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Posts Tagged ‘Startupping’

http://hbe.fi/gasellit/2010/06/never-mind-finland-more-start-ups-looking-good/

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Launching with ‘good enough’ productization

Last week’s blog series ‘art of productization’ continues with more insights from Kati Riikonen, our guest writer in this week’s blog.

Yes, it’s true, ’good enough’ is not measured in the amount of features or the length of specification.  For productization, the key customer promise is a top priority it seldom requires all possible features to be showcased.

Often there is no need, nor it’s feasible, to do full productization journey before going out to market making mode.

The level of necessary productization is depending on many variables. Most importantly one should crystallize concrete goals for the post-launch actions. There are also big differences on targeted audience is B2B, B2C or C2C. In reality, the limiting factors for productization often tend to be time and money.

The following provides examples of productization check points for various types of launches.

Idea launch

  • Examples of next steps: Generate public discussion, idea exchange, testing the idea, scouting potential partners, gathering insights
  • Productization check list: None. Just go out and talk the way you do – all entrepreneurs should do idea launches every day!

Concept launch

  • Examples of next steps: Seeking for finance, crowd-sourcing for development or more insight, thought leadership, publicity, scouting for ecosystem partners
  • Productization check list: Initial customer promise, name and descriptor, differentiators, user experience and marketing assets.

Tip on naming: In B2C or C2C concept launch a legally protected name in early phase is a real asset. In B2B concept launch, it is more natural and often enough just to differentiate with customer promise and descriptors, rather than spend limited resources on the naming convention.

Tip on prioritization: In case of very limited resources, focus on the concept’s customer promise and end-user experience as top priorities regardless if it is B2B, B2C or C2C.

Commercial launch

  • Examples of next steps: Market and sell! Business development, marketing, scout, sign and train distribution channels, agents, personnel.
  • Productization check list: In case of B2C or C2C launch, the further the productization check list is completed, the more likely are scalable sales and operations to accelerate. Of course, there are always exceptions, but the fact is that agents and sales pros tend to sell what gives them the fastest and reasonable payback. Having all the productization assets at immediate disposal gives the team a head start.

Reminder: Productization process does not mean that it’s done in vacuum before going out to public. Direct end-user insight, dialogue and co-creation can – and often should – be part of the successful productization.

Feel free to post your comments & example cases!


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Crowdfunding is gaining some momentum as a potential investment vehicle for startups. As the traditional Angel Investors and Venture Capitalists have become more careful on the early stage investments and number of investments has dropped dramatically, there is a need for new methods.

But how do you actually run a crowdfunding investment round? There are no tools currently available for this so it may seem like a lot of work. And it is. This means it’s just another challenge to be solved.

The issues you have to consider and solve when running a crowdfunding round (or any investment round):

  1. How do I find the potential investors?
  2. Which regulation applies and what can I actually do?
  3. How do I get the investors’ attention?
  4. How to deal with all the required documents?
  5. How can I negotiate all the terms with so many investors?
  6. What about company valuation?
  7. What is Due Diligence and why do I need it?
  8. How on earth do I get all the papers signed by a large number (say, 90) of investors all over Europe?
  9. How can I securely communicate with all those potential investors without answering the same questions over and over again?
  10. How to take advantage of a large number of investors, after I got them?

1. How Do I Find Potential Investors?

In most cases you need to find all the interested investors yourself! You can also use some of the crowdfunding initiatives, such as GrowthOS and Vestify, to find those people, but it can take some time before these are the quickest way. You can also consider making a deal with a large bank and make a underwriting deal with them. In any case you have to keep in mind the regulative limits set by the financial authorities of your country, such as SEC, European Union and national laws.

2. Which Regulation Applies And What Can I Actually Do?

This depends where your company is based and where your investor candidates are. Regulation is largely unified with the European Union (excluding UK), USA has its own regulation as is the case with for example Japan and Australia. Due to the legal reasons and as I am not a lawyer, you should consult your lawyer if you are unsure about this.

3. How Do I Get the Investors’ Attention?

If your service or product is on the market and if you’re lucky, they’ll contact you. It’s always the best if you can get yourself and your offering visible so that the potential investors call you (and you don’t call them).

However, if you are really early stage company, or there is nothing in public yet, or if you just are not famous (yet) then you need other tools. One thing we are piloting next month is producing professional-grade “elevator pitches on video”. One of the videos is 100 seconds long and is meant to be public, including publishing it in Youtube. The other video is 5 minutes long and can contain “more confidential information”. The purpose of the videos is simply to get more attention of potential investors and get them in touch with you. We have developed a special “format” with pre-determined questions  related to startups and funding to speed up the process. Both shooting the ideo and editing it is done by the professionals, ensuring high quality and nice feeling.

You should, one way or another, have your own “Show Room” with all the videos, screencasts and other material you want to use for showing what you do.

4. How To Deal With All The Required Documents?

In order to raise money you need in minimum

  • Business Plan (with an excellent Executive Summary)
  • Share Issue Offer, including the Term Sheet
  • Shareholders’ Agreement

There are many guides on how to write a business plan so we don’t cover it here. Concerning the Offer and Term Sheet, you may want to take advantage of services such as The Funded (only for entrepreneurs) or consult your lawyer (again:-). Shareholders’ Agreement is discussed in the next chapter.

5. How Can I Negotiate All The Terms With So Many Investors?

The thing is, you don’t (negotiate with all of them). You must have such versions of the key documents such as the Shareholders’ Agreement that it is acceptable for all the parties without further negotiation. It’s “take it or leave it” kind of thing. An if it is not acceptable by the investors, they may “leave it”.

Luckily there are number of initiatives taking place in this field. There are for example already few “Standardized Shareholder’s Agreement” templated downloadable for free. You can always customize these with your own lawyer, but the key thing to keep in mind is that it has to be acceptable by both the investors and yourself.

Next week: Challenges 6 through 10!

PS. I’ll be in London and the Bay Area early March, please contact me if you’d like to discuss crowdfunding (as an entrepreneur or as an investor)

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Three days to go. As the year is about to end, it’s time to look back and learn from this year.

Jobita – Market Place for Jobs

Year 2009 was the launch year of Jobita, formerly known as Tikitagi. Late March we launched the prototype of the service. Jobita is an Internet tool for local service professionals (and those who want to become those) as well any individual to market their skills and manage the assignments. For consumers Jobita is the easiest way to find qualified doer for any task at hand, either at home, at the office or for example on the boat.

It was a great learning experience, later also leading to concept called “gasellizer” – more efficient way of producing software with outsourced resources.

Already in January I wrote about using True Identity instead of pseudonyms. We are proud to announce that Jobita.fi is the first of its kind to truly support True Identities. Jobita is working together with NorthId on this. It’s called “Nettihenkkarit” in Finnish, loosely translated as “Online Identity Card”.

End of October we launched the totally rewritten version of Jobita, initially only in Finnish language. During the first two months of existence, the number of members and posts increased rapidly.

Creating Software as it always Should Have Been Done

Software Industry is relatively new as industry. Therefore it is no surprise that it is still facing many fundamental challenges, such as understanding the customer problem and turning that into a successful business. Together with few other people from the industry we worked on a concept called “Gasellizer”. One of the observations was that managing the specification process is still a major headache for most of the developers, and no, Agile methodology as such is not an answer for this. It’s more question of “User Defined Features” or uDef’s as we call them. Simply put, there is a need for recording, and managing as the needs evolve throughout the process, the users’ need with their own words.

One way of approaching the problem is learning from the movie industry’s way of operation.

And it is always great to learn from those who have already done it in real life (lessons learned from Mårten Mickos, ex-CEO of MySQL).

Entrepreneur is the Most Critical Resource

This discussion is going on all the time: “there is not enough money for the start-ups”. That is absolutely true. In order learn a bit more about the actual problem, I tweeted and blogged about a simple question “Which one of the following is the most critical and the least supplied resource: ideas, entrepreneurs or money?”.

As was to be expected, there was a lot of support for the answer of “money is the missing link”. However, the poll made revealed that the majority of the people thought actually that we do not have (good/experience/etc) entrepreneurs to implement those ideas. Nobody claimed that we would not have enough ideas. I am 100% of the same opinion, we don’t have enough entrepreneurs. As many of the supporting organizations and tools fail to understand this most fundamental question, also many of the solutions (no matter how well-meaning) do not touch and help the actual problem.

Simply put: as long as we do not have enough those entrepreneurs who will use the money available to build succesful and brave enough success stories, we will not have successful software companies. Period.

Crowdfunding is the Modern Way of Raising Funding

Okay, in the previous chapter I claimed that the most critical missing resource is the “entrepreneur”. It does not mean that getting funding would be easy, not at all.

Raising money for an idea or early stage start-up never has been, nor will be, very easy.

There is, however, always the possibility of looking for new solutions for the problem. One of the hottest ideas right now is “crowdfunding“. I wrote a small article about that in August. According to the polls made, this kind of funding is well received by both entrepreneurs and investors.

There is a new exciting company working on the concept of crowdfunding, GrowthOS. If you are member of LinkedIn, you can apply for GrowthOS group. Check out also an interesting opportunity to get a really high quality video pitches for your company.

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We are testing new kind of production for high quality video pitches in February, 2010 (in Helsinki).

The thing is as follows: many startups (and actually other companies as well) have a need to produce video clips for investors, customers and other stakeholders. Typically there are two main options here:

  1. Produce it yourself, typically ending up with pretty low quality production due to lack of time and experience
  2. Outsource the production to professionals, ending up with probably high quality video but it easily costs more than 10,000 €

We have drafted new way of doing this process.

  1. We are using professional television producer and editing facilities
  2. We have created “standardized” templates and scripts what’s on the video and what needs to be filmed
  3. Participating startup gets instructions how to prepare, we have on-stage coach helping and filming is done “as industrial process”
  4. Editing is done by the professionals and the results are going to be fabulous!

The scripts will take care of asking the right questions, focusing on the right things and getting the message clear. And unlike traditional “elevator pitch” done in one shot, editing will help to make the video deliver the message properly even if you would not be so experienced in doing this.

In this pilot we will create two videos: 100 seconds “teaser video” which the startup can distribute publicly and another, 5 minutes version with more details (for a financing round) and that is to be given to selected investor candidates only.

The cost per company is going to be less than 1,500 €, the potential value for these being much, much higher. As it is commonly known that investors only have few minutes per startup to make up their mind (Go or No-Go), this will greatly help to make the great first impression. The second video sent for those gives more details and then you’d be already arranging a meeting.

There are six places available for the first session, half of them are gone already. If you are a Finnish startup  (or know somebody who is), and are interested in this then hurry up. Deadline is around beginning of January.

You can see some production examples (for television, not startup pitches yet) here.

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Yesterday I tweeted about a simple question.

So far I’ve received 15+ excellent comments.

Initially and based on discussions with some fellow (active) entrepreneurs I was of an opinion that we are mainly missing the people (entrepreneurs) to make the idea into action.

This line of thought was justified as we all know there are more ideas than what we can implement. Many of the ideas should, honestly, never be implemented. And many of them are just copycats, yet another facebook-youtube-socialmedia clone which is a pity. Even after these taken away there are many more great ideas than people to implement them. In this light it seems almost funny how desperately (still) some people value just the idea (or an idea in PowerPoint slides).

On the other hand many people, again initially, were of an opinion that you can actually find money if you have a really good idea. The money just may not come from your home country, in this case Finland. There is no real Venture Capitalists left in Finland, and the angel investor community is not very large nor truly active, yet. Luckily at least Veraventure is doing good work to get this changed.

I made earlier a little poll which says many (academic) people skip entrepreneurship as they either don’t have a business idea nor a team.

This week a Finnish business magazine Kauppalehti Optio published a cover story of 80 young people born in the 80’s, the people who are our future and who are going to take over. Guess how many of those persons were entrepreneurs? One. There is hope that some of those classified as “students” still could become entrepreneurs…

The responses to my tweet mainly said, however, that we are missing money and financing. There were also good comments about timing and luck, no matter how good the idea is. For example our idea of mobile carpool service (year 2002) was given no serious attention in the Finnish VC community (luckily the angel investors in Finland, Italy and The Netherlands trusted us) but this year two young students won Venture Cup with the idea of mobile carpool. So it’s also about timing, seven years later. See also a briefing to the subject here. As a side note I would say that if Nokia really would like to “think different”, they should use this Ecolane technology to enter mobile carpool business before Google or Apple do. Disclaimer: I’m a shareholder in both of the companies mentioned.

One thing what I’ve been wondering – if having not enough entrepreneurs is NOT the problem – why as there so little active serial entrepreneurs? I mean those who have tried at least once, possibly succeeded and become a driving force of another start-up with all that experience? Many of those people seem to be now in a more convenient “advisor” role. As one of the active entrepreneurs I respect, Marko Parkkinen, said this week: “After failing in the recent start-up, I was at one point almost desperate enough to become an employee, but luckily I run out of battery in my mobile phone before I said ‘Yes'”.

As one active entrepreneur friend of mine said, “At the first stage of ‘making it big’ the lack of true entrepreneurs makes the start-up market very small. Money matters only after a start-up has started its journey – if there was all the money available, but no real motivation to make ‘my/our company big’, I doubt there would be much success.”

However, I do belive that funding is a key element in building new success stories. Early this year  we start building a new initiative code named “GrowthOS“.

“GrowthOS is an ecosystem for entrepreneurs to build online presence enabling them to receive funding from one or more private investors as well as facilitate all the activities before and after the investment has taken place. Extensive use of web-enabled communication, reputation building and other tools offer a unique platform for private investors to follow, communicate with, invest in as well as follow or participate the development of those startups they mostly believe in.”

If you are interested in the GrowthOS ecosystem (it’s going to be Europe-wide), feel free to contact me.

But coming back to the main question: “Which one of the following is the most critical and the least supplied resource: ideas, entrepreneurs or money?”

What do YOU think?

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There is a interesting blog entry by Perfect Business writing about How Your Startup Affects Your Body.

It claims that startupping affects a person in many ways (click all that apply!) :

  1. Your energy level rises
  2. Your endurance increases
  3. You become extremely motivated
  4. Ideas come to you more easily
  5. You gain focus
  6. You eat less
  7. You sleep fewer hours
  8. You lose weight
  9. You can’t keep your mind off of your work

I must say I agree with all other points except #6 and #7. I don’t eat less and I dont’ sleep less but I guess both of these are healthy.

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