seed to startup

I have been meaning to post some of the articles I wrote for a very cool newspaper in India – I’m not sure if you all will agree to everything but here goes!


Seed to startup…

Firstly, a very happy new year to you all, I hope 2008 brings you all that you aspire for; for some of you this may be the starting of a new venture and I hope that this column helps you with some real life experiences (by no means are these conclusive!); I’m going to refer these to some of the examples related to nivio for some real-life relation!

As you can see the title of this article is a double edged sword; it talks about growing an idea from a “seed” to a “startup” and in later columns will talk about how to get seed capital to grow your startup.  As I have said in most of the lectures I have given around this topic – there is one quote that really comes to mind when I think of this topic and that is by the notorious rapper fifty cent; “Get rich or die trying” and I believe this is the mentality that one really needs to have adopt going into the start-up world since it is fully of difficulties and pressures that you could never imagine in normal working life.

2007 was the year for start-ups in India; an every growing percentage of people you met and spoke to seem to talking the talk and in most cases they were venturing out to do their own thing; it was also surprising to see that many of the industrial families letting their younger generation venture out. So what is a “start-up”? And what is a “seed company/ project”? Most importantly how to do you make the “seed to startup” transition?

An idea begins its life in the head of an individual or a group of individuals (the founder(s)) ;  at this stage it is a concept and high on vision low on practicality – I like to call it the pre-embryonic stage of the corporate growth cycle i.e. the baby is not even formed in full yet.  It is more about dreaming and in the next stage of funding (if required) you will be selling dream and vision. I remember the early incarnation of Nivio was something called myRemoteWorkstation; we even made a cheesy animated video to try and show its potential grandeur!

The key areas to focus on at this stage are trying to really flush out the concept; if possible build a proof of concept (this will help you in later stages as you grow) and to start putting even a rough plan of how you think the revenue would work, how would you build it in production and what kind of team you need; now some of you are probably panicking with the thought “but it will change” and that is absolutely correct; whatever you do today in most cases will only have a 20% effect of the final product as you will go through so many more iterations but the importance is that you have some thoughts on paper so when you try to get some seed capital you are not just selling vision & dream but some underlying construct. The seed stage is very quickly replaced by the start-up phase if some of the following things happen:

          You can prove you can think big

o   No one really wants to invest in a high risk small company

          You have really though it through

o   Make sure you can answer in detail the questions the first 20 people ask/question you about your idea…

          You have classed your idea – this is very important as it effects the team you build, the cash you need and the investors you go to

o   Is it niche specific

o   Is it global

          You have answered the two big questions – why has it not been done before? What are the super-trends that this is based on?

Congratulations – if you have done this you are now a start-up… a company with an almost solid idea with a passionate founder(s). The early stages of the start-up are about getting a proof of concept final, getting some team in place and getting some early capital in hand. At this stage you have low bootstrapping costs (this basically means you can keep reinventing the idea without huge cost implications) and are still categorised as a high risk investment (your family will probably still be telling you to get a regular job – I know I had a tough time leaving Deustche Bank!). The key at this stage is to be innovative – do not behave like a big corporate (I sometimes tell people it is better you don’t work for a big company and do a startup first thus you do not get bad habbits); innovation is more than the product being innovative but even in how you run your to-be trillion dollar enterprise. Start-ups succeed or die because of a few reasons; no out-of-box thinking….. and the rest will come in the next article J

Now to the not-so riveting ending; a little about myself. My name is Sachin (if you didn’t guess) and I am the CEO of www.nivio.com; something that has been branded the world’s first online windows desktop that lets you access a familiar windows desktop anywhere you go with all your data & applications sitting in the internet securely. In reality Nivio is ? (confused yet?) well its really what you want it to be – it lets you store data online, access a windows desktop that is yours, rent applications such as word or visio and also lets you share your pictures, music with the world at large!  So some quick facts; I am 24, studied at Imperial College in London and used to work at Deutsche Bank in London.

Seed to Startup #2 – the pitch book

Greetings from a very warm Singapore! Last time we had an encounter we discussed some of the real 36,000 ft stuff; what is a start-up, what is a seed company… in this section I hope to add some “juice” to what we had discussed and bring in some new concepts. Last week we mentioned some key steps to transition from seed to start-up; whilst they were quite conclusive they really missed out the two things needed for funding – why you may ask did I make such a grave mistake, worry not, it was part of the master plan!

So you have a great idea, you have done all the basics required to take this to a start-up but you are still missing two things; a pitch book and some market research. Whilst these are not required to transition to an early start-up stage they are absolutely required pretty soon after. So what do these really mean?

Let us start in reverse – market research is all about understanding your target audience (who are they, age etc), how they buy things, understanding the guys that sell to them and also understanding the competitive landscape (never say you have no competition you always do – think of substitute items etc). Whilst you don’t need to do this excessively in the beginning; definitely do not let it stall your business progress (at Nivio we almost made this mistake) as sometimes you may have a product that is industry changing and in which case the market research is more for understanding alternatives and market trends. Your market research will depend if you are an innovator (first to invent), a challenger (second or third to introduce a better version) or a me-too company (just copying but maybe on a niche specific basis or with better mass expertise).

Pitch book: a deck of slides / short document (no more than 7 – 10 pages) that really outlines the business and concept overview. The key points to remember when you work on a pitch book for your first bit of “seed” capital are

          Start with the conclusion (yes I am fully awake); a lot of people just don’t realise that the guys who are going to be your seed / angel funders are usually really busy, in a large portion of the cases investing into bright young start-ups is not their primary business and so they have very limited time. You need to hit the message straight home in the first slide / paragraph and it should be punchy enough to make them want to read more. I think a lot of people call this the “elevator” pitch.  In this you must include a brief on the idea; this cannot exceed three to four lines, an explanation on why this is the best thing since sliced bread and finally what is the wildest revenue potential and some brief explanation on why you think that.

          Rest of Document; the rest of the document needs to be slower paced that the racy start. You need to cover off points like detailed concept, market research (if you have done some, see next paragraph!), perceived risk.

          PLEASE NOTE: fancy presentations usually do not impress the person you are presenting to, I definitely believe that a fancy presentation at this early stage means your idea is not holding water on its own (investors will invest in your idea not your use of PowerPoint). Don’t get me wrong, we made animations when we started out on nivio but if you see our presentations – no transitions, no animation, simple and to the point. See some screenshots of the ones I used in the beginning. One thing I did realise as I went along – don’t put too much writing…

          VERY VERY Important: Like I said before, a lot of people you will meet in the beginning are angel funders by night but usually high flying business people during the day (in my case they were top investment bankers). When you go to see them, or speak to them remember one thing and one thing only – you need to be the light of shining energy to them; you need to be that person who gives them excitement and adds a new dynamic to their day; in essence you need them to want to speak to you more often (no this is not speed dating!) – A lot of the investments at angel level are gut feeling and a quick calculation on the person who is running the show. If you brighten their day you are almost 80% of the way there.

Ok I think I am running out of space so will continue this next time but between now and then try to do this – make a pitch book and try and present to friends and ask them if they got excited… till next time. Zài jiàn!! (Goodbye in Mandarin)

seed to startup #3 – the pitch

And hello again from a very chilly London morning – I cannot believe I am up at 5am writing this! So when we last met we talked about preparing the pitch book and we touched on giving the presentation itself – now I assume all of know you need to be smartly dressed and have oodles of energy when you go for the presentation itself. One tip I recommend for not getting nervous is to close your eyes and visualise blue light around you and coming in from your head to your toes – ok too much reiki for me. But in all seriousness; the calmer you are the better you will perform – remove what you are about to do is probably the most important piece of showmanship in your life (dont be nervous!).

In this scramblings I am going to go into the whole idea of getting your first round of seed capital; I warn you that this is not an exhaustive nor guaranteed route but it worked for us an Nivio and so I can only go by that option – speaking of which I have to do a pitch today!

The first thing is always find a good investor!! No but seriously, you need to study the people you are going to see, it is critical to look at who they are, what they have achieved and invested in, what is their risk appetitie – some people seem to be risk addicted!. You also need to understand what is their decision making process – will they take months or will they do it in a week or in an hour… I’ve experienced a combination. Usually the month ones will not invest and so you need to take a call at what point to ignore… one of our kind investors agreed for $750,000 in 45mins and one $2,500,000 in 6 days!

The other thing to realise across the board is that angel investors are highly intelligent; they will cut through the nonsense, have wide knowledge, are fast thinkers and are deeply sceptical of guys taking their money especially young guys because a part of them deep down wanted to be you – a free spirit! And this latter is the side you need to sell to –

Remember – decisions at this stage are about concept, heart and an eye-ball of potential – actually scrap that – a large portion of the decision can be actually about how you play to the angel and excite them with the concept and potential.

I think i’m reaching my quota…. do email me if you have any questions… sionara!

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