…get paid to do it, and then sell it to thousands more.
When I was meeting founders over the last few weeks, I opened most of my meetings with a simple question, “How can we help?”
I received an identical answer three times, “I want to test my product in 500 restaurants.”
Wow. This was a side sentence that we had written in an email to founders to invite them to meet with us. It seemed to have struck quite a chord. “Test your product in 500 restaurants.”
Here is the background to this. Techstars, the Worldwide Network that helps entrepreneurs succeed and METRO, the wholesale giant that supplies over one million restaurants with food, run an accelerator program together. The METRO Accelerator for Hospitality, Powered by Techstars. This is a three-month accelerator program that focuses on tech startups that have restaurants or hotels as customers.
This program has one very specific element to it. METRO has a new division, called HoReCa.digital. HoReCa.digital has something they call a digital sales force. That digital sales force markets only digital products to restaurants and hotels. They do this in a two-step process.
First, they test the digital product with restaurant or hotel owners who are early adopters when it comes to tech. The owners love playing with new products. This test can be done in one of five countries: Germany, France, Austria, Italy or Spain. During those tests, METRO pays for the product; the customer gets it for free. But in exchange, they have to give honest, structured feedback about the product to METRO and the startup.
Second, when the feedback is positive, the sales force can take the product into a countrywide rollout. This means marketing it to thousands and tens of thousands of potential customers.
Let’s use an example to illustrate how this can work. In the 2016 METRO Accelerator program, we invested in a startup called Resment that was making HR software for German restaurants. We did tests with potential customers and found out that these needed three features. Of these, Resment had one, the second they had, but it needed to change, and the third needed to be added. Also, restaurant owners really did not like the brand. So Resment changed its name to Ask Paul, iterated on the features and subsequently had very positive resonance with restaurant owners.
Ask Paul successfully signed a country-wide rollout deal with METRO, and within three months, the METRO sales force had generated over 2000 qualified leads for Ask Paul.
So here is the thing. If you are an early stage startup, how do you access thousands of customers? How do you attract, hire and manage a sales force with seasoned people who know how to market to customers? How do you do this countrywide? How do you ramp this up quickly? How do you ramp this up without spending a lot of money?
Below is a picture of Ask Paul CEO Marc with the HoReCa.digital sales team. This is also his sales team (Ask Paul has full-time sales people, too). At the same time, this could also be your sales team, too.
One of the ways is to use the digital sales team as a shortcut to help you ramp up your structures and processes, and then to subsequently supplement that team with your own full-time staff.
This year, we are expanding this sales capability from one country to five. Germany, France, Austria, Italy and Spain. Every startup that goes through the METRO Accelerator for Hospitality, Powered by Techstars program will have the opportunity to test its product in 500 restaurants and hotels, get paid to do it and then to sell it to thousands more.
The program may run in Berlin, but the test with customers runs in one of these five countries, and the startups will frequently travel to their target country during the program.
Once you are selling in one of these five countries, can you sell in the others? Yes, you can. And thus you can also use the digital sales team to help you with internationalization.
If you want to test your product in 500 restaurants and hotels, get paid doing it, then roll it out to thousands and tens of thousands of potential customers, we would love to hear from you.
Techstars is a worldwide network that helps entrepreneurs succeed. To do this, we work with forward-thinking partners around the world to create unfair advantages for our founders.
METRO, one of the largest international food wholesalers, has been catering to hospitality businesses since its foundation over 50 years ago, and serves as a partner to founders to help innovate in the hospitality and retail industries.
A few years ago, METRO realized that in order to succeed in the future its key customer group, restaurants and hotels, had to increase their adoption of digital technology.
At the same time, numerous tech startups that see the opportunity are trying to offer solutions that could ease the life of the restaurant owner, improve customer experience, grow the business and so on.
METRO thought of bridging the two and giving startups an unfair advantage through access to its network and its customer base.
METRO CEO Olaf Koch was in New York in 2014 when he received an invitation to attend a Techstars and RGA Demo Day. Olaf’s plan was to only stay for 30 minutes, but he ended up staying much longer. The time Olaf spent at that Demo Day inspired him to do something similar to help progress METRO’s customers’ digital transformation.
In 2015, Techstars and METRO came together to launch the first hospitality focused accelerator in Berlin.
After 2 successful iterations of the program and 21 companies later, we’ve launched an additional accelerator program with METRO in Berlin, this time focused on Retail. Applications for that program have recently closed and the program commences on June 12th. But applications for the next METRO Accelerator for Hospitality, Powered by Techstars, are now open, you can apply here.
By the end of 2017, we will have invested in 40+ startups in the hospitality and retail space.
How can a corporate accelerator add value to entrepreneurs?
To provide the best resources for our founders, we work with the best partners to help achieve success. Here’s what we’ve learned about how an accelerator programs with a corporate partner adds value to founders:
Mentoring & Network
Corporate executives tend to have a very in depth understanding of their customers’ needs. They have a global view of these problems and can give both insights and offer to make introductions to founders.
Being heavily associated with a trusted household brand name like a corporate partner brings a certain amount of comfort to new customers. If a company like METRO trusts your startup, then others can, too. It can enhance a startup’s profile and build trust with your customers.
Corporate partners can function as a distribution channel for a startup’s product. METRO, for example, operates a digital salesforce that markets digital products to restaurants and hotels. This salesforce can distribute products to paying customers via a METRO pilot program in one of five cities: Berlin, Paris, Vienna, Milan or Barcelona.
We caught up with a few companies from past programs to hear directly about their experience and what they learned from working with corporate partners:
“The METRO Accelerator, powered by Techstars, stood out from other programs because of METRO’s board level commitment. We enjoyed one to one access to CEO Olaf Koch and his direct reports throughout the 3 months of the program, a privileged position to gain business and insights into the HoReCa and retail markets. Best of all, the collaboration continues after the accelerator.”
– Adrian Maseda, Co-founder, Cheerfy
“If you combine Techstars’ business excellence, their startup knowledge, and their huge network of mentors and investors with the industry experience and direct customer access of METRO, great things can happen. We experienced an intensive and challenging three months with hands-on support from the CEO down to each sales representative, gained deep insights to our industry and even continued the cooperation with METRO in various projects beyond the accelerator. We truly wouldn’t be where we are today without this experience, and highly recommend applying for a program like this.”
– Jan Saupe, CEO & Co-Founder of Lunchio
If your hospitality tech company is ready, check out the next METRO Accelerator for Hospitality, Powered by Techstars, starting in September. You can apply here.
In 2015 and 2016, Techstars ran the first two programs focused on hospitality with our partner, METRO, Europe’s largest wholesaler to restaurants and hotels.
The 21 companies that went through the programs have now raised over $50 million in capital. While this is very exciting, we are anticipating another benefit that we think can add serious value to startups: lead generation.
Over the last year, METRO has quietly been building up the Horeca.Digital unit. This subsidiary markets digital solutions to restaurants and hotels across five countries in Europe (Germany, France, Austria, Italy, and Spain). In those five countries, there is a dedicated sales force that does nothing but market digital products.
Now, every startup that goes through the METRO Accelerator for Hospitality, Powered by Techstars has the opportunity to run a pilot with Horeca.Digital. In this pilot, we test lead generation of the product with the Horeca.Digital sales force. If successful, there is potential for a multi-year lead generation agreement.
Over the last month, Horeca.Digital has delivered over 1,000 warm leads to one startup with which they have just signed a deal. Now this company has been scrambling to hire salespeople. What a problem to have!
If you run a startup where your product is aimed towards restaurants or hotels, you should apply for this program. Here are the details of what you’ll receive:
- An offer of 120.000€ of investment
- Mentorship from and access to key METRO and Techstars executives and leaders, other hospitality industry leaders, venture capitalists, and experienced entrepreneur
- An opportunity to test with METRO lead generation of your product to restaurants or hotels in one country (Germany, France, Austria, Italy, or Spain)
- Free dedicated working space in the heart of Berlin for the duration of the program
- A Demo Day in December 2017, where each team will present their company and product to hundreds of investors
- The chance to become a member of the METRO and Techstars alumni network for life
If you are interested in joining the METRO Accelerator for Hospitality, Powered by Techstars, apply before the final deadline on June 30th. If you apply before April 30th, we will be able to help give you feedback on your application.
There is no shortage of advice on how to get funded – Lots and lots of sophisticated advice.
Does it work? Yes.
Does it work for everyone? No.
For whom does it work then? It helps investable companies to get funded.
I have now invested in 27 startups over the last few years. Admittedly, we live in a great funding environment.
In all these investments, I have only seen a single company that should have been funded fail to raise. All other well performing companies raised a round. And in addition, a few that may have been less deserving.
The reason? Angel and VC investors by now are pretty experienced when it comes to picking companies. There are more active investors than high quality startups – the good ones get funded.
When we launch an accelerator program, I say the same thing to all founders: it is not my job to get you investors. It is my job to help you build an investable company. Once you have that, you should be able to raise the capital you need.
How do you build an investable company?
In my experience, founders go through some stages:
- Idea and first customers
- Insight and more customers to validate insight
- Building a marketing, sales, product, etc. machinery
- Building out the business
Each time, when you progress from one stage to the next, you become more investable. More progression, more investable, etc.
Now you know why it is called an accelerator. We work with companies to accelerate them to the next stage.
www.metroaccelerator.com is focused specifically on those startups that have a focus on hospitality and food tech.
Over the last three months with the METRO Accelerator, I have talked to 100+ founding CEOs and hundreds have already applied for the program.
What I am looking for is simple: Great founders who have tangible insight into their market.
I am becoming really excited because this is what I am finding:
- Online restaurants focused in specific foods and highly scalable cooking and delivery options
- Very low cost and marketable SAAS solutions
- Staffing solutions for hospitality businesses,
- Startups simplifying the supply chain for restaurants
- In restaurant / venue ordering solutions
- Mobile apps where restaurants can pull in physical customers
- New types of customer care software, e.g. Bots for hospitality
- Entirely new types of food
These are companies with experienced serial entrepreneurs, founders who have experience with high-growth startups, as well as complete first timers. In most cases, these teams have worked together for more than one year, all with real insights into their customers, products in the market and working on growing their businesses.
When I started three months ago, I didn’t know what to expect. Last year, we found a large number of startups at the idea stage. Now, we are seeing far more startups that have initially validated their market and are working on building a scalable marketing and sales machinery. That is actually a great match with what METRO is looking for.
If what I have already seen is an indicator of what else I will find, then I am super stoked.
Don’t be shy reaching out, you don’t need to get a warm intro to talk to us.
Last week I talked to a young, first time founder. Before we even talked about Techstars, he said, “You know what, we have raised a little bit of cash, we have a good advisor, we are probably okay, we don’t need an accelerator.”
You cannot imagine how much I cringe when I hear that kind of statement.
It is very difficult for me to convey to first time founders what lies ahead of them. Indeed, if they knew, they wouldn’t do it. “You don’t know what you don’t know.”
Building a successful startup is incredibly difficult. The reason is this: In order to build a great startup, EVERYTHING has to work out for you. EVERYTHING.
The CEO, the team, the market, the business model, the pricing, the marketing, the sales, the customer success, the design, the engineering, finance, HR, recruitment, culture, your investors, your board, your advisors, your competitors must screw up, the world changes in ways favorable to you, the tech stacks shift in your favor. And more. EVERYTHING.
If only ONE of those things goes really wrong, you will likely shut down. ONE key aspect wrong, company likely dead. You need to master ALL of them. And if you want to build a world class company, all of these better be world class.
That is very, very hard.
The question every founder needs to ask themselves is whether they think they are world class at those things. Do you know what it takes to be world class? Do you know how to recognize it? Where would you find those kind of people? How would you hire people who are? Which ones do you hire first? How much do you spend? Could you even afford any of them? What would you do with them once you hired them?
I am now 40 years old. I have been involved with startups for the last dozen years or so. I can tell you one thing with total conviction:
If I were doing another startup, I would try to get the best possible people around me. There are so many things that I don’t know and so many things I am not good at, and definitely not world class in many of them. The only way to overcome this is having incredible people around me. As many and as early as possible.
In this context, think again about a world class accelerator. In that accelerator, you of course get some cash, but here is what you really get:
An advisory team of 100+ mentors, access to a global network of thousands of founders who are on your side, the accelerator staff, the LPs in their funds, the corporate partners, the sponsors, the companies who provide perks and everybody else who is involved. They all work for the startups, because they want to, not because they get paid to do it.
I wish accelerators had existed 10 years ago. It is the primary reason I do what I do right now. It is the reason why the Managing Directors at Techstars do what they do. We do this, because we wish somebody had done it for us.
I personally think that getting everything I describe above for 6% founder equity is most likely the best way to spend less than 1/3 of a 20% option pool one could ever imagine. Maybe I am wrong. But then the startups I have been involved with had up to $300m annual revenue and 500+ staff. The best CEOs of these startups had the best advisors and mentors very early on.
Something to think about.
Applications are now open for the METRO Accelerator, powered by Techstars. Apply here!
Last year we announced the launch of the inaugural class of the METRO Accelerator.
One year later we look back on the 11 companies of the first class who have made enormous progress in a relatively short period of time. We are grateful to our mentors who have helped these companies, coached them, become customers or have invested in them. Thank you!
What impressed us most about the engagement with METRO in 2015 was the breadth and depth of its connections in the industry. METRO is connected to the food industry in 27 countries and its engagement with the founders in helping them build their companies was powerful and impressive.
If your startup is looking for traction in the food or hospitality industries, then the METRO Accelerator is for you.
It is with great pleasure that we announce today that applications are open for the second class of the METRO Accelerator in Berlin!
Hospitality and food tech startups from anywhere in the world can apply, regardless of whether you have already raised a Series A round or whether you are an experienced team starting to work on your next venture.
Applications will remain open until June 20, 2016. The program will begin on September 12 and Demo Day will be on December 7.
The program will take place in the heart of Berlin and will be run entirely in English. As with all Techstars programs, we invest €120k into each of the ten startups who will streamline and improve the way hotels, restaurants and catering companies work.
Metro Accelerator, Powered by Techstars: Creating an unfair advantage for Hospitality and Food tech startups!
I have some 20+ mentoring calls with founders each week. Many of them pitch me B2B ideas. Many of those ideas don’t work for one simple reason.
I think there are three B2B products that make sense.
1. Single decision maker
A single individual makes the purchasing decision. For example to use Buffer to manage social media. Typically these purchase decision are made by swiping a card and expensing it later. The price point here is $10s -$100s per month.
2. Department decision
You sell to a department. Say you are selling HR software. Or IT software. Or finance software. Several people can be involved a senior person / the department head will make the decision. You will send them an invoice and they will pay. The price point here is typically $100s — $1000s per month
3. Company wide decision
Multiple department heads are involved. The MD / CEO will make the purchasing decision. Long drawn out sales cycle and implementation processes are typical. Price point is typically $10,000s — $100,000s per month.
A good B2B business is typically priced in these bands, because the effort to market, sell and integrate the product with the customer means that unless products are priced at this level, they cannot be sold profitably.
So, when founder comes to me and pitches me a product that a CEO needs to approve that costs hundreds per month, then this leads to a short mentoring call where I would advise the founder to rethink what they do.
Do the math — your business is driven by it.
I have several dozen portfolio companies. Most of them send me monthly or quarterly updates. There are three items in the updates that I personally find more useful than anything else. They are:
- Cash flow / P&L top line summary
- Major changes / developments
- Problems the CEO is struggling with and wants help on
A hypothetical example is below. I wish all my update emails were like it. Call it the minimum viable update email.
Last month we burned through $45k. We are on track to turn cash flow positive before year end. We will decide in about three months whether we need a little bit of extra cash for working capital purposes or not.
There were no key changes last month. We have got two good candidates for CMO and will decide this month.
- We have some problems in our tech team. Our CTO isn’t experienced enough to manage through this. Can you recommend a mentor / experienced CTO to come in and help (this can be a paid coaching position)?
- I have been approached by a VC who wants to potentially pre-empt a Series A. How do I best deal with this?
- We have lost two important pitches against a competitor in December. Can any of you spare some time to talk through our positioning statements and sales process?
- I am worried that key competitor X has just closed a $8m Series A round (see here for more info), how shall we best deal with this (if at all)?
We recently published a list of Investors in Europe. I have now been approached by dozens of founders who want guidance on how to best approach these investors.
The best way to think about figuring out which VCs to approach is counterintuitive. Most founders try to pick the right VCs off the list. Given their lack of knowledge about each firm, they typically end up picking all the wrong investors (e.g. they are looking to raise a seed round and are picking famous US firms that are looking for Series A and B deals in Europe).
The right way to use the list is not to pick the right VCs. The right way is to exclude the wrong ones. This is how you do it:
- Make a copy of the list
- Remove all investors who are not investing at your stage (e.g. you are raising a seed round and they only do Series A and Series B rounds)
- Remove all investors who are only investing in specific geographies you are not in (e.g. they invest in Scandinavian companies and you are a US founder living in Germany)
- Remove all investors who are only investing in specific industries you are not in (e.g. you are an e-commerce company and they only invest in cleantech)
That is it. You should end up with a list of ca. 50–100 investors or so. That is your target list. You didn’t pick any of these firms. You just removed the ones that are not relevant to you.
Next, you need to figure out whom you know who can introduce you to these VCs. Use LinkedIn. Use Conspire. Make sure you are connected to all of your current investors, mentors and advisors. Also, ask all of them which firm they can intro you to and then show them the target list and ask them whom they know.
Craft a forwardable email. Send the person who should intro you to the VC that email. They will reach out on your behalf and, if successful, will intro you to the partner.
And that is how you use the list effectively. Good luck with the fund raising.
PS: I wrote a manual on how to best raise VC funding almost ten years ago. This is as valid today as it was back then. It explains all the steps in much detail.