AS YOU KNOW THE NAKED BUSINESS PITCHER’S GOAL IS MAKING STARTUP AND ENTREPRENEURSHIP SIMPLE. SOMETIMES, BUSINESS COMMUNITY AND CONSULTANTS SEEM MUCH MORE OCCUPIED WITH CREATING WORDS AND ACRONYMS THAN GETTING TO THE POINT WITH EARLY STAGE ENTREPRENEURS. HERE SOME HOPE HELPFUL DEFINITIONS “BEHIND THE SCENES AND THE DICTIONARIES”-
|BUZZ TERM||MEANING||REAL MEANING
|ADVISOR||An individual providing business connections, guidance, advice and support to the entrepreneur as they develop and grow their startup||A business developer with a lot of experience that bets on your startup knowing the specific market. A startup advisor is definitely a BUSINESS PLAN INTEGRATOR, which means that is a specific outsurcer finding space in your BP and in charge to help you developing SOME SPECIFIC PART OF IT!!!
NO SUPPORT= if you don’t take care in choosing the right one
EXTERNAL CONTROL= if it’s just someone nominated by investors, incubators or the like and you have little or no control on this process
|ANGEL INVESTOR||Unrelated entity investing equity in a business venture, often later than founders, friends and family (the “3F’s”), but before larger corporate investors such as venture capitalists (“VC’s”) or wealthier individuals able to invest significant funds throughout the development of a company||Sometimes Dr Jekyll …or Mr Hyde
A real angel when:
–able to understand the characteristic of your specific kind of business
-possibly a “mature” subject, which means able to wait the right time and the right moment. In facts, most of the times business angels with “big wings but grey hairs” prove to be the best because they are not too anxious to monetize their investment
DEVIL investor: when one of both conditions apply:
1. b. angels are not able/willing to deal with difficulties…maybe because they are not experiences, maybe just because they become impatient….if they basically not trust the management/founder ability to steer the company in moments of trouble that will make startup entering a vicious circle where everybody will lose something
2. basically, they believe more in the business plan than in the entrepreneur: but in the real world plans need sometimes to be changed according to changing market conditions and that may cause some delay…but they should never interfere with company operations. If they do, they show that in reality they don’t really believe in the possibility for the startup to accomplish its vision.
|ASSETS||This word refers to all financial resources that a corporation owns.||Make sure and clear what the word “ASSETS” means in your specific case. If it’s clear for you, so will be for partners and investors too
ASSET is not necessarily equal to “financial resource” they are not always material/current but it can be, and most of times for startups really is, that they are represented by:
– SPECIFIC/UNIQUE SKILLS (be able to document it)
– EXPERIENCE (be able to prove it substantially)
– KNOW HOW (be able to protect it)
|B2B/B2C||Business to Business transactions occur when one business engages in commercial interactions with other business(es);
Business to Consumer transactions occur when a business engages in commercial interactions directly with consumers;
|Don’t lose too much time in puzzling about this point: most of startups don’t really know how it will end. They can still play with the market adapting like stem cells changing according to circumstances/opportunities.
It won’t be the first and neither the last time that:
1. a firm will soon realize that is much better to sell to another more structured company instead that wasting too much energy in trying to make market sensitive/interested to a new idea
2. a B2B born firm will instead undestand that getting directly to the end customer (and controlling market datas) is of capital importance
3. a B2B and a B2C approach can sometimes coexist
|CROWDFUNDING||Crowdfunding – “Crowdfunding” is the process of raising financial support for a venture via smaller amounts from many investors (“the crowd”)||Look to the opportunity with realism and not with emotivity
1. testing your idea;
2. anticipating market test (test marketability);
3. getting used to efficiently present your idea;
4. finding partners;
5. boosting your growt
The crowfunding platform work best for someone but definitely not for all types of businesses. When your idea:
1. is not well defined yet;
2 is too specialistic/difficult to understand:
3 is definitely too much B2B oriented:
4.need a particular caution in terms of non disclosure/protection (f.i. can be quite easily copied and realized by other subjects who often screen crowfunding platforms exactly for these reasons):
5 may face administrative and accounting challenges connected to regional/country specific regulation
|EXIT STRATEGY –||An investor’s intended method for liquidating its holdings while achieving the maximum possible return.
|A GROWTH PERSPECTIVE AND AND A POSITIVE INPUT TO DEVELOPMENT if fully agreed (and understood) between the parties
A REAL CAOS AND A SOURCE OF ANXIETY if rules are not clear since the very beginning.
Tacking for granted that one thing is sure, both entrepreneur and investor will, sooner or later, get out of the limbo and run away, there should be some formally agree rule. Then, future will tell because there is no general rule that can tell you the right moment to go (and how…selling to another investor, getting out through an IPO or an M&A etc)..so there should be enough flexibility form both sides too…
|CASH FLOW||Met amount of cash and cash-equivalents being transferred into and out of a business.||Be aware of what exactly you are talking about trying not to get too obsessed by this value. Is true, free cash flow is a bit like the blood that flows in our veins, without you are dead, but that sounds definitely too dramatic and probably not correct for a startup. Try to see more realistically cash flow like an indicator of:
–money range needed to support and service the startup itself;
-liquidity (you can be profitable but fail because of cash shortage);
–maturity…after a while being able to control and stabilize this value making reliable projections means somehow reaching the status of a consistent and structured company;
–insight: one of the few sources of reliable information on firm’s health;
–complexity of firm’s cash structure, because financial or operating or investment cash flow are different components of the cash flow concept
But in all the above-mentioned framework, what really counts is your long term vision; on an early stage, if you only think in terms of cash flow then all this short term thinking would kill your dreams…Rome wasn’t built in a day!!!
|INCUBATOR||An organization established to support the development of startup companies which grants access, to facilities, (office and lab space), resources and development programs, potentially including mentoring.||Look for an incubator not for a prison: if rules are too strict as well as interferences with your business development you should be fully aware of it and consciously accept it.
Look for an incubator not for an high tech condominium: qualified services are nowadays far more important than having a fully furnished office with parking place.
Be aware that incubators are a really different thing compared to accelerators, with the latter focused on speed/compressing time to market.
|COLLABORATION/GROUP WORKING||Using the principles of collaborative economy in order to accelerate innovation||Yes, OK, but entrepreneurship is not Mr Nobody’s task…make sure that your to be company is not too liquid!!! Is ME and not much about WE. In the end entrepreneurship is always about:
–identification with leadership (not uuthoritarianism but choosing a leader able to make the synthesis/choice between all received contributions);
-a bit of greed and selfishness
Consider that a widespread practice between investors is acquihires (acquisition + hiring), as they sometimes are not so much interested in the business itself as it is in the team, the talent. And the talent is often about the founder and /or a very restricted group of 2-3 persons.
–protecting the idea and (necessarily) making flexible (but clear) borders Nobody will invest in an insubstantial and undefined business.