is important to investors as it provides a means of analysis and helps evaluate your startup’s financial performance. Your historical financial statements also help determine future trends as well as future expectations on your financial runaway for your startup. However, different financial statements relay different types of information. For example, a Balance Sheet will state your assets and liabilities and represent what the company is actually worth. Income Statements will state your income and how much things are costing you; this is very important for investors as they would like to see growth. There are many different financial statements you can have, but it is good to have a wide range of them in order to be more transparent with investors. Below are examples of a Balance Sheet and Income Statement from Walmart.

Balance Sheet (See Template)
Income Statement(See Template)

2. Business Forecast 

(Here is a Template)

What this is, in essence, is a prediction of future developments in your current startup through many aspects. Whether this may be in a sales aspect, technology advancement, or anticipated expenses, this all helps with budgeting and giving an investor a better understanding on what to expect in the upcoming years. It also helps them gauge the potential future growth according to anticipated business environment changes. There are a few places you can check out to see how exactly to create your own business forecast, Chron, JumpStart, and Entrepreneur.com. Below are also snippets of brief business forecast’s to give you a general idea of what investors expect.

Business Forecast

3. Customer List 

(Here is a Template)

A great way to begin talking about this is by describing what exactly is a “Customer List.” This is a intangible asset which means it is a non physical, non financial asset. Investors would like to this because they may find the demographics of the customers very helpful in making their decision. For example if your product was designed and made for teens but majority of your customers are middle aged people, then there is a mismatch and something is off. They want to see a realistic market potential sized and addressable market. It is mostly for transparency within your startup and making sure that your product or service is indeed reaching it targeted market. Although you may be reaching your sales or profit goal, analysing the customer list may tell investors that you are hitting a different and maybe a smaller market; in fact, it may decrease long term growth and potential. In addition to this, keeping the privacy of your customer lists is also very important and should only be provided to serious investors, do not post or upload customer lists online as it is a breach of your customers privacy. Below is a mock example of a very brief customer list example for general needs.

Example of Customer List

4.Customer Contracts 

(Here is a Template)

A “Customer Contract” is a legal agreement between you and the consumer by whom the service or goods will be received. In addition to this, the customer must be paying for the goods or services. Signing a partnership with another company is not a customer agreement if there is no monetary exchange for a good or service. An example, to represent this would be if Facebook partnered with Uber and created a new database of information. This is a partnership, not a customer engagement because there was no monetary exchange whatsoever. On the other hand, if Facebook paid Uber for all their data, then this would be a customer contract. As you can see, it is important for investors to know about these customer contracts as it may have potential growth for your startup in the future. Only include customer contracts that consist of big amounts of money relative to your startup and ones you may feel are appropriate.

Example of a Customer Contract

In addition to this, letters of intent are also great ways to show customer agreement with the service or product you are offering. Check out this article to learn more about it in more detail.


5.Monthly Recurring Revenue (MRR)/ Churn (SaaS) 

(Here is a Template)

MRR = Revenue/ month

Churn Rate= # of clients lost in period/ # of total customers at the beginning of period

Let’s begin off by diving into MRR ( Monthly Recurring Revenue). MRR is essentially a measure of your revenue stream on a monthly basis. This is applicable to companies who operate on a subscription basis and get recurring revenues and also companies who also make regular single transactions that may not necessarily reoccur. Examples of a recurring revenue type of model is Bell, Netflix, Spotify, etc. A startup with monthly recurring revenue is also more attractive to investors as there most likely is stronger retention rate. For companies who have regular one time transactions the MRR can be calculated using the average amount for each month.

Moving on, the “Churn Rate” refers to the percentage of clients who stopped and discontinued commitment to the service they signed up for. An easy way to remember this is through an equation.

(Churn Rate= # of clients lost in period/ # of total customers at the beginning of period)

Sample Charts

MRR Chart
Churn Rate Chart

6. Employee Contracts 

(Here is a Template)

This is a signed agreement between an employer and employee; it is vital in protecting employee rights and also employer liabilities. Aspects such as salary, general responsibilities, duration of employment are all addressed in this document. Investors maybe be interested in this info as they want to know what type of team your startup consists of and if it is well balanced. For example if you had a high paying programmer compared to other programmers in the startup, investors would like to if it makes sense especially if the startup isn’t as widely scaled yet. Every dollars matters and it matters even more when it’s the investor’s dollar. In addition to this, a “Non-Disclosure Agreement” would also be in the employee contracts and this is very important to include. This prevents any vital information regarding the startup to leak out to the public or competitors who may utilize for their own profit.

Below is a very brief employee contract meant just for example purposes.

Employee Contract

7.Details on Competition

(Here is a SWOT Template)

Competition is present in every industry in the world and there is a good chance you have a good set of competitors in the field your startup lies in. It is important to address these competitors for both yourself and investors as you want to be as unique as possible to order to differentiate. You can analyze your competitors in a number of ways but a common way is to complete a SWOT analysis on potential competitors. SWOT stands for strengths, weaknesses, opportunities, and threats. What this analysis does is that is looks at competitors through internal and external aspects and makes sure you are being able to differentiate them. Accept your weaknesses as a startup and continue building upon your strengths. Identifying and sharing threats early on ensure transparency and makes investors more aware of the whole market situation. Below is an example of a SWOT analyse on a pie company.

SWOT

8.Cap Table 

(Here is a Template)

This is one of the most important documents an investor is interested in and one document you should not miss in your submission. The “Capitalization Table” shows ownership segments within the company, including shares, options, and equity. Everyone who has a stake in your startup MUST be in this document so then valuation of an investment is valid and accurate. This is a table which also has to be updated regularly. In essence, every line you add to the table should add value to the company because it shows investors, employees, and partners that there is indeed a successful vision which they also believe by. Furthermore, there isn’t necessarily a proper way to format this table, just make it simple, organized, and easy for investors to understand.

Example of a Cap Table

9.Option Pool Information

An option pool helps to acquire top talent for your startup and entice people to stay with your company. This is done by offering them stake in your company. Where does this stake come from you may ask? There is actually a dedicated percentage of your startup dedicated to your employees, obviously if you opt in to do it. A scenario to represent this could be as such, you start up your own company in the field of creating innovative energy sources. You want top talent, so you hire a few grad students and someone who also has worked at other places to guide your startup the right way. In the beginning of their time at your company you can offer each of them a certain percentage of the company stake, this can be in the form of stocks assuming you are a public company. Let’s assume each year they get 200 individual stocks for each person which they can buy at the price at which they first joined the company at ($5 dollars). If they leave, they do not get to redeem any of the stocks they have. Over time, they tend to work harder and harder to make the company more successful essentially increasing the stock price. After 4 years each of them has quantity of 800 stock parts and the stock price is now $50 dollars. If they sold the stock at this point in time they would have made an instant profit of $36,000. {(800*50)- (800*5)}= 36,000. This is what drives employees and creates an urge to join your startup compared to others. Investors want this information because they want to know that dedicated percentage that you allocated to your employees and seeing if it makes a difference.

Cap Table with the Option Pool Option

The final step investors are going to do is call many large vendor customers and ensure there is indeed a legitimate business taking place. The investor wants to make sure his money is going towards the right investment and think of this call as a reference check. They want to know how the customer feels about you first hand and how their experience has been with you. Depending on the industry, investors will also ask customers if the product or service has made their job easier and if it is something sustainable.

You must understand that for a investor their money is very important and will want to know everything and anything their money is going towards. It’s best to be transparent with investors and provide adequate financial details with strong analyse on your competition. Investors have been through this many times and being prepared with all this information puts you ahead of the curve.

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How to Build Traction Starting from an MVP

How to Build Traction Starting from an MVP

A vision without traction is merely a hallucination. Cultivating and creating a successful startup is more than just offering a product or service, it’s a consistent effort of building, measuring, and learning. However, one of the most important factors to venture capitalists (VCs) is traction and measuring the potential success of your product. In regard to measuring traction for your startup, below is a list of what potential investors will value when looking for investments.

Minimal Viable Product

Let’s begin off with an MVP (Minimum Viable Product). This is not a beta or prototype you are launching it’s rather a product or service you make to see if there is a market for it. You are trying to learn what your users want and don’t want and minimize the amount of time you spend on creating features or aspects of the product which is not valuable. Believe it or not, many big companies we know today originated from an MVP.

Dropbox

A good example to represent this is cloud database company called “DropBox.” Their MVP product was essentially a video which showed what they wanted to do and a signup form for people who were interested in the idea and wanted to be early adopters. Almost overnight, there were over 75,000 signups all with only a 3-minute video of Dropbox and not even an actual product of the software. If you are very early in your startup, make sure there is indeed a market for your product or service using an MVP. This is a valuable aspect to present to investors if you haven’t created real customer data points yet.

Below is a list of more MVP’s which you may find very interesting and see how the actual product which has derived from this has changed.

1. Airbnb

Airbnb

Co-founders of Airbnb needed help paying their rent in San Francisco. They also noticed lots of business conferences around; hotels were very expensive in their area. They wondered if strangers would pay to live in someone else’s house for a night. They provided all the facilities and tested out their product assumption using the interface you see above. Creating a website like this especially in the type of technology we have right now would cost you couple hundred dollars max.. If you have no idea about coding then check out ShareTribe, it is great place to create a peer to peer marketplace website and they take of everything for you. You get to focus on building your customer base and they take care of everything that’s technical. Base plans start at $100 a month and this is definitely a great way to see your your product has a market fit without spending tens of thousands of dollars into something that hasn’t been validated yet. In addition to this, hiring university students in computer science is also a great cheap alternative as well.

(MVP is estimated to be $100/ month and 2–3 weeks of coding)

2.Groupon

the point

They first started off creating “the point” which was a platform for bringing people together for fundraising or boycotting a retailer. This platform failed and from this they created Groupon. They used a customized wordpress blog and didn’t invest any time in developing a coupon system or designing a new website. They just took whatever resources they had and made a MVP out of it. It definitely was not scalable but it did answer Groupon’s questions for them. To recreate this type of MVP a simple subscription to “WordPress” will work as well. Relaying information on your own customizable wordpress website is great and more importantly relatively cheap compared to investing in a dedicated server and a team maintaining the site.

3.Buffer

Buffer

What Buffer did for their MVP was create a landing page where they showed what it would do for potential users; if you were interested, you could sign up as a paying customer. If you still weren’t sure as to why you wouldn’t join, it you could still sign up for their email alerts and executives would reach out to to find out why you weren’t convinced to use the platform. Hundreds of people responded and the demand for Buffer was evident. This strategy helped give valuable feedback and find out what users really wanted out of the service. In today’s day and age creating a landing page to show potential users is very simple. The only real aspect of what is being invested is essentially your time to review and analyse what users are saying about your potential product or service.

You can use WordPress for $10–33 dollars a month and creating the static landing page will take a few days.

4.Zappos

Zappos

The founder began off by posting photos from the local shoe store and uploaded them to this website. He then checked if anyone was interested and if there was he would go to the store and buy the shoe and then sell it to the customer. Doing this overtime he found out there was indeed a need for this type of service and answered his question if his product would be accepted into the market. Only after that, he invested into infrastructure and inventory. Reselling is becoming very common in the 21st century and online commerce is almost everywhere around the world. To recreate this type of MVP it is very cheap, quick and easy. For example you can get a subscription on “Wix” for $5–10 dollars a month and use a premade template to upload photos onto your site. This process can take as little as a day. There are multiple website builders such as Wix, Shopify and SquareSpace and all with free and paid options as suited to your individual needs.

You can get this website running in 1 day and $5-$10/month on Wix

5.Twitter

Twttr

It was first used as an internal messaging system for Odeo employees and it picked up so much that the monthly bill for the messaging system went into the hundreds of dollars. They noticed the demand and prepared to take Twitter large scale and release Twitter publicly. Creating an MVP like this is more expensive than the other options available. Creating a whole messaging system for internal use requires some capital equipment which many startups may not be able to afford. However if you do have a reasonable number of assets and capital equipment then you should consider creating something for a specific group of people then expanding once you see the validation. Another way to overcome this issue is getting a developer on your team who can use today’s available tools to create a messaging system more efficiently and cheaply.

6.Zynga

Zynga

Zynga uses landing pages and adword MVP tests to direct available resources into developing projects. What this means is that they launch ads for games in existing games and if the user clicks on it and seems interested in the new game, then they would continue developing the new game and put more attention towards it. Farmville, Yoville, etc. are all games that were developed this way and based of users interests. This type of MVP is essentially placing ads whiles users are playing games or browsing through Zynga. Sending ads to your own users are virtually free but placing ads through the Google Search Engine costs about $0.58 per CPC.

Creating and launching your own ads take a few days.

7.Foursquare

Foursquare

Foursquare began with a single featured MVP which is essentially a version of the product where design and features were minimal. They started off with user check in and offering gamification rewards. Once they realized users like this they added more features and then tested those out. It was a very repetitive process but in the end it creates a product completely sculpted by users. Although it is still very pricey to outsource work in the creation of making an app as an MVP (50,000–1,000,0000) it is strongly advisable to have a experienced coder who has coded apps before. This saves on a lot of money and you make it completely customizable towards your needs. The whole app making process however takes a number of months. If you are still insistent on hiring a company to create your apps there are few who are great at that (247 Labs, Openxcell, etc.)

This MVP takes 3–4 months to build.

8.Pebble

Pebble

Pebble actually was actually able to get money from investors; however, over time, the money ran out and they needed funding to showcase their research in E Ink displays in watches. They really wanted to find out if people would be interested in a smartwatch that had an exceptional battery and could connect to your phone. They started a kickstarter which had a video explainer describing the product and reached their goal of $100,000 in 2 hours. At the end of the fundraising they had raised 10.2 million for the project and then finally they went to manufacture the product after the evident market demand. Kickstarter is a great way to really see if your product has a market fit without starting to mass produce the product. It’s free to launch on Kickstarter but there is one catch. You need to get all the funding you submitted for, if not you lose the funding you raised. In addition to this there will be a certain percentage kickstarter will take away from each successful fundraising effort. Furthermore, you need to have pictures and a live demonstration of your product in order for you to be valid for kickstarter. This whole process will take a number of days and it will be for. More specifically the Kickstarter team spends 30 hours reviewing your submission and will reply back in 2–3 business days.

If accepted, this costs $0 and 1–10 days to make the graphics/ video. (This does not include promotional campaigns.)

9.Spotify

Spotify

Spotify has a 4 step cycle when it comes to creating and testing out its MVP. “Think it, Build It, Ship it, Tweak it.” Spotify is made up of many small teams and they have many ideas, the way they get this idea validated is by first creating the MVP based off their idea. Then they release it to users very slowly and take in a mass amount of reviews from their MVP. After, they tweak the MVP based off the reviews and users’ thoughts. They used this very process to scale from bottom up. While Spotify’s MVP product was very expensive because of its strong software background, Spotify was still able to minimize costs by creating a complete roadmap of early and cheap prototypes. They only completely launched when baseline of quantity was met.

The next sign of traction I would like to focus upon is customer acquisition. How are you going to reach out to customers? What’s the cheapest way to reach them? How much customer growth have you had? Different traction channels works for a variety of startups and can cause a chain of explosive growth for your venture. A few examples of channels for traction is through targeting blogs and search engine marketing.

A) Targeting blogs is one of the most effective ways to reach out to your first wave of customers and create your presence.

  1. The first step is to find a blog which is in the similar field as your product or service and ensure there are an appropriate number of followers on that blog suited to your needs.
  2. Secondly, reach out and offer your product or service to its readership to develop and build traction. Popular startups such as Code Academy , Mint and Reddit all got their start by targeting blogs. Mint actually gained initial traction by reaching out to mid sized blogs and ensured the bloggers were a good fit for their service. The famous bloggers used to exemplify the service and showcase it while Mint gave them VIP service in return through the service. This essentially grew the customer database.
Search Engine Marketing

B) Another channel to gain traction is through “Search Engine Marketing.” This term refers to placing ads on search engines such as Google and Bing and because SEO is so broad it will be applicable to any startup. This whole SEM process works by finding high-potential keywords which leads to your website or business online. The page that a potential customer lands on is called a landing page, and this is one the most important pages on your website. Key SEM metrics to reflect upon are CTR and the CPC. CTR (Click-Through Rate) is the percentage of people who clicked on your ads compared to the amount of people who actually saw your ads. The CPC (Cost per Click) on the other hand is the amount it costs to buy a click on an advertisement. What this means is how much are you willing to pay to get a potential customer on your website.

www.ancestry.com

A good example of a company that used this method to generate traction is Inflection, this is the company behind Archives.com which was soon to be acquired by Ancestry. They spent over $100,000 a month and dedicated several employees to customer acquisition through this method. Obviously very early startups don’t have this type of resources, but Monahan’s input on SEO is that “even if you decide to send less than 5,000, do it, because you get to have an early base of customers and users and it will create a whole bunch of things that are important in terms of regular metrics.”

The harsh reality is that majority of startups fail, and investors know that, that’s why traction is very important to them and making sure there is a market for that product or service. A MVP (Minimum Viable Product is a great way to see whether or not a business opportunity exists and ensures your long run potential. There are many ways to gain traction and I have showed many examples of it from successful startups who have all taken very different routes. Ensure there is a product market fit and traction will follow. The more traction you have, the greater the chance to catch an eye of an investor and finding external investment. “Almost every failed startup has a product. What failed startups don’t have are enough customers”- Gabriel Weinberg (CEO/Founder of DuckDuckGo)

To learn more about examples of traction feel free to head on over to the article written by us on how letters of intent can increase your startup’s funding success.

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VenturX is a Startup Awards Finalist 2018!

VenturX is a Startup Awards Finalist 2018!

 

Honored that VenturX is a finalist for Startup Awards by Startup Canada

It was a beautiful night that took place at Le Gare and Ubisoft in Montreal with multiple categories recognizing the hard work and accomplishment of diverse entrepreneurs. It was truly an honour to be recognized by an incredible organization such as Startup Canada among our extraordinary peers and award recipients.

About Startup Awards

Each year, hundreds of nominations pour in from across Canada, and thousands join us as we celebrate the regional winners at local, grassroots ceremonies in startup spaces and education hubs.

Nominations for the 2018 Startup Canada Awards will open in February 2018.

The winners of the Startup Canada Awards are selected by an esteemed adjudication committee which consists of a diverse group of leading entrepreneurs, ecosystem builders, and previous Startup Canada Award recipients. Regional and National Adjudications committees to be announced.

This year, we are delighted to announce 6 regions for the 2018 Startup Canada Awards: British Columbia, Ontario, the Prairies, Quebec, the Atlantic, and the North! The Startup Canada Awards culminates in October 2018 with a red carpet Grand Finale in Ottawa celebrating the national winners. Click here to register for a regional event near you or the Grand Finale today.

Objectives of the Startup Canada Awards:

Celebrate those working to advance entrepreneurship in Canada;

  • Increase awareness of the importance of strengthening Canada’s entrepreneurship ecosystem and culture
  • Incentivize efforts and elevate the ambitions of the Canadian entrepreneurial community
  • Nominations for the 2018 Startup Canada Awards will open in February 2018.

The winners of the Startup Canada Awards are selected by an esteemed adjudication committee which consists of a diverse group of leading entrepreneurs, ecosystem builders, and previous Startup Canada Award recipients. Regional and National Adjudications committees to be announced

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Should Founders Work on Their Strengths or Weaknesses?

When looking at this scenario in a macro, it seems that most entrepreneurs at different stages of the business would choose to work on strengths and let another expert work on the weaker part. In theory it sounds logical and favourable. However, let’s examine these scenarios why a lot of first time founders seem to fall into the pit of spreading themselves too thin and focus too much on the business areas that are weak. Is there such a thing as a good balance? How do you measure it?

Different entrepreneurs will have strengths and weaknesses in different areas. Running a successful company is very demanding so it may seem that startup founders are supposed to be good at everything or all else will fail. Here is a short list of what strengths and weaknesses entrepreneurs may possess:

· Getting investor funding

· Pitching to investors

· Managing customers

· Managing internal team

· Building the product or service

· Marketing

· Sales

Investor Funding

Investor Funding

The famed author of the book “Rich Dad, Poor Dad” Robert Kiyosaki describes funding as a prime example of a necessary skill that most entrepreneurs are weak at. This is not to say they will not be successful but it is say that they should be aware of this early on in order to prepare for it when their business needs funding the most. A lot of startup founders try to take getting funding into their own hands, even though it is their weakness; they do this instead of hiring for others’ strength such as a software tool to help train their business or professionals to help broaden their network. Like any strength, securing investor funding requires knowledge of the startup investment field, relationship building, and logistical time. Usually startup founders would try and fail between 2 months — 12+ months before asking for the necessary help. By them, their business would have gone through a significant amount of suffering that could have been easily avoided. We have heard of startups who have gone through 1 year of unsuccessful capital raising before finally considering help with their weakness.

Tim Ferriss

Tim Ferriss

Tim Ferriss, #1 New York Times best-selling author and Silicon Valley entrepreneur, dedicates to steering people to work towards their strengths and hiring/ outsourcing for weaknesses in order to accomplish professional goals. When founders dive into the entrepreneurial journey and undergo self discovery, each will find where their strengths and weaknesses really lie. Each business decision relies on utilizing available resources, time, and strengths and weaknesses of people.

Team

When founders try and do everything themselves, they realize that they take a longer time to develop the skill sets that funding experts, accountants, web designers, etc.. would have. It would cost more time and money in the long run and the return on investment (ROI) is poor. When founders hire experts in the fields where they are weak, they can work along side the experts to better learn what the end result should look like. It would be a positive learning experience that also saves you time and resources in the end.

If founders did not put too much on their shoulders by hiring for weaknesses and doubling down on their own strengths, they will not only save themselves a lot of time but they will spend their days building their business and doing what they love.

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Should Startups get Free Resources or Customize Help? (AWS Edition)

Should Startups get Free Resources or Customize Help? (AWS Edition)

Should Startups get Free Resources or Customize Help? (AWS Edition)

As more and more startups sprout from each major city in the world, the number of free and customized services to support startups also grow globally. One of the first expenses that startups will be spending on are servers. No matter what industry your startup company is in, you will need a website. So let’s review which is better: a free server or a paid customized help. As a small gift, our development team has written out FAQs about the Set Up that are not included in Amazon’s free trial. See end of the article.

I Want Freebies! (Obviously)

I love freebies

I love freebies

Freebies

This would be the obvious answer that free is the first resource that unprofitable startups would turn to because of their limit budget. When startups on a budget, words like “free” can mean a lot. You don’t know if you would like to commit to a monthly payment. This is especially true for first-time startups. There are services like Ormuco,Microsoft, and Amazon Web Services (AWS) that offer free startup hosting for a year. We will focus on the one we just switched to which is Amazon Web Hosting from Ormuco. We won’t go into why there was trouble with using Ormuco. It is not the place for that.

Pros

  1. This is FREE for one year for you to try unless you have multiple sites like we do. Then it could be less than 1 year.
  2. Choosing things that are well known will have a lot of documentation that is available online including this one to help you set up.

Cons

  1. They do not have anyone to help you with any support when you are on the free version (so make sure there is someone on the internal team you can trust with handling all of this)! You might not want to outsource this part. This is also attributed to if you have questions about the setup.

Should I Go for Customized Services?

This is a great option if your budget can lean this way. You can get things done faster with less headache.

How can I get set up info for Free?

As part of our company mission, we want to help as many startups save time, be more efficient and achieve their goals. If you do end up choosing the free version, here are a few questions that our internal team has answered for you!

Frequently Asked Questions (AWS Set Up for Beginners)

FAQs
  • How to move to continuous integration with code deploy?
    A: If you are using Bitbucket, this guide will help you. It basically boils down to building a series of scripts that throw your source around from bitbucket to an S3 instance to your EC2 server. If you make sure everything is running (especially the code-deploy agent). That way, it will work beautifully and save you time.
  • Getting charged on free tier/What does the free tier actually encompass?
    A: This is a big one because their support pages dance around it very much. In general, Amazon tells you what will be charged as an extra and what you’ll get for free. For example, Amazon’s free tier includes an EC2 – their cloud instances – running for  750 free hours per month for one year. Since you are billed per hour this sounds pretty straightforward… until you realize you’ll be charged for setting up any additional concurrent instances. You should set up your development environment elsewhere unless you want to pay for your free trial. In general, the free trial availability varies from service to service, so you should check, but they all should cater well enough to early-stage startups.
  • Do I need an Elastic IP?
    A: Yes! Your instance comes with an IP; but every time you stop and re-start it AWS assigns it a new IP. You have to set up an elastic IP under their services and associate it with your instance. That one will persist restarts, so you should definitely assign it to your server.  You get one per instance for free
  • Which set up do I start with?
    A: We went with the free tier t2.micro EC2 and some negligible SSD storage space running Ubuntu. Simply, you pick a tier and a region. Then you name it and configure it.
  • Which region should I use?
    A: This is also a tricky one. On the one hand, at least in theory, you mitigate latency by having an instance closer to where your user base is. On the other hand, certain regions are cheaper. We don’t know exactly what the science of choosing that is. Nevertheless, us-east-2 seems to be the cheapest.
  • What if I want more?
    A: The 1 year free tier is the smallest generic one that anyone could get with just an email.

But for startup, AWS offers much more interesting free tiers though, from 1000$ to 15,000$ over 2 years, depending on your context (backed by an incubator or not, …)
Startup should try to not use just the free tier, but ask for the AWS Activate program: https://aws.amazon.com/activate/

1) https://aws.amazon.com/free/  –  The free-tier central page, which gives information on a plan by plan/product by product basis, notably “what’s covered exactly by the time-bound free tiers, what’s covered by the lifetime (renewed monthly) free tiers, like DynamoDB or Lambda” etc.

2) https://calculator.s3.amazonaws.com/index.html – The official cost calculator  where you can include/exclude the 1- year free tier

For more great information about AWS, here is a Medium article from another user: Bootstrap to Billions on AWS. Enjoy!

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The Art of the Ask

The Art of the Ask

Have you ever someone say, “Well, you should have asked.” The lesson learned that those who don’t ask, don’t get. This article will tell you about top reservations why people don’t ask for things, what business opportunities can be missed, and how to structure the Art of the Ask!

The art of asking questions

The art of asking questions

The Art of the Ask could be anything such as inquiring questions to which you don’t know the answers, sharing where your company is really at and what you are looking for, asking for help, etc..The ask isn’t always a favour but it can make people feel that way.

For startups that means there are many missed opportunities over their journey because they didn’t ask; they know they could have asked; ultimately, they didn’t get the opportunity. Sometimes, these missed opportunities mean they missed meeting an investor, meeting a potential customer or learning about a new resource that would make their business more productive.

When you are running a lean startup, your main advantage is speed. Startups are all about catching opportunities at an accelerated speed! As they grow, new opportunities arise every day and it is either a gain or lost.

So then why are people so afraid of asking for things? Here are some top reasons why people don’t ask and how to master those reservations.

1. Fear of bothering or annoying others

As people, we want to be liked. So it is natural to not want to bother others. This is also a fear that the other person will say no. A simple and collaborative way to ask for help with something is to prepare to offer something in return. When we offer our expertise, services, etc., we get the opportunity to meet the needs of others. In turn, it helps limit the fear of bothering or annoying others.

For example, when our company was going through UX testing, I wanted to find a way to repay a user for going out of his way to meet us and give feedback. I found out that he was hosting an event so I knew how I could help. I lead a group of entrepreneurs within the Internations.org organization and I could help him promote his event in our community. So my promotion efforts filled up his remaining seats at his event.

2. Fear of showing your vulnerability

Sometimes an ask is indirect such as a description of how the business is going and what you need. When you express your need, you may be surprised how often others try to help. Because our clientele are startups, whenever I ask someone how business is going, the first automatic answer is “things are going really well.” This is because we are so used to saying it and so used to feeling the need to protect our “baby” (which in this case is the business). People tend to not let others in because they are afraid of any potential criticism. An easy way to perform the “tell others what your need is” would be to structure your sentence this way, “Things are going well. We just hired a new developer and we are just starting to look for funding.” It gives a realistic sense of how things are going and gives a peek about what you might need. When performing this one, just remember to keep an open mind. Don’t expect that others will suddenly know an investor to refer you to. However, when you keep an open mind, you may find opportunity in the unlikeliest of places.

Don’t be afraid to share things that you need. It takes a lot of strength to own your vulnerabilities. You would be surprised about the opportunities it open up when you share your truth. Like a child, it takes a village to build a company and startups need to grow as fast as they can. Unforeseen opportunities from unexpected sources can help you alleviate some of those “growing pains.”

3. “Oblivion is Bliss”

Oblivion

Oblivion

When we don’t ask for help or insights from others, we will be sure to stay on the same path. At the time same, we will also be sure to protect our egos. When people start companies, the market does not care about your ego; therefore, living in blissful oblivion will not help your startup in the long run. Startups need to ask, learn, and reiterate. It all starts with the ask.

When we were doing our market research when we first started, I met an entrepreneur who told me that his biggest fear was to be copied by competitors. He didn’t show me his product. It was ok. He told me that he was so afraid of being copied that he spent 3 years building it and never talked to a single potential customer. He did not want feedback and did not welcome it. It was very surprising to me that even though there were best practices on how to do product market fit and why market research was important, there are many startups who choose to build businesses their way.

Ultimately, there are always going to be new reservations about why first time entrepreneurs will not ask for things such as help, insights, and perspectives. When you do, you get the chance to uncover the possibility of the good, the bad, and the ugly from others. But here is the key thing, at least you get to uncover A POSSIBILITY that wasn’t there before! I want to leave you with a quote from my grandfather who said, “Those who ask the most questions, get the most answers.”

Asking Questions

Asking Questions

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3 Reasons Why Every SaaS Startup Need to be Consultants!

3 Reasons Why Every SaaS Startup Need to be Consultants!

As a super busy startup in today’s world, it seems impossible to be doing anything extra. Today, we want to tell you why that extra added service will go miles for your new SaaS (Software as a Service) business.

1. Research on Your Customer’s Needs

Customer-centric companies win. Getting there, however, requires getting to know customers so well that there’s not only understanding of what they do, but why they do it. This is the mentality that Founder of Apple, Steve Jobs, always understood.

An excellent way to do it is to simply ask. Work with them on the solutions directly. Help your target market to achieve their goals so you can benefit from key takeaways to that will benefit your technological solutions. Find out what not only what the solution should be but how customers want to use it and any other extra features that would make it more valuable.

When startups are close with the customers, that relationship will act as an insightful competitive advantage. (This rings true if the target market for your SaaS is the same as your consultant clients.) For us for example, it would startups who are first time business owners looking for their first round of funding (Pre-Seed — Series A). If you are very specific with your target, the more you will benefit in the long run.

2. Use it as Your Side Hustle

Get some revenue coming in from the side hustle. Depending on how much you charged, your startup can still reinvest that money into things such as Facebook or Instagram ads like we did. If your consultancy packages enough for you to invest in automation softwares or salaries, even better!

This would also be play a helpful hand when you are applying for government grants where they require you to show some form of revenue.

3. Use It to Build Your Startup Brand

To utilize the customer feedback and questions to build your brand will show community engagement as well as branding your company as an expert in this industry. It is always hard for startups with no money to build a brand so utilizing as much content in a consistent format as possible is a big step in the right direction.

For example, VenturX, has free monthly Health Checks for subscriber users. This takes place on Skype. Because I have a close friend who is a startup on our platform, I asked if our Health Checks can be recorded. This recording would show her asking questions about our VenturX metrics, why these metrics are important to investors and what other considerations she needs to think about before submitting to investors. She agreed it was a good idea. So starting March 4th at 8PM EST, we will have our first Health Check session. This is ideal for branding because her questions may be the same as others in our target market when it comes to investing and it gives a sneak preview of what to expect as a VenturX user. If you want to catch the video, please follow us on FacebookTwitterInstagram, and Youtube.

In addition, we will be writing a Medium blog and Youtube debrief on how the first session went. We expect there to be at least 2 sessions so you would be able to see a typical startup user’s improvements and added value.

Resources on how to get started on branching out your consultancy services

  1. Post your services on your website

2. You will need a consultancy package to send to potential clients so the understand what your field of expertise is and the price.

Here is a sample of how ours look like:

Pricing Package

Pricing Package

3. Other places to post your consultancy services:

a) ME University

We put ours under Raising Capital and Funding. You can see ours as an example of a typical description of the services:

ME University

ME University

b) Freelance Service Sites: FiverrUpwork, and Guru.

c) Post it on your social media as announcements of your new services

d) If you have a newsletter, make sure your audience is aware.

The main thing startups should beware of is contributing too much too little time. If your SaaS company is your main operation, be sure to devote the necessary care and time to it. When startups do not have the history of clients and built up a reputation yet, a lot of clients may have a lot of questions in order to feel more trusting and secure about taking that next step with you. This could take a lot of time to “nurture” new leads. From our experience, we help answer some of those questions on our website and our latest blog post to explain the pros and cons of hiring startup consultants here!

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Should First Time Entrepreneurs Pay for a Startup Consultant or Not?

Should First Time Entrepreneurs Pay for a Startup Consultant or Not?

“A journey of a thousand miles begins with a single step” — famous Chinese proverb

With entrepreneurship becoming so popular nowadays, it is certainly overwhelming to know which resources are right for you (ie. investor platform, incubators, accelerators, startup consultants, etc..)

As our business who mainly targets startups, we devote a lot of time keeping our ears to the ground and finding interesting startup problems, solutions, and ideas to explore. Here is a post that inspired this post. It was from a popular Facebook group.

Facebook
Facebook Post

This post was from a first time entrepreneur who received 54 comments in 24 hours from startup consultants, entrepreneurs who have used consultants, people who have not used consultants, etc.. (This post has been edited several times and we cannot find the original post.)

The most detailed and interesting comment was this one:

“I started my business with $100 and a hunger to create freedom in my life.

At the time I couldn’t afford coaching or programs and guess what?

I didn’t buy any.

I did market research by talking to people (that costs me nothing).

I then created a membership program (in the B2C space) on WordPress (had to learn how to use WordPress) — that costed me the $100 of Siteground hosting and nothing else.

I had a Facebook group I was running the community in. That cost me nothing.

I then went on and started doing live videos and promote my membership (costed me nothing).

I sold 60 memberships, that replaced my banking job. So I quit.

I then with the money I made bought a new MacBook so I can work faster.

I then sold more memberships and more memberships and here I was making $5000 a month.

And that’s when I decided to invest $2000 in the 90 Day Year.

This year (1.5 years later) I am on track to have a 7 figure year by the end of 2018.

You see… all these programs you see.. you don’t have to buy them.

Also.. the people that sell them.. they don’t need to change their pricing to accommodate “people who can’t afford it”.

Coaching IS NOT a right.

It’s a privilege.

Programs and courses are NOT a right.

They are a privilege.

And Iike any privilege, you either

1) make money and work to deserve it (and reward yourself with it)

2) don’t make money and don’t buy it.

3) look for organizations that offer free mentorship for startups (lots of them in the World)

Sooooo

I don’t understand what the issue is.

Work hard.
Make money.
THEN invest.” — Anonymous

There were also other comments from the post explaining how startups who are new to the world of entrepreneurship have reservations about investing because of these following reasons.

Why People Don’t Pay for Startup Consultants

  1. Insecure feelings about their business- or the consultant
  2. Not 100% sure about their own ROI from the business enough to pay for a consultant
  3. Lack trust in the consultant
  4. Feel that there are enough free resources about certain areas on the internet
  5. They do not understand the long term value of the business and how a consultant can make a difference (ie. spending $1000 to make $20,000)
  6. They cannot find the right fit for the exact field of expertise that they need

You Don’t Know What You Don’t Know

You don’t know what you don’t know

You don’t know what you don’t know

This famous saying rings true in entrepreneurship. This boils down to whether this million dollar idea is worth the risk you are taking or not. For most first startups who come to our team and ask for investment money, it tends to stop right here and they will tend to go back to their full time jobs or take our advice to ponder about whether or not they go forward for another 4–6 months.

Since we run a startup platform, VenturX, that helps prepare and connect early stage startups for investments, we have the opportunity to see with our own eyes what success and failures within startups look like everyday. Even though they come from diverse backgrounds, the checklist of startups we can accept in order to maintain a high level of successful launches and investments are still the same. We can quickly tell a) if they are in our target market and b) what their next step would be in order to best be prepare for big investors like ours.

Time VS Money VS Quality

Time, Money, Quality

Time, Money, Quality

From working with over 300 startups and hearing their stories of successes and failures, there are only so many things you can invest into your business if you don’t have the luxury of quality. Quality stems from knowledge and experience. Every investor who has been an entrepreneur in a previous life always talks about getting your hands dirty. That is where your “je ne sais quoi” value comes from and therefore enhancing your overall “quality.” If it is your first time, you really only have the options of investing your time (known as sweat equity) or your money (known as hiring people or purchasing resources).

Even though we have a platform where potential clients can already see there are startups using our platform and getting investment, they have valid questions before signing up or hiring our consultation services. Their questions are ones that all startups should consider when investing any amount of money into their business.

Why Should First Time Entrepreneurs Hire Startup Consultants? (What do potential clients ask?)

  1. What is your field of expertise? Why should I choose you?

Answer: Helping prepare you for your first big round of funding and helping get to you launch with business intelligenceFrom working in the startup industry, we get to see the ingredients of success and failures on a daily basis that we use to benefit our consultation clients so they don’t have to suffer with their time and money in the long run.

2. Do you have referrals from other startups?

Answer: Yes — some are on our website: www.venturx.ca and others can be sent to you privately. We strongly recommend our best practices such as developing good positive relationships with clients in order to collect those success stories!

3. How does the consultation services work?

Answer: You can purchase specific packages such as “Review my investor’s pitch deck” or purchase a set of 5 or 20 hours of consultation. We meet on a call to help you with specific goals and come up with a structured plan of implementation and we make sure this plan is executed in the best manner possible.

4. Do you connect us with contacts?

Yes! As an added bonuses are connections and contacts when applicable. We know that not all consultants, coaches or mentors do that; however, it is part of our practice. There are some that are exclusive to only VenturX platform users.

4. Can I get a discount?

Answer: Discounts are available to all VenturX platform users or those who purchased larger set of consultation hours (ie. over 20 hours).

There you have it! The reasons why first time entrepreneurs opt to hire or not hire help. We hope this article helps you make informed decisions that can help your startup in the future years to come! For more startup tips, check out our other blogs!

Work

Work

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BIG Mistakes business owners make when hiring ’TOP’ Employee’s

Guest Post by: Jeff Consul, Institute Of Innovation

1.) Skills can be Taught — VALUES CANNOT. Always first confirm that you would trust them to work on your grandmothers house, or babysit your kids — before you start to see how they handle the tools. People with crappy attitudes and bad values are NEVER worth the effort. Inevitably they find something to externalize about; you’re not paying them enough, they don’t get enough time off, the gravity is too heavy…

2.) Confirming GRINDABILTY — But don’t ask how hard there last job was. Ask How LONG this hard job lasted, ask why they DIDN’T quit, ask what they LEARNED from this hard job, and how it changed them as a person.

3.) Call References — BUT — ask questions that allow you to see if you were right about their character. Remember that’s what you’re ultimately judging. 70% of the stuff on any resume is going to be questionable/exaggerated. When they worked for you; What were they the most proud of? When were they the happiest? What’s something most people wouldn’t know about them?

Call References

4.) Always remember that doing one or two more interviews is always MUCH less time than retraining anyone. Wait for the right person, even if their particular skill is lower — someone who lines up with your values can be leveraged over the long run, someone who quits in the middle of a job because the gravity is a little too heavy that day… is always going to be a let down

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3 Erreurs commises par les Startups: Sur quoi se concentrent les jeunes startups à part leurs Métriques?

Les startups en phase de démarrage ont énormément de choses à faire. Au fil de leur progression, leurs jours semblent de plus en plus courts. J’ai trouvé que beaucoup d’entre elles consacraient beaucoup de temps dans des choses à moyen et long terme plutôt que de se concentrer sur le présent. Lorsque je leur demande quelles sont les métriques sur lesquelles elles se concentrent, ce qui est important pour elles, etc… la variété de réponses obtenues est surprenante.

Cet article passe en revue les 3 erreurs les plus commises par les startups et explique comment un recentrage sur ses métriques remet les choses en perspective. Gardez à l’esprit que nous nous concentrons sur les startups en phase de démarrage et qui viennent seulement de créer leur entreprise.

1) Pas assez d’ACTION!

Les gens vous recommanderont toujours de lire ce dernier livre sur les startups ou bien les dernières tactiques de marketing pour atteindre des sommets.

Ce n’est pas pour vous décourager d’apprendre mais l’expérience de vos actions déterminera davantage ce que vous aurez appris que vos lectures. La stratégie marketing de quelqu’un d’autre, les canaux de distribution et la négociation commerciale ne sont peut-être pas adaptés à vous. Puisque chaque entreprise est si unique, vous ne saurez jamais quelles sont les meilleures pratiques à moins que vous sortiez et expérimentiez votre activité.

« L’ambition repose sur vos actions » — Gary Vaynerchuk, Entrepreneur, Animateur du AskGaryVee Show

POINT D’ACTION: Réservez-vous un ou deux jours dédiés à la lecture, la recherche, etc. Et consacrez les autres jours à la mise en pratique. (Je peux vous dire, par expérience, que si vous lisez un livre sur les startups, vous n’avez pas besoin de le terminer pour vous entraîner).

J’aime personnellement m’informer sur le marketing des réseaux sociaux car c’est un complément à ma formation de marketing en ligne. Je consacre généralement mon Samedi à apprendre de nouvelles choses. Pour atteindre mon public cible composé de startups, j’essaye tous les réseaux sociaux afin de voir où ma clientèle cible est la plus active et engagée. Je réalise des vidéos éducatives, des retransmissions en direct et des blogs sur Youtube, Facebook, LinkedIn, Instagram, Twitter et Medium. Je cherche quotidiennement les canaux de communication qui fonctionnent les mieux afin de décider quels seront mes futurs investissements en marketing.

2) Se projeter trop loin dans le temps

Les fondateurs sont tiraillés dans tous les sens à cause des nombreuses sources d’influence qui les entourent, que ça soit l’effervescence des évènements de startups, des retours d’amis ou de la famille, des recommandations de partenariats potentiels ou encore des « tu sais à qui tu devrais parler? ». Je suis sur que vous avez des exemples en tête!

Il est peu judicieux de concentrer son énergie sur des partenariats à moyen et long terme, plutôt que de se concentrer sur le prochain essai ou projet pilote.

Exemple: N’attendez pas pour embaucher la personne parfaite qui vous aidera à mettre en place votre projet pilote ou votre test bêta plutôt que de le faire vous-même.

Je l’admets, je suis parfois tombé dans le piège mais une chose m’a encouragée à me concentrer sur les partenariats à établir maintenant, les recommandations à suivre ou bien où allouer mes précieuses 24 heures, l’analyse de mes métriques en temps-réel! (Voir diagramme ci-dessous).

POINT D’ACTION: Marquez vos futures tâches sur une durée de 1 à 3 mois. Si vous pouvez rapidement identifier les missions ou les partenariats possibles à exécuter en un mois, alors inscrivez-les dans votre calendrier sur un délai d’un mois à compter d’aujourd’hui. Vous n’avez pas besoin de tout faire d’un coup et être dépassé par la quantité de choses à faire. Quand tout cela commence à s’empiler, un tas d’opportunités peut facilement devenir un tas de distractions. Une chose pratique à faire est de trouver un rythme. S’il y a une nouvelle ressource ou un nouveau canal à explorer, mettez-le de côté jusqu’à ce que vous ayez complété ce qui est important pour le moment comme faire de votre premier projet pilote un succès!

3) Éviter ses Clients

« La vente est le remède de tous les maux » — Mark Cuban, Shark Tank de ABC, Investisseur, Entrepreneur

Comment les startups peuvent avoir ce remède si leurs clients ne sont pas le centre de leur attention?

Éviter ses clients peut être expliqué de deux façons:

a) Découverte Client: Certains entrepreneurs en phase de démarrage connaissent des cycles de procrastination avant de faire quelconque étude de marché ou enquête sur leur Product Market Fit.

POINT D’ACTION: Pour apprendre à enquêter sur votre Product Market Fit en 24 heures, référez-vous à cet article: https://medium.com/@VenturX_team/comment-trouver-son-product-market-fit-en-24-heures-c00d07c77820

(Il va vous guider à travers les différentes étapes avec des exemples concrets). Si vous voulez un modèle de questionnaire, envoyez-moi un courriel, et je vous en enverrai un!

b) Ignorer les retours de nouveaux clients et réitérer

En tant qu’être humain, nous faisons ce que nous voulons faire et non pas ce que nous devrions faire. Si c’est plus simple pour certains de travailler sur la création d’un beau site internet plutôt que de récolter des retours clients, vous pouvez être sur qu’ils concentreront leurs efforts dans l’option #1.

POINT D’ACTION: Planifiez des rendez-vous avec vos clients pour avoir leurs retours de façon régulière. Essayez de les programmer en avance. Même si vous avez de nouvelles distractions telles que des évènements de startups, embaucher des nouveaux membres dans votre équipe, etc. ces rencontres régulières vont vous assurer de rester au contact de vos clients et montrer que vous ne les évitez pas.

Afin d’avoir des retours pour le lancement du produit VenturX, je programme des appels Skype toutes les 3 semaines avec des amis en startup pour leur montrer la refonte du site et avoir leurs retours. Je contacte aussi une startup, tous les après-midis entre 14H et 16H, pour lui parler de ses Métriques VenturX. Il m’a dit qu’il préférait les notifications SMS. Pour lui montrer ma gratitude, je lui envoie ces rapports individuels journaliers depuis mon téléphone.

Sur quelles Métriques devrais-je me concentrer?

C’est une très bonne question. Une question bien détaillée dans ce livre:

« Lean Analytics: Use Data to Build a Better Startup Faster » — Alistair Croll et Benjamin Yoskovitz

Ils expliquent que les startups devraient se concentrer sur une métrique à la fois, et que cela dépend du type d’industrie et de leur phase de développement. Voici un diagramme détaillé provenant du livre:

Avez-vous découvert dans quelle phase vous vous positionnez?

Génial!

Pouvez-vous déterminer quelle métrique est la plus importante?

Excellent travail!

Maintenant vous pouvez inverser la formule pour vous débarrasser de ces 3 erreurs commises par les startups en phase de démarrage!

Gardez en tête que même si ces informations proviennent principalement de nos observations de startups en phase de démarrage et de jeunes entrepreneurs, de nouvelles informations sont amenées à venir!

Il pourrait y avoir plus qu’une métrique que vous allez pointer du doigt comme un faible Product Market Fit ou des finances trop basses.

En tant que chercheuse dans le monde des startups, je souhaitais vous partager mes observations sur cette industrie fascinante. J’espère qu’avec ce simple guide, les débuts de votre entreprise seront sans heurt! Si vous avez des questions concernant vos métriques, envoyez-moi un courriel à l’adresse sydney.wong@venturx.ca et nous jetterons un coup d’œil ensemble!

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