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Idea to Seed Funded - the Planwise Experience

vinae
July 10, 2012

Idea to Seed Funded - the Planwise Experience

A talk given at the meetup for Tech startups focused on finance ( http://www.meetup.com/Bay-Area-Tech-Startups-focused-on-Financial-Services/events/69355242/ ) on our 12 month journey from idea to getting seed funding

vinae

July 10, 2012
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  3. Legal  –  C-­‐Corp,  California,  nego3ate  for  under  $5k  with  6+

     months  deferred  payment  terms     Visas  –  Added  cost  &  3me,  make  sure  it’s  worth  it     Market  Research  –  invested  $2k  in  a  US  census  relevant  survey  of  over  800  people  with  10+  targeted  ques3ons  –   did  one  on  one  user  surveys   hNp://www.gmi-­‐mr.com/     Ini3al  Capital  –  startup  capital  was  $35k,  1/3  of  this  went  to  lawyers  (before  we  had  proven  anything)  and  1/4  to   consultants  that  got  us  good  market  intel  –  overspent  on  legal           3  
  4. Co-­‐founder  –  virtually  impossible  to  get  funded  without  one,  for

     many  reasons,  quora  and  Venture  Hacks  are  your   friends  here.  Should  bring  new  ideas  into  the  mix,  start  with  a  project  first  that  is  in  the  domain,  keep  cash  and   equity  separate,  put  in  place  ves3ng  for  earned  equity.  Start  as  equals,  or  you’re  not  co-­‐founders.       hNp://www.quora.com/Technical-­‐Co-­‐founders   hNp://venturehacks.com/   hNp://venturehacks.com/bookstore         Prototyping  –  start  with  wireframe  tools  like  Balsamiq,  create  low  fidelity,  highly  interac3ve  mockups  and  step   through  these  with  a  broad  range  of  people  including  those  you  might  have  invest  in  the  future  (mine  included  2  of   the  3  who  would  later  invest).  Let  them  get  invested  in  your  product  evolu3on.  Listen.       www.Balsamiq.com     4  
  5. Name:    our  original  name  was  Mifii..  It  failed  the

     3  rules  of  good  names  (hard  to  read,  when  you  see  it  you  aren’t   sure  how  to  say  it,  when  you  hear  it,  you’re  not  sure  how  to  spell  it)…  it  had  to  go.  Don’t  get  stuck  on  your  name,   be  pragma3c     How  much  difference  does  it  make…    huge.  Mint  vs  wesabe  example,  well  documented  on  quora..  Be  prepared  to   work  on  gecng  a  good  name..  We  spent  months  on  it.  It  paid  off.       hNp://www.quora.com/Why-­‐did-­‐Wesabe-­‐shut-­‐down-­‐while-­‐Mint-­‐did-­‐so-­‐well   hNp://blog.precipice.org/why-­‐wesabe-­‐lost-­‐to-­‐mint       Brand:  Pay  top  dollar  to  create  your  core  brand,  give  them  something  to  work  with  (a  good  name  and  a  clear  vision   of  what  you  stand  for)  ..  Create  something  interes3ng  in  your  brand  story  …  the  green  is  sampled  from  your  US   money  as  an  example  …  We  spent  almost  1/3  of  our  startup  capital  building  our  core  brand  and  blog  and  UI   concepts..    Allowing  us  to  sell  the  vision  to  everyone  in  a  far  more  effec3ve  way     5  
  6. It  all  went  horribly  wrong…    very  quickly.  It’s  impossible

     to  be  prepared  for  this,  but  here  is  what  happened..     Losing  co-­‐founder  forced  me  offshore  to  get  beta  dev  done,  ..  Only  way  to  achieve  result  in  3meframes  is  to  be   onsite..  In  any  offshore  place  this  will  probably  save  you  money..  7  weeks..  On  $10EUR  a  day  …  leh  huge  hole  in     Specify  down  to  the  leNer…  reduce  scope  &  complexity,  focus  on  the  core  parts  of  the  proposi3on  and  who  you   are  building  for?       Use  Atlassian  OnDemand-­‐  hNp://www.atlassian.com/sohware/ondemand/overview  $20/month  for  up  to  10   people  for  wiki  &  issue  tracking  …  no  brainer       Ran  out  of  money  –  external  funding  cri3cal  to  keeping  the  business  afloat  –  price  aggressively,  ..  Win  on  emo3on,   focus  on  <  5  people  who  have  been  part  of  the  product  evolu3on  ..  Underwrite  their  risk  en3rely     Milestones…  make  em  3ght,  singular  and  in  sequence  (not  parallel)  ..  Put  100%  of  effort  into  hicng  each  milestone     6  
  7. Beta  is  being  able  to  provide  a  basic  but  working

     version  of  your  product  to  real  people  to  see   a)  If  they  actually  like  it  /  use  it  /  get  value  out  of  it   b)  Establish  the  extent  to  which  your  users  will  generate  more  users  for  you   c)  Further  refine  your  product  experience     Trac3on  –  the  key  to  funding..  Or  is  it?  …  Once  you  have  enough  to  do  a  beta…  put  all  your  energy  into  making  this   happen.  Prototyping  proves  very  liNle  in  the  eyes  of  arms  length  investors     hNp://www.quora.com/Brendan-­‐Baker/Startups-­‐How-­‐to-­‐Communicate-­‐Trac3on-­‐to-­‐Investors       Publicity  is  key  to  a  successful  beta,  defined  as  gecng  enough  people  in  the  front  door  to  get  meaningful   informa3on  and/or  kickstart  users.     Sprouter.com   Startupreport.com   7  
  8. So  with  AL  failing  for  us  …  and  the  beta

     finishing  up  with  moderate  and  expensive  growth…  we  had  started  re-­‐ developing  the  en3re  back  end  in  parallel  and  were  inves3ng  no  further  in  the  beta  code  (it  was  to  be  trashed)             I  was  able  to  point  to  finovate,  press,  beta,  team  ..  So  gecng  into  events  was  easy…    however,  pitch  events  are  like   trying  to  find  a  girlfriend  by  entering  a  male  beauty  pageant       There  is  virtually  no  3me  to  make  any  real  connec3on  …  even  the  most  amazing  presenta3ons  very  rarely  go  on  to   get  funding..  I  started  to  see  a  lot  of  the  same  faces  at  these  events  …  you  can  get  value  out  of  them..    Go  early,   wear  your  team  colours  …  meet  as  many  people  as  possible…  try  to  connect  with  at  least  2  people  on  the  panel..   They  will  be  from  VC  who  might  fund  you  later..  I’m  s3ll  in  monthly  update  conversa3ons  with  4  people  I  met  via   pitch  events  who  were  on  panels..  Once  we  make  enough  progress..  Those  contacts  will  come  in  handy     hNp://jumpstartdays.com/     8  
  9. Trying  to  launch..  And  trying  to  get  funding..  At  the

     same  3me..  Is  incredibly  hard,  don’t  do  it.    If  your  beta  can’t  get   you  funded  …  get  to  launch  first…then  come  back  to  it     Try  to  learn  why  you  didn’t  get  funding..  Ask  hard  ques3ons,  don’t  worry  about  scaring  people  off..  If  they’ve  not   commiNed  aher  1  month  then  they  are  unlikely  to  commit,  so  nothing  to  lose  by  understanding  what  isnt  working     Your  reasons  will  be  different  but  get  in  the  habit  of  asking  why  why  why  –  find  the  root  cause  of  their  disinterest   in  inves3ng..       Go  back  to  your  roots  –  find  people  who  knew  you  in  a  former  life,  who  you  have  had  some,  any  success  with,  even   if  that  was  also  associated  with  some  failure.  Qualify  that  they  trust  you,  and  focus  on  the  market  you’re  playing  in   …  in  short,  find  people  from  the  industry  who  you’ve  worked  with  and  s3ll  have  a  rela3onship  with.         Come  in  at  your  ini3al  terms  but  focus  on  gecng  a  leader  (not  a  lemming)  agreed  to  discounted  terms  –  remember   to  appeal  to  their  ability  to  help  you  over  and  above  the  money  alone.  This  resonates  with  people  who  are     9  
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