Monthly Archives: May 2015

Looking 3 Steps Ahead: What Comes After the Startup Ideation Phase

Looking 3 Steps Ahead: What Comes After the Startup Ideation Phase

What are the next steps after you come up with an idea for a new business?

After the ideation phase of a business, many teams loose focus. Fortunately, there is a tried and true blueprint that successful companies in all industries have followed in order to take a business entity from a spreadsheet into the real world.

Here are the three steps that all would-be Startup companies should consider after the initial visualization.

1 – How do you evaluate the current target market and market saturation? 

Identifying competition should be first on the list of any start up. This will help a company to more accurately define its own role in the marketplace, narrowing the sales funnel and eventually increasing the ROI of all marketing efforts. 

A high percentage of the first funds that you receive for your business idea will likely be earmarked for a highly detailed differentiated market analysis. Google Trends and the Google Keyword Tool are a great place to start, but the search should definitely not end there.

A startup company should consider geographic and demographic data from across the board in order to identify the audience that is making the current purchases of the products that it is considering selling.

More than 50% of businesses now include Facebook and Twitter commentary in their overall assessment of market saturation. If there are many comments about a product or industry trend, but most of the comments are negative, this means something much different than commentary that is overwhelmingly positive.

Researchers should be attuned to the fact that Facebook is prone to be much more negative than Twitter regardless of issue.

2 – How do you determine if your idea is profitable and scalable?

Profitability is a function of the perceived market value of your product, which can be approximated by a price/value industry matrix, minus the expenditures of your company per unit produced. With a volume that outpaces your fixed costs, you have a viable business structure, at least in theory.

Scalable ideas must incorporate variable costs such as taxes, marketing, promotion, distribution and government compliance into the equation. These kinds of calculations may require some professional assistance, but they should be determined before the initial start of production.

50% of businesses, and 60% of investors, want to see some sort of breakeven analysis in an initial business plan in order to help determine the overall viability of a would-be company. This should definitely be included; however, it should not be the end of the marketing analysis. Although it can be quite difficult to project profitability without a round of sales, every company should attempt to do this without exaggerating results, especially if multiple rounds of funding will be required to retain viability.

3 – How do you secure the flow of your marketing information to your customer?

One of the first things that an embryo company should consider is its niche in the marketplace. This is incredibly important in order to solidify the proper distribution of the marketing message. No matter how big or small a company, compliance with the current flow of information is critical. Business no longer runs the world of business – telecommunications does. This will only become more apparent as time goes on.

Currently, less than half of the Fortune 500 is mobile compliant by the standards of Google. 70% of those companies barely pass muster. 100% of these companies are spending millions in order to become fully compliant.

As of April 2015, any company that is not fully compliant by Google standards will begin to
lose visibility within the search engine, especially within the mobile search market. If this is a priority to a multibillion dollar company, this is a virtual death sentence to any high growth start up.

Guest Blogger Cameron Johnson is a business consultant and entrepreneur.
Over the course of his career he has conducted case studies on both social media optimization and non-profit marketing. Cameron has also had the opportunity to speak at international business conferences and was recently recognized as one of the world’s top 100 advertising experts to follow on social media

7 Lessons Learned From A Vegas Tech Startup Conference

Collision Con From The Startup Garage

7 Lessons Learned From A Vegas Tech Startup Conference

“ It’s A different kind of Vegas.”

Collision Conference invaded and innovated downtown Las Vegas, Nevada Cinco De May and 6th.

The 48 hour “crash course” included 7500 attendees representing 89 different countries, with a legendary guest-list that included: 200 WorldClass Speakers, 1000 Startup Businesses, 451 Tech Investors, and countless “smart” entrepreneurs.

Equally as interesting to the individuals that attended the conference, was where the event took place, “The Downtown Project” (Psst..If you haven’t heard this name get familiar with it, you’ll be hearing a lot about it.)

It’s there, just 6 miles from the infamous Las Vegas Strip, a small Startup town is brewing. The cutting edge urban revival project was heavily invested ($350million) in by Zappos frontman and startup cultural icon, Tony Hsieh.

His business model; to create a community of happiness, in an other wise depressed and dilapidated city centre… which leads us into lesson #1.

Lesson #1 Recognize potential and invest in it’s possibilities.

Startups Entrepreneurs are familiar with taking risks and getting comfortable in the uncomfortable. Tony Hsieh didn’t see the “Fremont Experience” and think let’s avoid this rundown area at all costs. Instead he said let’s immerse our company, culture and entrepreneurial energy into the infrastructure, and make old bones dance.

Lesson #2 Conferences, especially tech. conferences, need female minds in attendance.

Collision Conference acknowledged the fact that tech conferences tend to be sausage fests, and did something Different. They invited the top 150 females in technology to attend the conference complimentary, there by subtly shifting the dynamics of a male centric space.

Lesson #3 There’s an organic type of networking, it’s called Collision.

A Collision with another person, moves away from the hunt and gather mentality of standard networking events, and allows for the natural serendipity of individuals paths to cross.
Colliding with the right people at right place, and the right time, can become a natural and common occurrence.

Lesson #4 Never underestimate the power of food and lasting impressions.

Each morning upon entering the “event” attendees were treated to freshly baked blueberry muffins. The DoubleTree may have started this trend with freshly baked chocolate chip cookies, but the result remains the same… A feeling of being welcomed, comforted, and wanting to return for more.

Lesson #5 Collaboration is the easiest way to breed successful innovations.

In the chaotic sea of 1000+ Startup Businesses prepping and pitching to investors and want to be investors for funding and mentorship. I found myself wondering, how many of the Startup entrepreneurs conversed and collided with one another to exchange ideas and information? (please tweet us @startup_garage if you have a great Startup to Startup Collision story)

It seems that Collision Conference was the perfect landscape for new startup business ideas to emerge, and preexisting ones to flourish with new insights. However, my experience was everyone was there with laser focus in the hopes swooning the VC or Angel.

Lesson #6 You can’t talk Marketing without the other M word… Millennials.

#Millennials isn’t just a trending hashtag, they’re a population of 77 million people, 1/4 of the American population, who are socially and economically savvy. Millennials have big brands via-ing for their attention and approval. As a generation with an insatiable appetite for quality content and the Tinder mindset (swipe left and move onto the next) marketing power is shifting into the hands of the consumer.

Lesson #7 Innovation never sleeps.

Innovative ideas and solutions have no On and Off switch, they’re a constant switching in the mind of Startup entrepreneurs. It’s not enough that there’s a solution, the questions remains whether it’s the smartest and most effective solution possible.

There’s Startup towns brewing, do you hear it percolating?

A Tech Startup conference shifted my perception of Vegas from an epicenter of gambling, strippers, and intentional debauchery to a sustainable community of like-minded entrepreneurs, that when colliding together, have ability to transform even the most unsuspecting places.

The Correlation between A Startups Seed Round and Series A Round

The Correlation between Your Seed Round and Your Series A Round from The Startup Garage

The Correlation between A Startups Seed Round and Series A Round

Here at The Startup Garage we are often asked, “Has it become harder to raise capital for Startups nowadays?”

 

The answer is, yes and no.

On the one hand, the total dollars invested in U.S. startups in 2014 reached its highest point since the dot-com boom in 2000, according to Bloomberg. On the other hand, there are more startups competing for these dollars than ever before.

One of the hardest rounds to raise, and subsequently one of the biggest hurdles to startup success, is the Seed round. This round is potentially the riskiest round for an investor as most startups raising Seed capital have yet to accomplish any significant milestones that prove the concept.

The technology or product development is usually in its infancy,
The team is lacking,Traction is nominal if present at all, and The key benchmarks for success have yet to be proven. As a result, many good ideas never make it out of the gate.

Those that successfully navigate the Seed round significantly increase their chance at entrepreneurial success and at raising their next round of capital, the Series A round.

When raising a Seed round the question becomes, “How large of a seed round should I raise to maximize my chances of raising a Series A round?”

Smaller Seed rounds seem like a quick fix because they are simpler and faster to raise as they typically require less investors.

However, in order to raise a significant Series A round, the startup needs sufficient capital to accomplish enough milestones that will attract Series A investors. As a result, we see a direct correlation between the amount of capital raised in the Seed round and the amount of capital raised in the subsequent Series A round.

According to data from CB Insights, companies that raised both a Seed round and a Series A round can be categorized as follows:

  • Small – Below the 25th percentile (<$360K for Seed, <$2M for Series A)
  • Average – Between 25th and 75th percentile (between $260K and $1.5M for Seed, between $2M and $7M for Series A)
  • Large – Above 75th percentile (>$1,5M for Seed, >$7M for Series A)As depicted in the chart below, nearly half of all large Seed deals became large Series A deals. Most of the other large Seed deals went on to raise average Series A rounds with a small number raising a small Series A round.

For companies that raised small Seed rounds, 57% went on to raise an average Series A round, and only 13% raised Series A rounds of $7M+. Lastly, 63.8% of companies that raised an average Seed round went on to raise an average Series A round.

Moral of the story: if you plan on raising a Series A round, don’t cut yourself short during your Seed round.

Seed Funding From the Startup Garage

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!