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Show_me_the_Money
| Show me the Money!!
Show me the money!!!
Are you ready to raise money for your startup?
Leslie Mitts, Managing Practice Leader at the Wharton SBDC and Le
ad
Advisor for the Wharton Venture Initiation Program, tells us that
most
entrepreneurs coming through her programs are focused on raising
capital, even though there are higher priorities in many of their
businesses. Since fresh dollars help drive the business engine, t
his is a natural entrepreneurial concern.
But are you ready to raise money?
Going to investors before you are really ready can damage your
reputation and may actually hinder future funding efforts.
Team and a Dream uses a unique Fundability Diagnostic to help com
panies assess their strengths in four key areas:
Team - This is the most frequently cited attribute examined by
investors. Many investors will invest in an A-level team and a B-
level
product, but not the opposite. Having your Seed Team nailed is cr
ucial.
Traction - Showing momentum is a critical element to demonstratin
g progress and your ability to execute.
Perceived Pain - Do people really need your product? Why? Will th
ey need it in the future?
Product Eco-system - How does your product fit into existing and
emerging landscapes? Who else is out there and how big will this
market grow?
Find out what you need to succeed and discover your roadmap to ge
tting
there. Take the quiz below to see how well you might expect to sc
ore
with investors. For each of the four sections outlined above, se
e
which hurdles you can clear given the current state of your busin
ess.
PROCEED WITH CAUTION: Only self-aware entrepreneurs should take t
hese results seriously. ASSESSING YOUR TEAM Part A:
If you or any member of your current team are not planning on bei
ng the CEO, give yourself two points and proceed to Part B.
If someone on your team IS planning to continue on as CEO, then y
ouÂ’ll
need to answer yes to both of the next two questions in order to
score two points; otherwise, take a zero.
A1.Our CEO has significant, previous management experience in a s
tartup
or comparable operating environment (i.e. middle management in a
large company doesnÂ’t count!) ( 1 point)
A2.Our CEO is able to rapidly assess and prioritize our work with
the respect of the team ( 1 point) Part B:
Score one point for each answer.
B1.Someone on my team has significant experience in the domain sp
ace in which we are starting the company ( 1 point)
B2.Our team understands and acts as if they understand the differ
ence
between tasks that are urgent, urgent and important, important, a
nd none of the above ( 1 point)
B3.This team has terrific chemistry ( 1 point)
Your score (0-5) is your Total Team Score.
If you scored three or more, you pass the Team Hurdle. TRACTION
Score one point for each item you can answer positively.
1.We have made a few initial sales and have positive indicators f
rom the marketplace for additional sales growth ( 1 point)
2.So many good things are happening I am bouncing off the walls w
ith excitement ( 1 point)
3.I have added a significant team member (besides myself!) in the
past two months ( 1 point)
4.In the past two months, I received press coverage that would be
acknowledged by my prospects as legitimate business coverage ( 1
point)
5.We recently have achieved a significant product or marketplace
milestone (includes a single, initial sale) ( 1 point)
Your score (0-5) is your Total Traction Score.
If you scored three or more, you pass the Traction Hurdle.
PERCEIVED PAIN
Award your Team the number of points indicated after each questio
n that you answer positively.
1.My product or service solves an important problem for a well de
fined group of people ( 2 points)
2.My product or service will be in great demand in the future in
order
to solve problems emerging from a new trend that has a large popu
lation of prospects ( 2 points)
3.My product or service takes advantage of newly available market
forces (technology, demographics, societal). The result is an of
fering
that will clearly appeal to an existing, well-known market demogr
aphic ( 1 point)
Your score (0-5) is your Total Perceived Pain Score.
If you scored three or more, you pass the Perceived Pain Hurdle.
PRODUCT ECO-SYSTEM
Score the stated number of points for each item you can answer
positively.
1.My product is unique in a clearly defined (i.e. I can describe
the
difference in one or two clear sentences) and useful way ( 1 poin
t)
2.My product is patented or can easily be patented or I have anot
her
competitive barrier (e.g. trade secret, unique manufacturing proc
ess,
etc.) that will make it difficult for others to compete directly
( 1 point)
3.My marketplace is well established but fragmented or my product
has
“category killer” potential because it is so unique to the mark
et ( 1 point)
4.My marketplace is either very big (> $5 billion/year in sales)
with
clear room for a product like mine or is rapidly growing with wel
l documented trend lines ( 1 point)
5.My marketplace is wide open and there are no competitors ( subt
ract 1 point)
Your score of (-1 to 4) is your Total Product Eco-System Score.
If you scored three or more, you pass the Product Eco-System Hurd
le.
Now that you have completed the scoring, we shall take a look at
how
“fundable” your company is. Before we do, it’s important to r
ealize
that this is a snapshot in time. If you are not satisfied with y
our
score, there are plenty of things you can do to improve it. IÂ’v
e seen
many of my clients make tremendous progress along these dimension
s by
extending their team, focusing on sales or tweaking their offerin
g. YOUR FUNDABILITY RATING: Number of Hurdles Cleared: None
IMPLICATION
If you received this score and hope to receive funding, then you
have a lot of work to do.
Perhaps you just know you want to start a business and are lookin
g for
ideas. If so, keep these criteria in mind as you formulate your
plans.
If you already have a business concept, you should think long and
hard
about “re-conceiving” some elements of it to improve your score
s.
Many perfectly good “lifestyle” businesses may fall into this s
cale – you just can’t get funding for them.
Number of Hurdles Cleared: One IMPLICATION
Funding from your rich uncle may be possible
Number of Hurdles Cleared: two IMPLICATION
Funding from family and friends network may be possible
Number of Hurdles Cleared: three IMPLICATION
Professional investors will consider this, but youÂ’ll need to be
prepared to explain how youÂ’ll address your gaps.
Number of Hurdles Cleared: all four IMPLICATION
Put the finishing touches on your business plan and hit the fundi
ng trail!
You will have the best chances of success in fund-raising if inve
stors see that you can clear the hurdles in all four areas.
NOTE: Team and a Dream offers a professional version of this asse
ssment
that offers additional detail and examines nuances that arenÂ’t p
ossible
to convey in a simple quiz. If you have an interest in the
professional assessment, please visit us at
http://www.teamandadream.com/contactus.htm Contact Information:
http://www.teamandadream.com skip@teamandadream.com
(610) 687-9195
Copyright (c) 2005, All rights reserved by Post Destiny, Inc. d/b
/a Team and a Dream(SM)
About the author:
As an advisor-builder with a sense of adventure, founder Skip
Shuda has worked with numerous startups since 1983, including
Destiny WebSolutions, which he founded in 1994. Destiny was
named Startup Company of the year in 1998's Philadelphia Area
Enterprise Awards. Destiny grew to $25 million in annualized
revenues in 2000 and employed over 120 people.
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