The Pitch Checklist
How do investors evaluate your startup company? Let me take some of the mystery out of the process and tell you one approach. It’s not the only approach and different investors will put different weighting on different parts of your company. The goal of the post is to help you be self-aware and ask your yourself if now is the right time to pitch your idea to investors for funding. This is a different process then pitching your idea for validation.
Please remember that your personal/business need for investment is not at all correlated to your ability to actually raise money. Your business may require money. But the stage and traction of the business will be what is required to actually raise the money.
The following are listed in no particular order – think of this as a set of criteria as a whole. First the list, then the breakdown, with examples of the reason for the scores. This scoring applies to “Venture Scale” companies, not all companies. Venture Scale is where an institutional investor (investing other people’s money) can get a 10X-100X return on their investment. Other investors may look for smaller returns, but in general VC’s are looking for the potential for outsized returns.
All scores should be ranked on a 1-4 scale. I know my statistics friends will hate this method because there isn’t an odd number and the range is so small. By contrast, using a Net Promoter Version of 0-10 implies a level of precision that isn’t useful at this stage. Using 1-4 eliminated the middle score of human nature, being nice. Providing a “3” on the equivalent 1-5 scale doesn’t provide any useful feedback to the team. Founders will read the middle score as a false positive. In Seattle, it’s called “Seattle Nice”, people don’t want to give you honest feedback. It’s hard to give and many founders don’t take it well. The Founder Institute did a 1-5 Scale at but asked mentors not to use the three.
This is by no means is Quantitate Venture Capital. There are areas that can be measured for investment. However, this process is simply assigning numbers to predominantly qualitative criteria. Even so, it’s a critical qualitative measure.
- The evaluator hates (strongly dislikes) your idea – hate is such a strong word… so think of it as a “1”
- We don’t like it – not as negative as a 1, but still… you may have missed something in your pitch or a major milestone. Think about attending a Pitch Clinic or “6 Month Startup – Ideation to Revenue” and get some coaching.
- We like it! That’s not a 4, we don’t love it, but it’s a good place to start!
- We Love it!
Event Name: _________________________
Event Location: _________________________
Event Date: _________________________
Domain Experts Diversity Serially successful Founders From great companies Functionally competent (hacker, hustler, designer/marketer)
Big “category” Idea Early/Late continuum Technically Achievable “Pain pill or vitamin” In our investment thesis
Customer first focus Clear Value Prop Design/Ease of use Clear launch and scale offering
How big is the market – TAM/SOM Unmet customer need How many incumbents Nascent Go-to-market system
Barriers to Entry Differentiation Well funded competitors in Crunchbase
High transactional value Clear Profit Model Capital Efficient -anything about previous financing/cap table? Scalable No “Bad” things on Cap Table
Customer adoption Customer Engagement Early Revenue Know the Unit Economics
Emerging innovation “Meta” factors are favorable Established demand
IP Required IP in process
Notes on Scoring Examples
The examples below are just that, examples. Each investor is going to look at your startup company through their own lens. This is designed so you can both do a self-evaluation and understand how you will likely be judged. Scoring high does not mean they will invest in your company. Investors tend to invest in markets they know. For example, if your business is a B2C game and the investor does enterprise software. I’ve also found that people seldom invest in markets that are new to them, in one case I was running a company in China and investors were either intersted in the country or the business but if they didn’t know China they wouldn’t invest.
- Solo Founder or Part-time founder. Investors don’t like solo founders. It has nothing to do with how amazing you are personally, mind you. We just know that it takes more than one person to build a company. Solo founders tend to auger in on an idea vs feedback from the team when it’s time to make a change.
- Incomplete team or not balanced (lacking a tech or marketing role). Offshore development with no plan to bring on as employees
- A balanced team with complementary skill sets, market experience, startup experience. Some track record together.
- Experienced startup team with industry experience,
Bonus points – well balanced in gender, diverse. The data shows that diverse teams produce better results. Also, an early stage investor is going to be with you for 7-10 years so likability matters.
Negative points – married co-founders? Sorry, though I’m a fan, investors view it as a compounding risk. A relationship ending poorly is the fear, real or not. Just know what you’re in for, you don’t have to change, but that doesn’t’ mean the investor will view you differently.
- You’re doing the next “Groupon” or insert any other crowded market of competitors (Food Delivery, Home Repair, Travel Rankings). You’re solving a problem that isn’t really a problem. I love the internet connected belt idea, not.
- You’re a feature of someone else’s product or a tool. It doesn’t mean you are a bad tool, but it likely won’t be Venture Scale. Think plugins for WordPress or Shopify vs Shopify itself.
- Good market, though not huge, could change a market but not the world. Think about a product that has a limited geography, e.g. only Brasil and Portuguese.
- Disruptive ideas are very unique. When you find an idea that really could be a $1B idea it’s special. Big market with the right timing solving a genuinely big problem.
Bonus points – unique ideas are amazing and every idea is crazy right before it works. Excitement is valuable as people like to rally around a great idea.
Negative points – Your Non-Disclosure Agreement (NDA), no real investor is going to sign an NDA unless you have a cure for cancer or a real scientific discovery. Don’t worry about someone stealing your idea, worry that you’ll waste three years of your life not discovering that your idea had a fatal flaw that other people could have shown you.
- A concept on a napkin – the concept might be interesting it’s just that, only a concept. No working prototype – there are a number of ways you can get a prototype showing for cheap. Here’s a link to a Series of posts for how to build an MVP starting with a specification.
- Working prototype, but ugly. This is where the developer is the designer. Think about a home that has pipes and plumbing showing in the walls because the plumbing design (code) was so awesome it didn’t’ need an interior designer. Functional but ugly seldom gets a second chance. Minimum Viable Product (MVP) show’s what’s possible. At very least a PowerPoint demo including design.
- All of the pieces are they and your gaining valuable customer feedback from people. Basic functionality should be included, not just a WordPress site.
- Function and design, it works and it’s beautiful. MVP moves to KAP, Kick-Ass Product. You’ll know it’s a KAP if people go to download it after you do your demo.
Bonus Points – you’ve taken customer feedback and built an email list of prospects that give you feedback and have a regular cadence of shipping (two weeks). That email list should be growing every week as you get feedback.
Negative Points – live demo doesn’t work. It’s a “platform”, platforms happen when you have “scale”, not at your launch. Though that may be your aspiration you don’t have that today and it usually means you don’t know what customer you are going to serve.
The Market and Customer are two sides of the same coin but warrant some explanation. TAM/SAM/SOM/LAM are terms that address the “macro” market as a whole. Customer reflects the “micro” of the market
- Small Markets suck. Selling to customers that don’t have money means you are doing a non-profit. Sorry to be the bearer of bad news here, but an app for the homeless needs to be funded by grants and donations not by investors that expect a return on investment. Customer’s that don’t have money to spend on your product is also a problem
- You have a great launch feature, but the market and customer need a complete solution in order to use it. This means you’re going to need to raise more capital before getting
- It’s a good market, but no longer growing.
- You know both your market (large and growing) and your customer (persona). Nascent or new markets are exceptional, e.g. Uber or AirBnB.
Bonus Points – if you have experience in this industry or unique knowledge or a complex market.
Negative Points – you calculate your TAM wrong because you want it to be HUGE! Hypothetically you make headrests for front passenger seats for trucks. In this example, you’d say the market TAM was the entire automotive market vs the subset of seats, subset of passenger seats and real TAM of headrests for passenger seats and further to the automotive subcategory or trucks. It’s a ridiculous example, but you’d be surprised how often founder routinely overblow their TAM! Be realistic about the actual TAM.
- No Competition – this likely means there is no market. The positive version is that you are too early to market and it will take a long time for the market to catch up to your visionary status.
- Busy market with a lot of competition that has already been funded. This equals late to market. You know you are late to market if there are already a number of companies that have raised >$10M in the market. Even if your product is better, your ability to raise cash will be very, very limited.
- A little late to market but against lethargic competitors in this category. Entrenched incumbents that haven’t yet been disrupted
- Early, but not too early is a great place to be. Keep in mind it rarely happens.
Bonus Points – You know the gaps in the market that current competitors are not offering. These gaps have been discovered because of your knowledge of the market and customer interviews (50-100)
Negative Points – being cavalier about the competition. One challenge I see often is people waiving off the competition vs taking the Andy Grove approach
I admit I’m super Geeky about Revenue Models – someone needs to be. There are a lot of products that can be made with technology but shouldn’t be made because the founder hasn’t thought about the cost of selling the product and how to make a reasonable to exceptional profit. Knowing how you are going to make money is critical to the investor. From there point of view, it’s easy to get a check into a company, but hard to get a checkout. If you can’t explain the economics of how you’re going to make money don’t expect a check.
- You don’t know how you’re going to make money yet and you’ve only thought about the cost of building the product, not the cost of selling the product and a reasonable margin.
- Low transaction value markets – if you only make >10% margins or your margins are in Basis Points (BPS) there isn’t a lot of room for error on execution. You’ve created value for your product but you haven’t captured payment for the value created. Services businesses also fall into low rankings in this category, they don’t scale without adding additional staff. If you productize a service it will help, but they don’t scale like other models.
- High transaction or high margin – if you can start with at least one of these you show that you can capture value for the product.
- Recurring revenue subscriptions and combination business models (e.g. transaction fee + subscription) win the day for best score. Monthly recurring revenue is the truest gauge of churn. Annual Contract Value (ACV) is a good measure, but if you have a large price point you’ll likely have higher churn as you develop the product. NOTE: you don’t have to accomplish all of these things yet, you just need to know where you are going and have some early traction.
Revenue is the obvious starting point here but it’s not the only measure. Depending on the customer profile (think enterprise) you may need to be a whole solution before you can charge the customer. Your launch feature may be popular and become an “on-ramp” product that acquires customers for future revenue. Time on site/app may also be a measure of success, especially in the B2C category.
- No users – seems obvious but if no one is using it you have a problem. You may need money to fix it, but you’re not likely to get it from an investor.
- No payment from users – again, not the only measure
- Proof of Concept (POC) or Letters of Intent (LOIs), as well as early revenue, will get a score on the board. It shows a level of commitment from customers.
- Strong customer usage or strong initial revenue. Some rare B2C companies can move past word of mouth and into “viral marketing” – they can also become unicorns (again rare!). But if you’ve figured out how to get strong initial customer growth or for people to pay you early you’re going to score well in this category.
Bill Gross from Idealab talks about why timing is the most important factor of success in this video. It’s the best 7 minutes of video on the internet for Startups. You don’t ultimately control timing, they are outside factors that should influence your decision to start a company. Know, however, that your belief in why it’s the right timing may not sway your investors to that same belief.
- Too early or too late – you might be a visionary, but the market may still need to catch up to your idea. The other extreme is that you’re late, see Big Ideas above.
- Unclear timing – if you’re here you and the investor may not know enough about the market to make a judgment. If you don’t have any data about the market timing your score is going to fall into the don’t like it category. Think of this timing as “headwinds” that will make it more difficult to grow
- A little early or late – in this case, the investment capital is still available and hasn’t been pulled out of the market by 2-3 large players (think $100+ valuations with >$25M raised).
- You’re still in front of what could be a new or nascent market. You can think of timing here as “tailwinds”. You may also be in the current “hot space”
There are market segments where Intellectual Property (IP) is critical. This may include Patent, Trademarks and Trade Secrets. I’m not a fan of the investor question “what’s your sustainable competitive advantage“? In most modern tech-related companies your advantage will be speed to move and knowledge of the customer (through customer development). Regardless of IP portfolio, you need to have an answer to the question of how to build a competitive moat over time.
- No barriers to entry or defense. This might be because you’re selling someone else’s product (reseller) or your
- There is already a great deal of IP created in your market. You have a unique idea and product but the margins will make it difficult to build a defensive position or moat around your business.
- You have a path to defensibility. Building IP requires legal budget and time. People with patents tend to overvalue them. People without them tend to “waive their hands” at the value. They both have a place depending on the industry or vertical.
- You have speed, IP, and knowledge of the customer. You also have the budget to defend your IP.
We know you’re looking for capital, now the question is how much and what are the “use of proceeds” – what you’ll do with the capital. It’s important to connect these two items into one narrative. The founder usually knows why they are asking for $500k, but in the ask, it genrally comes across as “we need $500k to get us through the next 12 months.” What the investors hear is, “we’d like to get paid for 12 months.” The real answer is a “we have X, Y and Z milestones lined up over the next 12 months, $500k will allow us to hit those milestones with the necessary team.
If you’re looking for referrals to customers, give the customer profile and what you want. “We’d like introductions to Enterprise IT Managers that are looking for cyber security” don’t make the process dependent on them remembering your ask.
We know you have an ASK, tell us what it is!
Venture Capital firms tend to “over-index” on trends. Right now the trend is Machine Learning (ML) and Artificial Intelligence (AI). Smart capital will lead in that market based on an investment thesis. Others will follow. Then the category will move toward being overfunded. You see this with the use of “buzz word bingo” when startups through terms into their pitch because those are the categories that are getting funded.
Score yourself, your team and progress against this Rubric. It will help you know where you need to improve your progress before meeting with Angels or VCs.
I love office hours and listening to pitches – most of the time. This week I had an odd meeting that reminded me of some epic fails in pitching your startup idea. I will protect the “Pitching Parties” in this post and not identify them, but here are some quick reminders and lessons learned:
Don’t be on Time
This is just a business requirement to build credibility. If you’re late and the person has a meeting after you, your time will cut short. But more important than that, you’ve shown a lack of respect for the person you’re meeting with. This is a cultural and family of origin topic.
Some cultures (and cities for that matter) have a different range or minutes that it’s OK to be late – but generally is just poor planning and prep on your side. If you can’t make that time because you have another meeting or still have a day job, pick another time you can make. If it has to be early in the day, that’s ok. But don’t be late.
Stick to your script and topic of making your main thing the main thing of your meeting. You want to get into a dialog – but you need to make sure that the investor is asking the questions that you want them to be asking. Let me give you an example: you have a secret sauce, great, how will you explain it without compromising your trade secrets? You need to have that answer in advance. Waving your hands and talking about how magical your solution is or the awesomeness of your “superpower” doesn’t provide credibility.
If you’re the only one talking, you will never learn more than you already know. If the investor isn’t asking questions, they have either lost interest or they are bored. Neither of those outcomes are good for you. Plan breaks in your pitch to have enough “space” for you to take a breath and ask for participation. If an investor knows your market, you may want to ask the question “If this was going to fail, why would it fail?” You will learn a lot from that question and it may change your strategy months or years earlier in the process.
Don’t Have an Ask
We know you have one, just be clear about what the ask for what you actually want from the meeting. Are you looking for customer referrals, potential investment, team members? Even if you’re not currently raising capital you need to have an ask. At very least, ask for permission to put them on your regular email list – if you don’t have one yet, start it today. Every two weeks you should send out a summary email about progress and updates.
You get to set the final conclusion of the meeting. Leave yourself enough time to summarize what you want the investor to remember. I watch too many meeting trails off at the end and rather than ending on your strength they end in weakness.
First impressions matter – they cause early judgments. And early judgments are difficult to overcome without additional time. Time is one thing you haven’t yet earned in this relationship.
This was originally published on Dave’s blog
What do first time founders need to know about fundraising mechanics? This post should help you understand the basic lingo of fundraising – so you don’t look surprised or sound like a noob when you’re discussing funding. An attorney will go into a lot more detail and it’s important that you understand investor motivations – not all capital is green.
Please keep in mind, this is a founder’s view, I am not a lawyer – this isn’t legal advice. There are always exceptions to every rule. Especially in legal where optionality creates billable hours. Ask about costs with lawyers in advance.
Starting at Incorporation
Let’s start with incorporation. Who owns what percentage and what is a common number of Issued and Granted share and how do Stock Options play into the equation.
When you incorporate, you will Authorize (Authorized) Shares and Issue (Issued) Shares. Authorized is the total number of shares the company many issue over the lifespan of the company without changing its Charter with the State (incorporating entity). Typically this is a large number of shares so you don’t have to go back to your state or government agency to issue additional shares at a later date. Your corporate Bylaws and Charter will dictate how you can access these additional shares.
Issued shares include the number of shares for founders at the time of incorporation, the Stock Option Pool – usually 10-20 percent depending on if early employees get a grant or an option. As well as preferred shares that you anticipate selling in the early rounds of funding.
For example, if you wanted to increase your stock option pool, it would require documentation and a vote of the Board and perhaps shareholders. There are two types of shares at formation:
- Common – the most basic of the shares
- These shares are granted to founders and early employees at the time of incorporation or held in reserve
- The 6,000,000 shares, in this example, would be divided between the founders – see Awkward Co-Founder discussions for more on that topic
- Preferred – as implied, these shares will have a preference of some kind – but the preferences will be determined later. The preferences will change with each Series – or round of funding and generally grow in complexity with preferences, see below
- These are the type of shares sold to investors
- The specific preferences can change with each round of funding
When you incorporate your company the value or basis of the stock is (hopefully) the least it will ever be. At that point in time, you are granting Issued shares to the founders. This grant is in exchange for an Assignment Agreement and anticipated work to be contributed to the organization.
This is usually calculated in the fractions of pennies – so 3,100,000 shares may reflect a cash contribution of $3,100. This is likely the cash you and your partner(s) will be contributing to pay the legal fees or other costs associated with the early project work. This creates a basis for your stock price – when you sell it later, it reflects the cost you have in the stock. Think:
Total Sale – Basis = Taxable Income
Your Attorney Represents the Company
Not the founder. If you want someone to represent you and your founder team, you’ll need to pay them outside of the company funds.
The attorney also doesn’t represent the investor – but they may try to cozy up to them. In one of my startups we had a big name investor (I won’t name drop here) and our attorney decided that he might get more business by helping out the investor. This is not “good form” and professionals should know better. We ended up letting that attorney go and finding another one in the process.
Board Members also represent the interest of all shareholders – it’s called fiduciary duty. They will be required to vote their shares – especially if you have a class of shares to vote. However, they need to represent the best interest of the business. More on this topic in another post.
You’re now incorporated, you’ve established your basis for the stock. In the US you’ll need to file an 83B election.
Stock Options – are the shares held by the early team members or contractors. These are typically Incentive Stock Options (ISO) or Non Qualified Stock Options (NSO). ISO’s have favorable tax treatment of Capital Gains vs Regular Income (more in Joe Wallin’s blog). They are shares granted at the time of employment or generally the next Board meeting.
- Strike Price – this is the price the shares are granted at the time, at incorporation, it’s likely $0.01 per share. As a later option it will be closer to the fair market value – for more details see Fair Market Value of a Startup. Keep in mind they can’t be granted at a cheaper rate than Fair Market Value without creating a taxable event. The price is the same price for everyone you grant options at that time.
- Vesting Schedule – is the term in years that the shares will vest. Usually three or four years, it can be monthly or quarterly. Let’s use the example of a four year schedule with a one year cliff. Cliff Vesting – usually the first 12 months is the initial vesting schedule.
- 60,000 Share Grant example
- Strike Price of $0.10 a share
- 365 Days = 15,000 shares vested
- 45,000/36 remaining months = 1,250 shares vested per month
- Reverse Vesting Schedule – for a founder, when you are granted shares at incorporation you own the shares, however, you may be asked to reverse vest those shares. The reason is simple, let’s say you own 35 percent of the company and you decide at month 13 that you want to go do something else with your life – things happen. If it was similar terms as above
25% for year 1
2.7778% (or 1/36)
Total Founder Shares at Exit
This leaves 2.26M shares available for the company to use to hire your replacement or replacements over time. Think of this as a “must be present to win” tax. Remember, as much as you might think you are “owed” these shares as a founder, the market recognizes you have to keep contributing as an employee to keep the stock.
A convertible debt is a debt instrument used to put money into a company without having to put a price on the value of the company and the corresponding value of the shares. This funding mechanic is good for startups in a number of ways. First, you think your idea is more valuable than it really is, all of us do, so you don’t have to price the stock lower than you would like.
Second, the legal costs associated with this type of financing should be the cheapest option for your startup.
- Convertible Debt
- Amount – of the individual and as a total
- Term – accrued interest over what timeline
- Rate – usually in the 6-8 percent range
- Conversion at Qualified Financing – this stipulates reason for converting and the minimum amount to be raised – this would include accrued interest from the early investors
- Cap – a cap is the reason a investor is interested in this financing mechanic. In the case of Techstars, it converts at either the lessor amount of the financing or the “Cap”. For example, the cap may be $4M. If you raise a $1M at $5M pre-money, the original investors are effectively in the money from their original investment – though they can’t sell the stock at this point.
Debt is “first in line” to get paid if the company was to fail and you have to sell the assets (assuming there was value). What that means is that if you have IP that you can sell for $100k and you have $1M in convertible debt holders they would get a pro-rata % of that sale before shareholders – like founders – would get paid anything.
Keep in mind, these early investors are taking the most risk at this stage of your company and most don’t want to simply get paid back their principal and interest. They are looking to actually own the stock.
Selling Stock – Preferred Shares
Preferred Stock sales is a priced round of capital to be sold. Generally it “stands in front” of common stock until a company goes public, at that time all of the stock generally is the same – all common. Their are exceptions, like the Killer B stock, but in general an IPO converts all stock to common. The size of each of these Series depends on your location, e.g. the Valley has bigger funding rounds than Iowa City.
Keep in mind, when you sell new shares of stock in the company you are not selling your shares, you are taking shares from the Issued Preferred Shares. This will cause overall dilution to all shareholders, but the cash will go to the company and not to the founder.
- Series Seed – Series Seed documents are an open sourced set of documents designed to be both company and investor friendly. The goal of Series Seed is designed as a template your lawyer can use to keep the documents cheap – you don’t want $30k to go to the lawyers for a $250k round of funding.
- Series A – the terms of a Series A round of funding is set by the lead investor. It’s a negotiation, but you’re not completely in control of the process unless you are killing it on your forecast to actuals numbers and have multiple investors that want to lead the round. Having competitors always matters in getting the best Term Sheet.
- Participating Preferred Shares – this means that they investor will get their money back and then participate like the common shareholder.
- Series A Extension – extending the previous round and fundamentally the same terms.
- Series B – simply comes after the series A, can include a range of different terms
A Few Other Provisions
Here are a few other legal terms you’ll see on term sheets
- Pro-rata participation – this is a provision that allows the investor to keep their pro-rate percentage in future rounds. If they invested and have a 5% share, they have the right to keep that 5% share if they continue to invest in the up rounds
- Down Rounds – Cram Down Rounds – if you missed your numbers and are running out of cash, but your investors believe in what you are doing you may be faced with either a down round or a cram down round.
- Down round is simply a pre-money price that is lower than the post money price of your last round – your company has effectively gone down in value
- Cram Down is where an investor forces other investors to participate or effectively crams down their percentage of ownership.
- Drag Along/Tag Along – is a provision that allows and protects majority shareholders to pull along a minority shareholder, specifically at the time of a sale.
Questions about fundraising? Use the comment function below.
This was originally published here.
How much equity should you give early team members and why? This list includes mentors, advisors, board members and potential co-founders in your startup.
I’ve personally had challenges on this front and find it an area that benefits from experience (read as mistakes). I know I’ve both over-asked for equity in early days as well as been promised equity that never materialized and was forgotten after the company was sold. Neither was right and I don’t think either was nefarious – below are some ranges of what you should expect to ask for or offer… The context here is regarding the formation and early stages of the company.
Value is created when you build and grow a company – not when you found a company.
Mentorship is free – or at least should be. Mentorship is something you do to give back to your community. Yes, there are people that use it as a way to sell their services – but you’ll discover them soon enough. You should plan on buying the lunch/coffee/beverage.
One way to pay for mentorship is simple: pay it forward. Are you currently mentoring someone coming up behind you? Do they look different than you? The answer to both of these questions should be yes. You can always find someone that needs help who is a “couple of chapters behind you in the book.” What skill set do you have that you could mentor?
The point about not looking like you may seem simple – but the comment is about being intentional. Selection bias and our own networks tend to keep us insular. Dudes help dudes… white dudes help white dudes. Really? Branch out. Here’s a great article on Men who Mentor Women at HBR. I’m thrilled to say a friend of mine sent it to me because it reminded her of our relationship – that is something to be proud of, just saying.
If you find that you’ve met with a specific mentor on a recurring basis – don’t take the relationship for granted, make it more formal. Especially if mentors continue to show an interest and add value, consider moving them up the ladder to advisors. You want your company to survive and grow – it’s good to have aligned incentives. They may say no, and that’s okay, but the offer shows that you respect and value their time.
Advisors go from the informal mentors to a more formal and structured role that recognizes their contribution with compensation – usually equity.
Founder Institute did a great job putting together a matrix and Founder Advisory Standard Template (FAST) agreement, a five-page document that gets you to an agreement with equity assignment easily. The document is very straight forward, make two copies and fill in the blanks. You keep one copy and the advisor keeps one copy.
Here is the table: Note it’s broken into stage and roles. With roles come expectations for involvement. The more mature the organization and product, the less equity you will grant.
Keep in mind, the numbers listed above don’t mean that you will get an advisor or an experienced advisor for that minor percentage. The Advisor has to decide what makes it worth their time and how much time/knowledge/effort they are willing to provide.
I know you’re excited about your idea, but that doesn’t mean they will be excited about it for any percentage that begins with the phrase BPS vs percentage of equity.
You could pay a couple of points for an advisory board member with the right experience.
To maximize the value of advisory board members, I’d recommend that you establish a quarterly meeting. It serves the forcing function of driving you to deadlines – also, it reminds you of what you promised last quarter and if you’re delivering on it this quarter.
Board Members take an entirely different level of formality, primarily because of the fiduciary responsibility they sign up for the company – this duty isn’t cavalier and I would be careful asking someone to join your board too early. Test Advisory Board Members first for a season – if they continue to add value and the need for a formal board is there (maturity of the company, progress toward traction, etc).
Board compensation can be in equity, cash or blended. Independent board members need to be compensated – venture board members are being paid by the firm to watch their money in your deal so don’t generally expect compensation – other than travel.
Depending on the stage and need of the company, it’s at two to five percent. If you’re really early, haven’t raised capital and need the name on your deck/website to help raise the cash, it’s likely at two to three percent. Is it worth it? Well, if you can get to your end game faster the answer is likely yes.
If you’re looking for someone to join your team early and help grow the company, this looks more like a co-founder. The distinction here is how much time and effort do you expect the person to contribute and for how long?
The Foundrs site is a great calculator for contribution – remember everyone has expectations even if they haven’t expressed them. It’s expensive to unravel these expectations in a year – do it now.
Don’t be cheap – if you have a first sales hire that can help grow the company, set milestones with the stock grants based on hitting revenue milestones.
Don’t be naive – the entire point of the post is to help you understand the range of what you should pay and not pay to get work done. If you’re looking for a project deliverable, you can calculate the number of hours required, multiplied by the market (or discounted) rates and provide some sort of options to the contractor or vendor.
If you’re expecting overlapping roles for the above, make sure you have those roles outlined in advance so everyone has a clear understanding of the expectations.
All of these roles have vesting schedules and strike prices for the stock. If the individual isn’t performing – let them go and put the stock to better use with the right role. It won’t get better.
One of my Board Members in my first company told me emphatically that you hire professionals to do legal and banking work. What he meant was that you don’t try to be your own lawyer. You can project manage your lawyer to keep the cost down, but don’t pretend you are a lawyer. I’ve spent a lot of money on legal over the years and I’m comfortable reviewing basic docs as the initial process review, however, that doesn’t take the place of the final legal review.
You will pay a premium rate for a premium attorney. However, you can set fixed fees for projects – it’s amazing how the expense will cap at the fee.
For Bankers, you can expect to spend 7-10 percent of the transaction fee. Some bankers will want a retainer – generally, I’d say no to that retainer and put it as a success fee only – your circumstances will dictate. You might split that fee between cash and stock. But it’s not 10 percent on cash raised plus equity.
Finally, keep in mind you want a real banker – someone with a license (at least in most states). Not someone that says they will help you raise for a fee. Run away from those people.
This was originally published here.
As you prepare for your fundraising effort, you need to get the basic tools of the trade completed before you start the process.
In part one of this post, we covered traction and the executive summary. In this post, we will dive into pitch decks that will raise capital and financial models.
The goal is to create competitive term sheets, from multiple investors, for your growth capital.
Pitch Decks That Raise Capital
Guy Kawasaki has written about his 10/20/30 Rule in the Art of the Start. I highly recommend that resource. The idea is 10 slides, 20 minutes and 30 point font. My 10 slides differ slightly, but I’ve found it to work for me.
Design matters here as well. Spend some money on design. Sorry to offend the engineer here, but your design is like looking at a plumbing schematic. That’s not design. Make sure it’s consistent with your overall site design, color scheme, and logo.
If you print it out, make sure you’re not consuming a massive amount of ink in the process.
The feedback you will get in each pitch will provide directional changes to the pitch – some will be major, some will be tweaking and anticipating the questions. You’ll know you have the deck dialed in when you get a question that is answered on the next slide. (hit right arrow to continue!)
Components of the Pitch Deck:
1 – Overview – you should start your deck with an overview of the company, problem, solution, etc. You need to do this for two reasons.
First, investors are looking for early context – “is this the type of investment that I like or have made money in before” is likely one of the thoughts going through their head. So answer the question.
You also will face circumstances in delivering a pitch deck where you will only have time for one slide – so be prepared.
- This may be the only slide you get to present. I have literally taken an elevator to a parking garage with an investor that was double booked for a meeting – that one slide was all I had a chance to pitch, yes, in an elevator.
2 – Problem – what is the problem that your product or service is really solving? Is it really a problem? Be ready for the painkiller vs vitamin question here. Have you talked to enough potential customers through customer development interviews to really validate the problem? What will they pay for the solution?
3 – Solution – what’s your solution to the problem? Is it a website, a mobile app, a brick and mortar store? Get out of your head and be very clear about the solution.
Think about the drill bit and the hole analogy here. No one wants a drill bit, they want a hole.
What is the solution you are delivering, how will it make the customer feel or what result will it give them?
- What is your secret sauce? What makes your solution novel?
4 – Target Market – How big is the market? What is the TAM, SAM, SOM and Launch Addressable Market or LAM? You need to show that this is a big market that places value on your solution. Rich target markets are better than poor target markets. Do they have money to spend?
- How will you get to them? This is the marketing and sales component.
5 – Traction – have you shipped an MVP or prototype? Do you have revenue and customers? Traction will be required before you raise capital. The days of “back of the napkin” ideas getting funded are over in all of the cities where I have been. Your need for funding and your ability to get funding are directly connected to traction.
- Traction is a priority in your presentation – it changes the discussion from a theory to reality – keep it near the top of your presentation.
6 – Economics – what are your unit economics? Have you built out a spreadsheet with both revenue and expense growth for a three-year (not five) model?
Everyone knows the model is wrong, that’s OK, investors want to see that you’ve taken the time and the discipline to actually do the work to understand the model (Venture Ready Model Template here).
You’ll need to understand your Customer Acquisition Cost (CAC) as well as Lifetime Value (LTV). You can put a chart here if you’d like, but the unit economic discussion is more valuable.
- Investors know that this is going to be wrong. The question is just how wrong – see below in financial models.
7 – Competition – every startup has competition, even if the competition is to keep doing what the customer is doing without your product. What is the competitive product map?
Having no competition is a major red flag.
8 – Team – what makes your team the right team for this challenge? How long have you known each other? Investors like to see you have a track record of working together. Do you have complimentary skill sets? Overlapping skills sets are generally bad unless it’s in engineering.
9 – Ask – what do you want? In the venture world asking for cash usually gets you advice and asking for advice will occasionally get you cash. Do you want introductions to potential customers?
- If you are asking for cash, don’t simply explain that it will pay yours and your co-founder’s salary for a year. That is not what the investor is interested in, tell them what it will actually get the investor – raising $500K will get us through MVP launch and the first 100 customers. Pick real (believable) milestones you can hit with the capital requested.
10 – Summary – what do you want them to remember. Keep in mind that you are likely to pitch a Junior Associate. Their career at the firm is based on their ability to pitch your idea to their partner (without sounding stupid).
If you summarize for them, they should be able to make your pitch. If you don’t summarize – you risk them doing it (or not doing it if they feel like they can’t repeat your “concept”). Don’t forget your call to action – is your contact information on the deck?
Financial Models for Startups
Investors know your financial model is going to be wrong – the question is how wrong?
Financial models are difficult if you don’t have experience or training building a model from scratch. I’ve written about this extensively on Venture Ready Models. Don’t start from scratch if you don’t have to!
There are standard formats and GAAP language that needs to be used in your financials. Like the design comment above, this is another place you should spend some cash to get it right from the start. You will still need to “own” the document, even if you’re not a finance person.
At some point, some investor is going to ask a question that will drive you to the spreadsheet.
You need to know where to find the formula.
You need one tab with all of your assumptions. That way, the investor can clearly find your unit economic assumptions that are in both your deck and summary. Keep these synced over time, it’s easy to tweak one document without doing the others and have numbers that don’t match. Don’t make rookie mistakes.
Again, the investors know that you are likely wrong at this point. However, you are showing that you have the discipline to engage in this process, you’ve put numbers into fields that require a hypothesis and you’ve spent time thinking through your core assumptions.
Tracking Your Sales Process:
Remember, at the start, I called this an enterprise sales process. That means you’re going to need to implement a tracking process for your funnel. Most founders don’t do one pitch and get one check. Track your process just like you track your customer process
- Create a Google Sheet to track your contacts
- Research the contacts first
- Use Crunchbase to review their recent investments – do they invest in:
- Your stage of the company?
- Your vertical market?
- If not, move along, they aren’t likely to invest in you.
- Use Crunchbase to review their recent investments – do they invest in:
- Track companies, names, emails, add links for Crunchbase as well as links to LinkedIn profiles.
- Get introductions via LinkedIn – cold calls are not preferred by investors, but that’s not a reason to write them off. When you can use warm introductions, do so.
- Track notes of what you discussed – they will likely remember and you will likely forget.
- Have your documents ready to send.
- Build an email list with Mailchimp.
- Ask for permission to send regular updates
You’ll find your groove in this process, but remember, you’re in it for the long haul. Someone who says no today might say yes next year on your next venture.
Fundraising is an Enterprise Sales Process. Which means it’s going to take time to get fundraising done and you’ll need a lot of prospects at the top of your sales funnel.
As you prepare for your fundraising effort, you need to get the basic tools of the trade completed before you start the process. The Executive Summary, Presentation and Financial Model are your marketing collateral to sell your product. You’ll build a funnel of prospects, requiring both research and introductions.
The goal is to create competitive term sheets, from multiple investors, for your growth capital.
In this post, we will dive into traction and the executive summary. In part two, we will cover pitch decks and financial models.
Traction First – Before Fundraising
Before we begin – I need to point out two not so obvious points for founders:
1 – Your need for capital does not mean you can raise capital. I’ve been there, you have constraints, lack of cash, lack of engineering resources, and you need the money to pay for design.
All of that is a reality that stands between you and the fulfillment of your product vision. Get used to it, even after you raise the capital, you will continue to have constraints.
You need to find a way to get customer validation and traction before you raise money. That’s what the investors will require you to do before writing a check.
2 – Completing these presentation tools doesn’t mean you’re ready to go raise money. All too often founders complete a pitch deck and confuse doing that work with the “Real Work” of customer validation, traction and revenue.
Your product offering and company need to be at a point in the maturity of the company that you have proven your concept with data. For example:
If the idea of the product or service is known to the market – e.g. you’re creating a competitive product, this can be a direct competitor or a derivative competitor in different markets, then you have a known comparable or “comp”.
Let’s say you are copying a former employer and building a competitive product. The investor risk, in this case, is mostly on your team’s execution of your plan. You have to answer the question: “can you build a competitive product and market and sell it better than your former employers?” There are known unit economics, pricing, conversion ratios, etc. The competitor, in this case, your former employer, has an enterprise value or a comparable.
However, if you are launching a brand new product into an unknown market, e.g. AirBnB before it launched, the risk is greater than just execution. It is also now a question if anyone actually wants the product you are proposing and which market wants that product for what price. In this case, the unit economics are speculative and there isn’t a comparable. With that, the reward for the investor is also potentially higher.
That’s why customer development and traction is so important.
Remember, investors have opinions and checkbooks. If you have only an opinion, your opinion combined with customer data will get you to the checkbook. If you have a new product, unknown market, and unknown channel, you need to at least have 50 customer development interviews that show why people will want to purchase your product.
Business plans are dead – at least in the tech market.
The reason is that a 40-80 page document is irrelevant given the dynamics of actually interacting with potential customers. Remember what Mike Tyson said – “everyone has a plan until they get punched in the face.”
That’s not an excuse for not planning – just a reminder that a plan doesn’t reflect the reality of the world and that you are better off doing the customer interviews and getting traction than sitting in your basement writing a plan.
Having the documents ready doesn’t mean the company is ready.
Startup Executive Summary
The Executive Summary is the two page summary of the business. It addresses the Pitch Deck content (problem, solutions, etc.) in a narrative arc that tells a story. The purpose of the Executive Summary is to “get you in the door” for the meeting with the Angel, Angel Group or VC.
No one is going to write you a check from any of these documents alone. Think of this as a process, you’ll still need to do the meetings, build a relationship and pass the due diligence process. But without doing these docs, you’ll look like a noob and won’t raise any cash.
Do the deck first, then draft the summary from the pitch deck. Remember, it’s only there to help you get the meeting and will be sent over in email as part of the meeting request – resist the urge to detail out all of your plans. It should match your website.
You won’t need to send the deck in advance. It serves as the discussion guide for the conversation you will have in the meeting.
All of these documents should sync, from your website, summary, and financial model. When they are out of sync you will get questions. Do the work, pay attention to the details.
This was originally published here.
How should co-founders split equity in a startup? What should you discuss before formation of the company? This post outlines the discussions that you need to have, including a framework for those discussions. I’ve also included some tools you can use to help define equity splits at both the early stage as well as the operating stages of your startup.
It’s sad when I get asked the question about how to rearrange equity “after the fact” or post incorporation because the co-founders didn’t have a discussion before they incorporated – thus the title Awkward Co-Founder discussion. Regardless of the timing, it will be awkward, it is a negotiation and resetting expectations – I’d recommend you get it done while is cheap!
First, let me point you to a previous post on why 50/50 is the only wrong decision. I still believe this to be true and even though I’ve blogged about it that doesn’t make the conversation any easier to have with a new co-founder. Someone should be the lead. It’s the first difficult conversation that you need to have and it likely means you kicked the can and split the stock equally vs. taking on a known issue.
The goal of this post is to give you a framework for productive discussions, ideally before you incorporate. We’ll work through the post-incorporation topic in the second half of the post.
This is a “Two Event” process. What I mean by that is that you need to put a discussion on the calendar with your co-founder(s) for “Awkward Co-Founder Discussion Meeting 1 of 2” – call it what it is, it’s not comfortable, but it needs to happen. Plan it offsite, not at the power of one person’s office, no white boards are necessary, just a discussion.
Meeting 1 of 2
This is the first meeting, grab a beverage of choice and settle in for an extended discussion. It’s not so important that you get to the answers at this point, but you’ll need to start discussing the questions.
First, recognize this moment is likely “as good as it gets” for your relationship. I don’t mean that to be negative, just realistic. Right now, the world is laid out in front of you! You’re in love with your idea – the product is brilliant and your either going to:
- Change the world
- Get Rich!
That’s what I mean, this is as good as the honeymoon period gets. You haven’t talked to 50 potential customers and had them tell you why the idea won’t work.
You haven’t done the 80 hours a week while your partner works at their day job and brings home a paycheck when you haven’t.
You haven’t yet talked to 50 investors and have them tell you to come back and see them when you get “traction” whatever the hell that is!
Here are the first set of discussion topics to discuss:
- What do you want to achieve with the company?
- Grow and sell? How much is enough?
- Build a great company over the long haul? Is this your forever company?
- What type of Company Culture will you build?
- How do you value people?
- What type of culture will your company be known for?
- Capital in vs. Capital out
- How much cash is each of you putting into the company?
- Do you need to take cash out?
- How long of a “runway” do you have of “personal runway until you need to go get a paycheck?
- What’s your passion for the idea?
- Who’s leaving their day job (or who doesn’t have a job?)
- How passionate are you – do you want to stay when it’s tough (and you’re not getting paid?)
- Do you share the same work ethic and how it manifests?
- Do you work early or late – stay until it’s done
- Are you more of a 9-5er?
- How well do you talk about awkward topics?
Each co-founder needs to go to Startup Equity Calculator. Input your individual view of the contribution by each founder on the organization. Print out your results and bring them to the next meeting for discussion. If you feel awkward about the results – for example, you’ve overstated your contributions, you can recalculate and see the differences. But each of the partners has a hypothesis. This tool is just a forcing function for the discussion.
Note here: The value of the idea is alway higher to the person with the idea. When you hear an investor say that “ideas don’t matter, only execution matters” know that is a semi-truth – the fact is that bad ideas matter and big ideas are truly rare. It is true that execution is more important. However, if you execute a flawed idea, you’ll just fail faster.
Now, take a week of time to go process what you’ve learned and set the next appointment for the second meeting date.
Meeting 2 of 2
Bring your printouts with you to the second meeting.
- What did you learn about each and yourself other from the last meeting?
- Any surprises?
- Everyone talks and listens?
- Share the print out from the equity calculator
- How close are you?
- Who over/underestimate their contribution?
- Why did the evaluate themselves that way? Listen
- How will you be dividing up the responsibilities?
- Are roles and deliverables clear? How about deadlines?
- Who has put in what cash at this point?
- Will you each bring it to pro-rata amount?
- This will determine your basis at time of incorporation
Set the third meeting if you need to have more time to discuss the outcomes.
Time to Incorporate
Now that you’ve had the discussions and have done some market relevant math you should be ready to incorporate. Have you agreed on the splits? If you have issues, now’s the time to address them head on. No passive aggressive behavior and no “we can just take care of that later”, the time to take care of it is now!
One of the things you’ll want to include in your documents is a “Reverse Vesting Schedule” – you’ll be granted stock for a minuscule price at the time of incorporation. The stock is granted, but like a vesting schedule, if you leave early you don’t get to keep all of your stock.
That way the clock can start on your 83b election and (hopefully) when you sell the company you can be taxed at capital gains rate vs Regular Income rate – this is a slight digression but something you should talk to your attorney about before you select who’s going to do your documents. If she/he doesn’t know anything about 83b (assuming the US) then find a different attorney.
What reverse vesting provides is that is one of the co-founders departs the company, say at the 12-month mark, you’ll need to get the remaining three years of unvested stock back to backfill their role in the company. If they were the lead developer, you’ll need another lead developer.
This is a topic about company health and chance for success, not about you personally.
People, circumstances and enthusiasm change over the time growing your startup. You need to be able to address those changes as you build out your product and ultimately a company.
For this term, you’ll find a good resource in the tool/book called The Pie Slicer by author Mike Moyer, it’s designed for bootstrapped startups where your equity is based on contribution. It’s a very clean way to think about contribution over time. When you add your profile, you input your market rates less what you are currently being paid by the startup.
So if you were a developer and market was $100k and you were getting $4,166/month you’d be getting 50% of market rate (I like simple math when I can).
You don’t get to inflate your math – and you should agree on what market it before you start the exercise – e.g. agree on your previous salary.
Mr. Moyer has also built the app to track over time so that you have a Cap Table that can be calculated at the time someone exits and it will calculate the value.
Based on the posts, it doesn’t have a way to incorporate hourly tracking yet in a real-time version of the app, so you’ll need to add hours manually at a regular frequency.
What’s your result? Did the equity splits finish like they started?
If you have more questions, feel free to start a discussion in the comments section below.
This was originally published here.
The story of Robin Williams’ death in 2014 was tragic, one of the funniest men in my lifetime, taking his own life because of depression.
I’ve started this post a number of times. Inspired by both Brad Feld and Ben Huh – I have admired both men for their transparency (and I’ve told them both). But I haven’t had the heart (or will?) to complete the post and actually make it “live.” I guess I felt like one more voice wouldn’t really matter. Until Robin Williams’ death.
Depression is a reality. Not something having a “positive attitude” overcomes nor a simple series of platitudes that will help you rise above and pull yourself up by your bootstraps. I’ve endured through two bouts of depression in my adult life. For me, it was chemistry compounded with circumstances of being an entrepreneur.
Don’t get me wrong, being an entrepreneur had risks that (I thought) I understood when I took them on at the time. In retrospect, I understood the something about risk, but I didn’t understand anything about the loneliness.
Some of my close friends understood, while others pulled away because they (and I) didn’t know how to deal with it. Thankfully, the closest people in my life didn’t pull away. Thanks to my wife, Kathryn, for not pulling away.
You see, when people don’t know how to deal with uncomfortable situations in their lives, they generally withdraw from the situation. I saw that when my wife went through a battle with cancer nearly 20 years ago. There were people who said they would be there for us and weren’t. I don’t blame them, they didn’t know how to deal with the uncertainty and confusion of cancer, so after the platitudes and emotion of the diagnosis, they withdrew to a safe distance to live their lives. A distance that was comfortable for them – but out of reach for us.
That’s the challenge of depression. When you have a friend in the midst of it, you have to decide to walk with them through it. Or not.
If you decide to be there for them, you have to walk all the way through. Part way through won’t help them. Pulling back to a safe distance will make it more comfortable for you and this time, it’s not about you.
For me, the act of making this post creates anxiety. It’s personally risky. What will you, a normal people, think of me? But the reason to do this post isn’t about you, it’s for the person that’s struggling with depression. For them my risk is super small, especially if it helps just one person walk all the way through and not give up.
There were days when dealing with depression that simply getting out of bed was the toughest decision of my life. There were other days that I thought the world would be better off without me.
Life is hard, and it seldom turns out the way you expect. But people who love you and show it, do make a difference. So will you do me a favor? Will you walk through it with one person today?
This week. This month.
I promise it will be uncomfortable for you. But, it may just save their life.
No matter what people tell you, words and ideas can change the world.
– Robin Williams
Join us on 5/25 for a live, interactive AMA to hear more about this important topic and how we can all help out in our communities. We’ll be joined by Brad Feld, Managing Director at Foundry Group, and co-founder of Techstars. Register here.
This was originally published here.
In 2012 I started a series of posts, talks and slides on Startup Internet Business Models. Those Slideshare posts have been viewed over 4,000 times.
That led to a research project of 2,600 funded companies from Crunchbase between Jan 2013 to mid 2014.
I’ve finally created a single document with a list of the eight Business to Business (8 B2B) and 12 Business to Consumer (12 B2C) business models that I’ve documented.
I finally promoted the posts to their own page (with some pending sub-pages where I’ll go into detail on each model) to make the content easier to navigate.
Have questions about business models? Post them in the comments section below.
This post originally appeared on DKParker.com.
I love engineers and developers! But sometimes they build a solution that is in search of a problem.
I recently read a headline on a LinkedIn post that reflected the headline above. I didn’t get a chance to see the author or article (I think it was about QuickBooks or Quicken), but the headline struck me given my interaction with technical founders. Often I’ll have Founders and Entrepreneurs that come into the Founder Institute with an idea for a product or an app, it’s a solution. But does that idea solve a customer problem and can you build a company around the idea?
- Is your idea a feature, or something that the founder discovered using a current platform or application? Building a feature won’t necessarily allow you to build a product or a company. For example, an App for Facebook, especially when it’s something you think Facebook could build. Building the App might solve the problem, but your real problem isn’t building an app, it’s your ability to get 100,000 users before Facebook builds the solution themselves.
- A gap in the market not currently filled? A gap may not represent a market need if the existing solutions are “good enough” and the cost of switching is high. For example, better Accounting software that fills the gap between QuickBooks and Workday. Both work great as is, and the cost of switching and risk are high.
I worked on a technical hardware product some years ago that was a great example. The company had spent a great deal of time and engineering $$ building a hardware device for IT Security. The problem was that they had never clearly identified a (large) target market, or an initial launch market. They started with the solution then asked me to work backward to find the problem that the product could solve. Regretfully, it’s not that simple.
1. What problem are you solving and for whom?
This seems an easy enough question to answer. There are a number of ways to look at the market and the user for whom you are trying to solve the problem, but just remember that you aren’t the customer. I was meeting with a company last week and they have built a product and identified a single B2B customer that could be a customer of the product. That’s a great way to identify a potential launch customer, but as we discussed the broader market of buyers, the use case became very “fluffy” and they couldn’t identify a company profile or market.
- If you are selling a B2C business model – what is the customer profile? It’s not everyone! Is your user male or female, young or old, a Mac or PC user? Etc. You don’t have to go so far as establishing a persona for the customer, but you should do that over time, as you better understand your customer.
- For B2B, what are the market characteristics of the customer? Is it a tool for companies that sell to consumers or to businesses? Do they sell large price point, slow sales cycle products or do they do a one-call-close with an inside sales team. Is it a transactional sale that is driven through marketing and customer service and no sales person is involved? Those three examples have widely different selling models and the corresponding margin to pay for your product.
After you evaluate the market, you need to understand if that market is big enough to justify building the product. Don’t stop focusing on the problem, keep it front and center to your company.
2. What is the Solution?
If you follow the Lean Startup methodology, you should be able to identify the your minimum viable product (MVP) before you build it. We recently had a mentor in the Seattle FI program named Justin Wilcox and he framed the MVP slightly differently. For Justin, the MVP started with testing your riskiest assumption that you needed to prove or disprove first, for example:
- Can it be built? Is it a technical challenge that can be solved?
- Does anyone want the product? Again, you are not the customer, having a buyer of one is a bad business decision.
- Would they pay for it? And what would they pay for it? This is only market research before you can actually take a credit card (B2C) or send an invoice (B2B).
One thing is for sure, don’t just keep coding or engineering before you answer some of these questions. You can spend the next 33,280 hours of your life on the wrong idea.