Monthly Archives: June 2013

Energetic VCs on the Rise

Energetic Venture Capital from The Startup Garage

Energetic VCs on the Rise

Active Venture Capitalists

The number of VC firms completing four or more deals per year has increased annually since 2009.  There is a lot of chit-chat about capital crunch and how venture firms in particular are in the decline.  However, this cannot be further from the truth.  First, there is an increase in the number of VC firms.  Second, these firms are investing at their highest since 2009.

As shown in the graph below, we’ve seen a steady increase in the number of active VC firms from 2009 to 2012, with 2012 registering more than 450 active firms.  2013 is trending well with nearly 500 VCs who have already done 2 deals this year.

The number of VC firms completing four or more deals per year has increased annually since 2009. TSG Enterprise. The Startup Garage.

Graph thanks to CB Insights.

 

Whether you have a question about VCs or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

Value Propositions vs. Positioning Statements

Position vs Value Proposition from The Startup Garage

Value Propositions vs. Positioning Statements

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The main objective of a company’s marketing strategy is to define and reach the target customer demographic while differentiating itself from the competition.  Value propositions and positioning statements stem from this marketing strategy and help the company to accomplish its marketing goals.  Many people use these terms interchangeably when writing a business plan or discussing their marketing strategy, but there are some key distinctions.

Value Propositions

A company’s value proposition describes the key functional and emotional benefits of its products, services and brand. Typically, functional benefits refer to key product/service features and advantages.  Meanwhile, emotional benefits refer to the positive feelings and emotions that customers experience when engaging with the company’s product, service or brand.  Whether the benefit is functional or emotional, the key is to create value and to convince customers that they are getting value for their money.  With this in mind, the main idea of a value proposition is to convince the customer that your product or service creates “value for their money.”  In other words, the benefits of your product or service minus the cost of your product or service results in value that is greater than the cost of the service

Positioning Statements

Positioning statements flow from your value propositions and a single value proposition may contain several positioning statements.  They are more focused messages that form the basis of advertising campaigns.  Positioning statements describe why a set of customers should use one product over another.  The positioning statement includes the target audience, product name, category, benefit and competitive differentiation.

Similarities

Value propositions and positioning statements share the following similarities:

  • Directed to a specific target market
  • Focused on the customer
  • Identify unique points of differentiation
  • Declare key benefits

Key Differences

 

Whether you have a question about Value Propositions vs Positioning Statements, or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

Legal Tech VC Funding Beginning to Stagger

Legal Tech vs Funding Stagger from The Startup Garage

Legal Tech VC Funding Beginning to Stagger

Although the legal industry is massive ($300B), it is seeing a drop in funding by 16% year-over-year as investments are concentrated at the seed stage and exit activity is lukewarm. Funding to legal tech startups barely topped $100M across 30+ deals, with the largest deal representing 45% of total investments.

 

Deal Flow

Oddly enough, the industry actually experienced a 41% increase in deal activity despite the 16% decrease in actual funding as depicted in the graph below:

 

Although the legal industry is massive, it is seeing a drop in funding as investments are concentrated at the seed stage and exit activity is lukewarm. The Startup Garage. TSG Enterprise.

Graph thanks to CB Insights.

 

Whether you have a question about Legal Tech VC Funding, or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

How to Write a Positioning Statement

How To Write a Positioning Statement from The Startup Garage

How to Write a Positioning Statement

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Many first time entrepreneurs get tripped up on the positioning statement portion of their business plan and how it differentiates from their value proposition.  In this blog post, we will tell you just how to write a positioning statement.  Please refer to the following links for instructions on how to write a value proposition and the difference between a value proposition and positioning statement.

What is a Positioning Statement?

Let’s start by making sure we all understand what a positioning statement actually is.   A positioning statement is a one or two sentence statement that articulates your product or service’s unique value to your customers in relation to your direct competition.  It explains why your customers should purchase your product or service over that of your competitors.

How to Write a Value Proposition?

A good positioning statement includes five primary components:

  1. Your target customer – a clear description of the core group to whom you want to appeal
  2. The frame of reference – the category in which you compete
  3. The key benefit – often the feature that differentiates you from the competition
  4. The reason to believe – your ability to deliver on your promise.

For (target customer) that seek (frame of reference of product category), (product or service name) offers (key benefit) that/because (reason to ).

For example: “For entrepreneurs that seek a professional business plan writer, The Startup Garage offers customized, investor-ready packages because our consultative approach, business experience and industry knowledge allow us to identify your goals and put together a plan to accomplish them.”

 

Whether you have a question about your positioning statement, or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

 

Angel Investor Stewardship

Angel Investor Stewardship from The Startup Garage

Angel Investor Stewardship

Angel Investor Stewardship – An Underrated Skill

One of the most underrated skills that a startup CEO needs to know is how to keep his/her investors updated, excited and engaged.  It is through the lens of the CEO that investors know what’s going on, and in some ways, engage with the businesses.  Furthermore, if you need more money down the road, you want your investors to be happy with how you’ve managed the business and your relationship.  Here are a few tips on how to best interact and update your angel investors:

1). Keep in touch, preferably by email.

If you are an early stage startup, you should be in touch every 1-2 months at least and every 2-3 months if you are a later stage startup.  If you have a full board of directors or advisers, it is probably best to setup a regular phone conference.

2). Be concise.

Keep your correspondence between 1-3 pages.  Your investors are busy and they are smart.  They just want to know the key information about what’s going on; they don’t need every detail.

3). Be consistent.

Create some sort of template that you use in every correspondence.  For example, you can use the following headers: highlights, low-lights, and goals.  With a consist report card of sorts, your investors will feel up to date and any uncertainty will be put to rest.

4). Be truthful.

Highlight your successes, but don’t hide all your problems.  Be sure to include one or two of your main strategic problems.  First, they may be able to help.  Second, every company has problems; it will seem fishy if you don’t disclose yours.  With that said, you don’t need to give away any secrets or provide sensitive information.  Rule of thumb: if you wouldn’t want it going public or having your competitors read it, then don’t write it.

5). Involve many.

You know the power of networking.  Keep your network up on your company.  Even if they aren’t investors, they may be able to help out now or down the road.  Keep those bridges strong by updating them on your company.

6). Ask for favors.

This monthly update is a great time to ask for favors.  Whether it be an introduction, key personnel, marketing favors, etc use this as an opportunity to get some help.

7) Record your correspondence.

First, this makes it easy on you and your investors when you need to go back to an old update.  Second, it avoids any problems down the road with claims about information that was or was not disclosed.

 

Whether you have a question about Angel Investors, or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

How to Write a Value Proposition

How to Write a Value Proposition from the Startup Garage

How to Write a Value Proposition

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When writing a business plan, many entrepreneurs get confused about value propositions and positioning statements. In this blog post, we will tell you just how to write a value proposition.
Please refer to the following links for instructions on how to write a positioning statement and the difference between a value proposition and positioning statement.

What is a Value Proposition?

Let’s start by making sure we all understand what a value proposition really is. A value proposition is focused directly on your target market.  It tells them exactly what your product or service is and why they should purchase it. Value propositions reflect your brand promise along with all the primary benefits offered and value received.  This helps differentiate yourself from your competition while spreading word-of-mouth.

How to Write a Value Proposition?

Now that you know what a value proposition is, let’s look at a few ways to write a value proposition. Any strong value proposition contains the following key elements:

  • The target customer
  • The statement of need
  • The frame of reference or product category
  • The key benefit
  • The major competitor(s)
  • The key differentiator(s)
  • The price

Now that you have they key elements to your value proposition, try plugging them into the following template:

For (target customer) who (statement of need), our (product/service name) is (frame of reference of product category) that (key benefit) because unlike (major competitor) our (product/service name) offers (key differentiator) at a price (less than, equal to or higher than competitor).

 

Whether you have a question about your Value Proposition, or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

Writing Your Business Plan

Writing Your Business Plan from The Startup Garage

Writing Your Business Plan

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Business Plan Benefits

You can be sure that writing your business plan will be a time consuming process.  However, undertaking this process is completely worthwhile.  Your plan will help you gain focus, sync all of the supporting programs, develop short and long term strategies, show investors what you are doing and what you are asking, and support your vision with an evolving guide to evaluate your progress and plans for the future.

Getting Started

Familiarize Yourself with the Business Plan Table of Contents

Download a business plan template or review some of our sample plans to get a sense of what goes in a plan as well as the table of contents.

Start with What You Know

Begin by completing the business plan in outline form with what your currently know about the business.  For now, keep it short and choppy.  The goal for this phase is to leave with an understanding of what you know about the business and what you don’t know.

Research

The industry analysis, market analysis and competitive analysis are three very important sections of the business plan.  On the one hand, they help you assess the market opportunity, the size of the market, trends in the market, etc.  What you learn here can have effects on the nuances of your product and service as well as your sales and marketing strategies for how you will position your product and service.  Additionally, this research will allow you to understand the strengths and weaknesses of your competitors and determine just how you will differentiate yourself from them.

Strategy Development

Now that we have the supportive research to help us tackle the sections that you were originally unable to complete it is time for a brainstorming session.  This looks different for each business plan and each entrepreneur as the gaps, red flags and concerns are never the same.  In any case, take the time to dive into these incomplete sections.

Financial Model

The next step before you are ready to complete a first draft is to build out your financial projections.  The financial plan breaks down the financial projections of the company in detail, compiling all revenues, expenses and profits into conventional accounting sheets (a balance sheet, cash flow statement and profit & loss statement).  The goal of this section is to show how the strategy outlined in the plan is sound from a financial standpoint, presenting a realistic business and investment opportunity.  This section also communicates the need for any outside investment and the uses of these funds.

Create a First Draft

Once you have complete the strategy development phase, you’ve ironed out all of the kinks, and you’ve created your financial model, you are ready to take your initial outline, your research and your newly minted strategies and complete a draft of the business plan.

Edit, Edit, Edit

Read through your business plan several times to ensure that you catch all of the grammatical and design mistakes.  You will also want to read through your business plan to ensure that you have provided enough content and context in each section so that the reader is not left with any questions after reading a particular segment.

 

If you would like help writing a business plan or have questions about our writing services, feel free to contact us for a free consultation!

Funding for Social Media Monitoring All Dried Up

Funding Social Media Monitoring from The Startup Garage

Funding for Social Media Monitoring All Dried Up

Decline in Funding for Social Media Monitoring

The Statistics Don’t Lie

Late-stage financing for social media monitoring and analytics companies has all but dried up.  With exits sagging, clearly this fad has reached its conclusion.  Over the past year, $128M has been invested in such companies across 25 deals.  This represents a decline of both funding and deal flow by 39.9% and 28.6% respectively as demonstrated in the graph below:

Late-stage financing for social media monitoring and analytics companies has all but dried up. TSG Enterprise. The Startup Garage

Late-stage financing for social media monitoring and analytics companies has all but dried up. TSG Enterprise. The Startup Garage

Of Those That Have Exited

The majority of exits have consisted of small, early stage companies who never achieved critical mass and who were acquired by larger, household companies primarily for talent or technology.  The most notable exit came from Radian6 which was acquired by Salesforce in 2011 for $326M, which was nearly 3X larger than all 25 exits in the past year.

Big Picture

If you are a social media monitoring or analytics company, get out while you can.  If you are thinking of launching or investing in one, think twice and definitely rethink your exit strategy.

Graph thanks to CB Insights.

 

Whether you have a question about Social Media Monitoring, or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

How to Write a Business Plan

How to Write a Business Plan from The Startup Garage

How to Write a Business Plan

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A business idea is not enough to build a successful business. Ideas are everywhere, but successful businesses are not. The difference lies in having a solid business model and business strategies around your great idea. The best way to do this is to complete a professional business plan.

The business planning process provides structure and guidance, determines resources you need to succeed, establishes a direction for your business, provides a way to measure results and provides a way to gain financing. In a sentence, a business plan takes your idea for a product or service and creates a business around it.  In this blog post, we will show you just how to write a business plan.

A typical business plan contains 10 sections and takes anywhere from 180 – 400 hours to complete, as outlined below:

How to write a Business Plan: Executive Summary 2 hours

The executive summary is a 1-4 page description of the entire business.  Though this is the first section that your readers will see, acting as a sales pitch to introduce the rest of the plan, it will actually be the last section that you write.  When you have completed the rest of the business plan, you will want to return to the executive summary, highlighting the key takeaways of each of the other sections.

How to write a Business Plan: Mission and Vision 5 hours

This mission and vision section outlines your mission statement, overarching vision and values for the company and often presents your company’s value proposition to your clients.

How to write a Business Plan: Product and Service Description 5-25 hours

The product and service description gives a detailed breakdown of all aspects of your product or service.  This section typically includes a general overview of the current problems in the market and your solution to these problems, your product/service advantages, your proprietary features, any liabilities associated with your product and service and your plan for overcoming these liabilities.

How to write a Business Plan: Market Analysis 20-30 hours

This is the first research section of the business plan.  It defines your company’s target market segments, or the groups of people that you will sell your products or services too.  You will want to narrow down your key market segments, the lowest hanging fruits, as muss as possible and then provide information about this target segment such as market size, break down of demographics and important market trends.

How to write a Business Plan: Industry Analysis 20-30 hours

The second research section of your business plan should provide an analysis of the industry in which your business will operate.  You should provide your reader with an overall understanding of the size and trends of the industry as well as any other important factors that will affect how companies in the industry do business.

How to write a Business Plan: Competitive Analysis 20-30 hours

The third and final research section in the plan provides readers with a breakdown of your direct and indirect competitors.  You will want to narrow down the definitions of your direct and indirect competitors as much as possible.  You will then want to provide a layout of the competitive environment, evaluating your competitors’ strengths and weaknesses, ultimately communicating your competitive advantages, differentiating factors and why your company will succeed in spite of the competition.

How to write a Business Plan: Sales and Marketing Plan 20-30 hours

This section outlines your sales goals, distribution strategies, marketing strategies, SWOT analysis (your strengths, weaknesses, opportunities and threats), branding strategies and customer service plan.  After determining who your target market is in the market analysis, this is your time to determine how you will target them given your competitive advantages and the strengths/weaknesses of your competitors.

How to write a Business Plan: Operations Plan 10-40 hours

Your operations plan explains all of the internal systems, procedures and equipment necessary to produce and deliver the product to the customer.  Relevant sections that may apply to you and your business include location, equipment, purchasing policies, manufacturing process, personnel and organizational chart.

How to write a Business Plan: Management Team 20 hours

This section introduces the reader to the entrepreneurs and executives who will run the business, as well as the board of directors and/or advisors that will play a crucial role.  The goal of this section is to assemble a team that is capable of successfully caring out the funding necessary to succeed as outlined throughout the business plan.  You’ll want to provide a succinct biography for each member of the management team in this section as well as a complete resume in the appendix of the plan.

How to write a Business Plan: Financial Plan 35 hours

The financial plan breaks down the financial projections of the company in detail, compiling all revenues, expenses and profits into conventional accounting sheets (a balance sheet, cash flow statement and profit & loss statement).  The goal of this section is to show how the strategy outlined in the plan is sound from a financial standpoint, presenting a realistic business and investment opportunity.  This section also communicates the need for any outside investment and the uses of these funds.

The business plan writing phase is when your idea will grow and change the most. Don’t be surprised if your business plan looks nothing like your original idea. It almost never does! Stick to it — after lots of creative planning, researching, and strategy development, you will have a complete, well-integrated strategy for your new business.

Now you know how to write a business plan, right?  Well, as you can see, writing a business plan can be a daunting process.  If it doesn’t sound like your cup of tea, contact us for a free consultation regarding our business plan writing and start up consulting services!

Asian eCommerce Investment Report

Asian eCommerce Investment Report from The Startup Garage

Asian eCommerce Investment Report

While financing in the Asian eCommerce market remains hot, exit valuations remain rather dreary.

Since 2010, $6.9B has been invested in Asian eCommerce companies across 383 deals from venture capital investors.  Both deal volume and funding activitiy to the region are up 30% and 56% year-over-year respectively.  Not surprisingly, India and China dominate the majority of this activity.

While the number of exits has continued to grow, the valuations of these exits have not been as high as investors might have hoped.  The majority of exits have been relatively small as far as venture-level exits are concerned, at less than $50M.  Nonetheless, there were 29 exits of Asian eCommerce companies in 2012 with 14 exits year-to-date in 2013.  Despite 60% of Asia’s disclosed eCommerce exit valuations coming in at less than $50M, clearly investors believe the tide will turn as they continue to pour millions into the market.

Statistics thanks to CB Insights.

 

Whether you have a question about eCommerce Investment, or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!