Monthly Archives: May 2014

How to Define Your Target Market

How to Define Your Target Market from The Startup Garage

How to Define Your Target Market

When it comes to defining your target market in the business plan you should have the following two questions in mind:

  1. Who is benefitting from the problem that my product/service solves?
  2. Am I demonstrating that a significant market opportunity exists for this product/service?

Many entrepreneurs tend to focus on one of these questions but do not adequately address both. You don’t want your target market too narrowly defined, where the market size will be unattractive to an investor.

However, you do not want to define your market too broadly as investors will assume you either: don’t understand the marketplace, or you do not have a clear focus on who your most attractive market segment is.

In order to solve this problem, you will want to start by defining your addressable market and follow this up with your target market.

Addressable Market

The addressable market is the group of people (or businesses) whom might be interested in what you are selling. It is the broadest umbrella of potential customers that your target or service may be suited for.

Target Market

The target market are those people (or businesses) within your addressable market whom are most likely to buy from you. Typically, they are the lowest hanging fruits and therefore the cheapest to acquire.

Narrowing Your Addressable Market Down to Your Target Market(s)

By starting with the addressable market, you are giving prospective investors a good understanding of the overall potential market opportunity should the business take off.

However, you do not scare them away by coming off as thinking too ‘pie in the sky.’

By following up the addressable market with your target market you are showing that you have a clear understanding of the various market segments and which are most attractive to you.

It shows that you have a clear plan for how you will take your product/service to market and how you will allocate your resources effectively to targeting this group of consumers/businesses.

When selecting your target market(s), you will want to target the lowest hanging fruits – those consumer/business segments that are most likely and able to buy.

 

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

Shark Tank Hosts Open Casting Call In San Diego

The Shark Tank San Diego From The Startup Garage

Shark Tank Hosts Open Casting Call In San Diego

Critically acclaimed business reality show, Shark Tank, attacks the shores of San Diego,
Saturday June 7th for an open casting call.

Do you think your startup has what it takes to swim with the Sharks?

 
 

Attend this rare casting call:
SATURDAY, JUNE 7TH – SAN DIEGO
COLEMAN UNIVERSITY
8888 Balboa Ave.
San Diego, CA 92123
9:00 AM to 11:00 AM – Numbered Wristbands Distributed
10:00 AM – Interviews Begin

Shark Tank Casting Details

 
Come prepared, entrepreneurs will only be given 1-minute to pitch of your business/product/idea to a member of the Casting Team.

Make sure your pitch is concise, clever, and screams there’s money to be made!

How To Get Your Startup Ready For The Shark Tank

 
The Startup Garage Team wishes you continued success in your business.

Please let us know if you attended the casting call, and the results.

Remember exposure and funding are unlimited for those startups, who are properly prepared, and are ready to attract investment.

 

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

Is San Diego Poised To Be The Next Silicon Valley?

San Diego Next Silicon Valley? From The Startup Garage

Is San Diego Poised To Be The Next Silicon Valley?

Since the 1980’s Silicon Valley has dominated the startup scene, a place to call home to many of the world’s largest technology corporations, as well as thousands of small Startups.

San Diego, although only a few hundred miles from the Silicon Valley, it is a vastly different world, full of sun, surf, and laid-back dispositions.

However, that might all be about to change…

New Entrepreneurial Ecosystems

A conglomeration of a number of economic conditions and consumer trends has launched a new entrepreneurial ecosystem in the U.S, specifically in San Diego.

On March 2014 San Diego, was recognized as Forbes Best Places To Launch A Startup in 2014

Forbes prides itself on providing world business leaders with strategic insight and information, and is perhaps best known for its lists and rankings. This list is certainly worth paying attention to, especially as a startup entrepreneur.

How exactly did “America’s Finest City” for surfing and sun come out on top?

“San Diego managed to come on top for launching a startup because of its “heavy concentration in projected high growth industries, as well as a high likelihood of accepting credit cards and adopting social media. San Diego is home to the fifth-best rated business community in the country.” ~ Tom Post, Forbes Writer

As the 5th best rated business community, it’s San Diego’s unique combination of wireless, digital medicine, bioscience, action sports, and military contracting.

In the Startup world, where innovation means everything, diversity of interests and resources are key ingredients.

Kevin Faulconer, San Diego’s newly appointed mayor, among others is very optimistic for the city’s startup future;“We have great intellectual capital and great creative ideas. We are one of the most innovative cities in the country.”

Silicon Valley has shown the world how to build a vibrate, flourishing, startup ecosystem.

It now up to the entrepreneurial community with San Diego to actively build, demonstrate, and evolve a greater level of startup sophistication.

A great example of possibilities for the city is 3D Robotics, which based in San Diego. It is here that, former Wired Magazine editor in chief Chris Anderson’s drone manufacturing startup raised a $30 million Series B round of venture capital, as the company prepares to market its autonomous flying robots.

List of Notable SD Startups

Regardless of potential, it is fair to say San Diego is not going to surpass the Bay Area’s success over night. A thriving entrepreneurial ecosystem takes time to mature. There isn’t a mobile application to instantly fuel a community of startups into billion dollar tech giants.

2014 marks a tipping point for San Diego, a notable time of reshaping the technology startup scene both locally and globally.

San Diego is no longer simply a vacation destination. It is a destination for dynamic startup businesses, which are invested in assembling and transforming a community of entrepreneurs.

Our team at The Startup Garage are committed to serving our Startup Community of San Diego.

We are dedicated to helping make San Diego a better place to live, work, and play.

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

8 Tips that Could Get You That Venture Capitalist Job You Want

8 Tips for Venture Capital from The Startup Garage

8 Tips that Could Get You That Venture Capitalist Job You Want

8 Tips that Could Get You That Venture Capitalist Job You Want

Venture capitalists come in all types, but just why become one? What makes this type of investment interesting for so many people? Truth is most VCs are average, every day people. They have usually either been entrepreneurs themselves, or they were surrounded by entrepreneurs at some point in their professional lives.

Suffice it to say, that this professional usually has a diverse breadth of experience. A VC works with many startups, all at once, as opposed to being a single entrepreneur who only works in one industry. They gain experience in a variety of industries, even though they don’t usually deal with the ‘ins and outs’ of the operations.

Still finding a VC position is no piece of cake. It requires a lot of planning, work and a diverse set of skills (preferably in tech related industries.) Whatever the reason and no matter how educationally prepared you are, finding the right VC job opening can be challenging. But there are ways to do justice to your efforts:

Understand the Personal Traits of a VC

VCs come from many different backgrounds, but overall, they are professionals that have either been successful entrepreneurs themselves, have worked closely with other successful startups or worked their way up through the venture capital ranks.

On average, the general characteristics of a VC follow along these lines:

  • A person that is in his mid-thirties to forties
  • Someone that has extensive educational background. Most existing VCs have an MBA or PHD.
  • Someone with Prior experience in finance, past entrepreneurial organizations or financial consulting.

Understand What a VC Firm Looks For

Obviously, this is dependent on the firm, and each enterprise has different requirements, but as a general rule, successful candidates will have worked with other reputable VC firms in areas such as technology, investment banking, consulting, and media or as a key person in a successful startup. Most have either an undergraduate or MBA and have completed their studies within the last 5 years.

Why So Green?

VC firms want candidates that are familiar with cutting-edge high tech trends, and candidates who have recently received their degree are more likely to be familiar with these trends.  A VC firm wants to know the future of social media, digital television and mobile computing. This professional has to be strong in finances but also needs to know everything related to the newest technology trends.

Competition is Fierce

There aren’t many job openings at VC firms, and when these do come up, the competition is tough. In most cases, it helps to show you have experience and are knowledgeable in the investing process. You may even want to demonstrate your abilities as a successful angel investor.  Crowdfunding is a viable investment platform through which anyone can own a piece of a startup for as little as $15 to $20.

Build Up a Reputation

Start a blog and network through social media. Learn about great passion and put your ‘two cents’ in. Become active on LinkedIn, the preferred networking site for VCs. Firms want to see strong digital presence, and prefer this to the more conventional resume.

Learn Your Tech Products

You must build up a passion for great trending products. Test the new social network, that new digital product and know the difference between an outstanding product and a ‘blasé’ one.

Network

Help other VCs get their job done. Do this through your blog and your social media presence. Connect with people and make the right introductions. Give more than what you get.  Be generous with your time and help startups by teaching them for free. This not only helps you network but also keeps you learning. And in the world of the VC firm ‘constant learning’ is an essential element to being successful.

Stay Humble

Even if you’ve experienced some investment success, stay grounded. Don’t assume you are an expert. Venture Capital requires constant knowledge and it is a long-term endeavor. Respect the VCs and the entrepreneurs you come across.

Remember the Purpose

Don’t let the profession go to your head. Stay grounded. Remember the world needs startups. Where would we be without Google, Facebook or Twitter? These were once startups and think of the number of people that now depend on these operations.  Remember the next Startup that gets pitched to you could be the next greatest technological trend.

3 Best Kept Secrets about Venture Capital

Best Kept Secrets of Venture Capital from The Startup Garage

3 Best Kept Secrets about Venture Capital

Venture Capital (VC) firms evaluate countless pitches from ambitious startup founders. The stakes are high with entrusted money from a sophisticated collection of people and institutions.

“No” is by far the more frequently used word.

So what makes them say yes?

—

To a child, a magician is whimsical and beautiful, a mystical person that pulls fabulous objects out of thin air. And for many entrepreneurs, A VCs decision to invest can be just as magical. But there are secrets to venture capital just as there are secrets a magician keeps. But when you know the slight of hand, the little tricks that occur behind the VC firm’s closed doors you can better prepare your pitch and be ready for the glitches.

VCs as Individuals are not that Diversified
While a VC firm could be very diversified, the average individual VC partner only participates in one or two deals a year. This means they need any deal they work on to really work. They want to risk as little as possible and want to be completely sure of who they back. That’s why you as an entrepreneur need to have everything organized. You must be sure of your startup and make sure the documentation meets all the requirements. You want all your ducks in a row when you make that special pitch.

All VCs Answer to Other Investors
Realize that every single VC has other investors to report to. Only the very top VCs don’t have to answer to their limited partners (LPs.) That means most individual VCs have to sell a project, just like you do. In fact, they may have more selling to do than you do because they have to convince about 15 other investors, whereas you only need to convince one.

Smaller VCs May See eye-to-eye but….
A small VC can see your needs, empathize with you, and it may even be easier to get funding from him, but what are the consequences? In most cases, the small VC is easier to convince but because they can’t write those large checks, they need to buy a lot for a small price. In contrast, a larger VC can fund a larger amount, but they care less about you the entrepreneur. Target the type of VC that best matches your growth needs.

7 Reasons Why Business Innovation Starts In A Garage

Where Innovations Start from The Startup Garage

7 Reasons Why Business Innovation Starts In A Garage

Wikipedia defines a garage as part of a home, or assembled building, designed or used for storing a vehicle or vehicles.

A quick look around The Startup Garage headquarters in San Diego, and you’ll notice there are no vehicles or automobiles in sight.
Inspired by to the founders of Google, Amazon, and Apple (and perhaps even you) our garage is part of a house, designed or used to help reinvent the way we do business.

The Garage-Era’s roots extend back to 1938, when technology pioneers David Packard and William Hewlett, better know as Hewlett-Packard /HP, started the HP workshop at 367 Addison Ave. in Palo Alto, CA. In 1989, the garage was made a California historical landmark and deemed the birthplace of Silicon Valley.

Wherever your business and garage may be located, here are seven reasons why creative and ambitious entrepreneurs start enterprises in a garage:
 

1. Establishing a Startup

Starting in a garage means financial savings. The overhead of an office space can weigh heavy on the wallet. Keeping expenses at a low and investing funds, rather than spending, is critical when building a business.

Google Founders Larry Page and Sergey Brin, know best.
In September 1998, the graduates of Stanford University developed the site in a garage owned by Susan Wojcicki.
She leased her garage to the two for $1,700 for 5 months.
 

2. Garage/Home Combination

Typically a garage is attached to home, hopefully one that is inviting and easily accessible to the entrepreneur. The garage/home combination embraces the “comforts of home.”

Ideally, allowing for an efficient work commute, freshly made lunches, and the reassurance of knowing you no longer need to worry about forgetting something at home.
 

3. Privacy

A garage is located on private property, providing less public access, and more security for budding ideas and knowledge to bloom.
 

4. Prototypes

A garage invites experimentation. The openness of space allows for building, construction, and the development of product prototypes.

In 1976 Steve Jobs. Steve Wozniak and Ronald Wayne did exactly that, in a small garage in California they created the very first prototype for a personal computer, better known as Apple.
 

5. Mindset

A garage evokes a mechanics mindset.

There’s an innate psychological pull when you’re in a garage to piece together, fix, and tinker with things. The garage becomes a laboratory for billion dollar ideas and tech gadgets.

In 1994, Amazon founder Jeff Bezos, followed the steps of HP and Apple entrepreneurs, and started an online bookstore completely operated in his garage in Washington. Bezos’s idea, now yields nearly $67.8 billion dollars in annual sales.
 

6. The “American Dream”

We all love a rags to riches story.

Starting a business in a garage opens the doors to endless characters, storylines, and possibilities.

Take classic American carmaker, Cadillac’s approach in this viral video

Some of the most remarkable innovations in the world have come out of American garages. From The birth of flight, to the all new Motor Trend Car of the Year, the Cadillac CTS.

Ain’t garages great?
 

7. Resourcefulness

The question remains, is storing a vehicle or miscellaneous “junk” in a garage, more valuable than letting entrepreneurial spirits flourish with in that space?
Were Paul Allen and Bill Gates being resourceful in 1975?

It was then that now tech giants tried their luck in building Microsoft in a small-space garage with very mere resources to start with. Ultimately, we’re not suggesting that a garage is the only place innovative ideas can come to fruition. Sparks of genius and creativity can happen anywhere at anytime.

We simply encourage you to find an environment that supports and nourishes your entrepreneurial vision. And welcome you to #TheStartupGarage our home designed to accelerate technology innovation for the entrepreneur in all of us.

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

1 en.wikipedia.org/wiki/Garage
2 http://www.hpmuseum.org/garage/garage.htm

How To Become A Venture Capitalist in 2014

How to Become a Venture Capitalist from The Startup Garage

How To Become A Venture Capitalist in 2014

So you’ve watched the show “Shark Tank” and think you have what it takes to be the next Kevin O’Leary, AKA Mr. Wonderful?

On TV, the career of a venture capitalist appears to be easily obtainable and positively thrilling. Power, prestige, and autonomy are ready and waiting for those bold enough to step forward. In reality, the aspiring venture capitalist (VC) has a better chance of becoming a professional athlete as he or she does becoming a VC professional.

The Startup Garage offers 3 key insights below to help those ambitious enough, enter this exclusive and highly competitive career.

Personality Traits

Please note the lists below are generalizations. Although these tend to be the norm, variations have been known to occur.

A) VCs have a business mind and are entrepreneurs to the soul. They have a raw intelligence for business opportunities, and an unwavering desire to make them come to fruition.

B) VCs are adrenaline junkies. They live for the thrill, whether jumping out of planes or financing a million dollar startup. The VCs life and business are founded on high risks and high rewards.

C) VCs are cyber prophets. They have keen insight on cutting edge technology trends, and know how to use all the latest gadgets.

D) VCs have stellar interpersonal skills. They’re social butterflies that thrive on interacting and communicating with others. Networking is 2nd nature to VCs, who are always on the prowl for the next business partnership.

Curious to dive deeper into the personality of a VC, and see if you fit the mold?

Technology evangelist, Guy Kawasaki developed an online test “The Venture Capital Aptitude Test” specifically for that purpose.

Take the free test here: electricpulp.com/vcat

Education

A) A VC has an undergraduate degree in business, finance, computer science, accounting, or engineering from a top university.

B) VCs typically have an MBA (Master of Business Administration) from a top business school; think Harvard, Stanford, Duke, Georgetown and Columbia.

C) Not only does a VC hold degrees from the above schools, more than likely they ranked at the top of their class.

Work/Life Experiences

A) VCs tend to be serial entrepreneurs, with real life experiences in working and/or launching high growth startups. They know the feeling of a successful startup, as well hardships of a failed startup.

B) VCs circle of influence includes entrepreneurs, tech savvy individuals, and business advisors.

C) VCs might have experience in working in and/or with large banks or credit unions.

D) A VC may have had their start as an angel investor, dipping into their own saving and investing in small businesses. Prior experience as an angel investor, allows for the deep understanding of responsibility that comes with investing other peoples money.

E) A VC may have done product development for large firms or has been a consultant for small businesses.

F) A VC may have been a CEO, one that demonstrated exceptional decision making skills.

G) A VC may have entered a Venture Capital Firm and worked their way up the ranks, from analyst to partner.

H) Success leaves clues. Remember to do your homework, research and mirror the success secrets of top investors. A great starting point is Forbes Magazine’s Midas List, The Top Ten in Venture Capital Today. The list includes top investors like Jim Breyer of Accel Partners, Marc Andreessen of Andreessen Horowitz, Peter Thiel of Founders Fund, Reid Hoffman of Greylock Partners, and David Sze of Greylock.

Finally, the last piece of advise we’d like to give is to be pro-Active, innovation and optimistic in your approach. The industry’s small size of 6,125 potential openings, can be daunting, don’t let figures dissuade you; it only takes 1 position to fulfill your VC legacy.

Best of luck!

 

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

Mistakes to Avoid When Pitching to a VC

Venture Capital Mistakes to Avoid from The Startup Garage

Mistakes to Avoid When Pitching to a VC

Avoid the “How Embarrassing!” Moment

No one wants to look dumb — especially while requesting a significant amount of money. As a growing business, it is important to have a firm grasp on the capital raising process — especially if your goal is expansion. The number one concept to understand about Venture Capital is that it is for businesses with established revenue looking to scale up.

If you are not to this point yet, seek angel investment or look into crowdfunding.

Regardless, the tips here of what to avoid will help you plan for the road ahead.

Not Enough Focus on the Financials

A VC firm will make the decision of whether or not to invest in your business primarily based on the numbers. There is an expectation of risk, but the assumptions and projections — as well as past revenue — will need to suggest a healthy return in order to be considered.

[pl_blockquote pull=”right” cite=”From ‘Pitching A VC Why Financials Matter’ by David Hornik”]
“It is almost assuredly the case that an early stage company’s projections are wrong. In the last decade I have only seen one company actually hit the numbers they pitched me on. The rest of the companies have missed by varying degrees of big time. But the real question when listening to a pitch isn’t whether the company will actually hit the numbers they are projecting, but rather what those projections say about the entrepreneur and the business? Is the entrepreneur focusing on the right things? Do the financials make reasonable assumptions? If the assumptions are anywhere close to right, is there a big interesting business to be built? Smart investors will dig into your financials to get a better sense of how you are thinking about your business.”
[/pl_blockquote]

 

Insufficient Market Validation

You will be expected to have accumulated some sort of customer base. Merely providing hopeful statistics on the market will not help prove the target’s willingness to adopt the product, or that there is even a viable business in discussion.

 

Requesting an NDA

Don’t ask an investor to sign a Non-Disclosure Agreement, even if it is just to protect your grandmother’s secret sauce recipe. An investor won’t sign an NDA… ever. And you will look like an idiot for asking.

 

Unconvincing Exit Strategy

What you’re selling the VC firm is a stake in your company over a given growth period. Their reason for buying in is to receive a large sum once the business has reached its growth goals. In order to be attractive, present a clearly defined exit strategy. Sell them on the opportunity.

 

Replacing Conventional Introductions with Digital Advances

With what has been said on the importance of the numbers, note that a VC firm is not investing in a product or even the business per se. They are investing in you, the founder. Maintaining a professional level of communication is extremely important. Introductions should first be made in person. If you’re not sure how to go about meeting these people, start networking. Local events and groups are a good way to start. Resourcefulness and the ability to network are traits an investor at any level would be interested to see.

Always remember your audience.

 

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

What to Know about Venture Capital

What to Know about Venture Capital from The Startup Garage

What to Know about Venture Capital

What to Know about Venture Capital

Venture Capital (VC) firms collect money from a collection of wealthy individuals, insurance companies, educational endowments and pension funds.1 These assets are allocated over a portfolio of stocks, bonds, real estate, etc. Typically between 5% — 10% are assigned to “Alternative Investments.”

The alternative investments are the high-risk/high-reward class of assets and are what is available to fund startups.

VC firms are typically set up as limited partnerships with two types; limited and general partners. Limited partners provide the funding in the form of a Capital Commitment, or obligation to pay when called upon. It is the responsibility of the general partners to put together deals that are attractive to their counterpart, in exchange for a percentage of profit.

VC firms knowingly make high-risk investments. The funding they provide is in exchange for equity in the company, and like all things when dealing in risk — the higher the risk, the more expensive it is. Your risk as a startup will be determined by the information and confidence you present. Ownership required by the VC firm can range between 15% — 25%.

The funds raised in a VC round for a tech startup serve one major purpose — scaling.

VC firms evaluate businesses that have a proven track record and product. Candidates must be able to present evidence to the market and sales potential and are interested in either growing up or out (geographically or for enterprise). This limits who this applies to primarily, but not exclusively, to tech businesses.

In order to be accepted by a firm, the numbers must work. VC firms work in the millions and billions, and will expect a model that has the capacity provide a large exit. While most VC recipients do not reach the numbers required for acceptance, confidence in the company’s potential is expected.

Of the millions of companies created every year, just a few thousand get VC funding. Nearly every tech company you recognize has been funded by VCs, including: Apple, Amazon, Google, Facebook, eBay and PayPal.

1 The Nuts and Bolts of Business Plans – MIT Course 15.S21. By Joe Hadzima (nutsandbolts.mit.edu)
 

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