What I learned by collecting a million dollars for a startup without a business plan and financial projections (while sipping beer)
From the translator. The author of this publication is Robert May, the founder of Backupify , which allows you to back up, archive and export information stored in various online storages.
Like many of you, I have read blogs about startups and ventures for quite a few years. I reread a lot of posts about what to write in my business plans and how to make financial forecasts. But in the end it invariably tired me. I have always been a man of action, not planning; I was resourceful, not looking for money. At the thought of spending precious time working on a business plan, I was pretty sick.
For several months, until I finished attracting investments in Backupify, my view has changed a lot. On the one hand, I was able to raise money without a business plan and financial forecasts. It pleased. On the other hand, I learned some things that changed my view of the process of finding funds. When I do this again for our next stage and for future start-ups, I will approach this differently than this time. So I thought that while these thoughts are fresh, it would be good to record my experience of passing the path from a novice in the field of venture capital to the general director of a company behind which venture capital investors stand. As time goes by, I don’t remember the events in such detail, and therefore here’s a post about what I learned and want to share with those of you who first step on this path.
Blogs about what venture capitalists want should be treated very skeptically. In my personal experience, they all want completely different things. At best, from a particular post, you can find out what this particular investor wants from the company and the team. I once sat in front of venture capital investors who thought I was insane - because I did not have a business plan. They asked, “ How can you manage your business at all without a written plan?” "Another investor said:" I am glad that you did not spend time writing a plan, we would still not have read it. "In fact, it is more art than science. This is something like a date. By this I mean that ...
I have always believed that the presentation should be resourceful and cunning in order to conquer skeptical investors with my impressive arguments. So: this is not the point. Either they or you like your idea or not. It’s like a date — after all, the purpose of a date is not at all to convince someone who doesn’t fit at all, that you are suitable for them. This is the way to divorce. In fact, a date is a stage in the search for the most suitable partner. Investors are in exactly this way.
')
A good example is the questions I received after each presentation. If someone asked: “This is interesting, but why on earth would anyone want to back up Twitter?”, I immediately realized that they were not suitable. They saw Backupify as a small project. They saw only what he is now, but did not see what he could become. Those who eventually invested, after just a few slides, realized that it was not about backing up Twitter.
The best that your presentation can give is a lot of ideas from potential investors. If investors start asking questions like “what if you manage to make X?” Or “have you thought about creating an option for Y?”, Then that is a good sign. So they understand. So they can add value. So you found a good partner.
I had the opportunity to participate in startups, who spent months on drawing up business plans, then to go and look for money. And I am not an opponent of planning in general. Business plans can definitely be an excellent exercise when you are thinking about a future company. But the only great thing you can do to impress these guys is to go and achieve visible results in your business every day. According to Mark Custer (Mark Suster), entrepreneurs should, @ # $%, just do business , and I more than agree. A lot of people think that it’s good to be an entrepreneur, because it's cool to run your own company and “be your own boss” (which is actually not the case). You can cut off this audience by looking at who among them is able to develop a project without large resources. All venture investors know that a lot can be done with a bag of money, so whining that “we can’t create anything because there’s no money” is a waste of time. Think about how to get the most out of what you have. Investors see many types of people who work in permanent jobs, who have little free time, little free money, but have great ideas. Most of them do not create visible results. And others find how to do it. It is they who receive funding.
In Backupify, we dodged, as we could, within the small amounts that we managed to scrape together. At times people worked for us for free; we used any links or resources we could find; we called out to others for help. I sometimes felt ashamed when I showed people my brainchild, because it was good for nothing. But listen, even if you do not have enough money, then there is always time and creativity. Look for opportunities.
During the presentation at the open forum of business angels in Los Angeles, I told investors that they could talk with me if they were interested before 10:00 pm (the presentations, I remember, ended at 9:00 pm), since I also had to catch the night flight to Boston to get to the morning presentation at a venture capital investment company. Someone from the back rows exclaimed: “I like that!” Many of the business angels were once in your skin, and they like it when you demonstrate that same stern determination that made them successful. Show them that you are ready to go to the end, whatever the cost. Create visible results. As a result, someone will finance you.
I have done my presentations a LOT of times. I was given 30 minutes for the first presentation for a group of investors. After 40 minutes, I crossed only half of my slides. But each time the presentations got better. Every time I reworked the slides to make the presentation more coherent. This occupation is a diabolical longing, but this is exactly what you have to do in order to achieve perfection. This is the same technique as in manufacturing and marketing; just apply this thinking to your slides. And most importantly, it is to listen to feedback. Investors of the first stages are faced with a myriad of startups, and as a result, they develop powerful filters that cut off real projects from unrealistic ones. They are not always right, but their knowledge of the metastructures around you may be useful. So take them seriously.
David Cohen (David Cohen) has already commented on my drinking beer * during a presentation at an open forum of business angels. Under normal circumstances, I would not recommend you do this, but at that event it was appropriate. It is very tempting to start listening to the advice of potential investors to behave one way or another, but in the end you have to be yourself and feel comfortable among them. After receiving the money you have to take a lot of difficult decisions, and therefore the last thing to do is to create a false understanding with investors, since it will lead to bad disputes over serious issues.
The point of all of the above and the reason why I decided (while the memories are fresh) to shake out information from my brain is that many people writing about startups either cooked in the subject for too long, or have never been to your slippers, and therefore look at problem from the point of view that you do not fit. Do not think that there is a miracle cure, some kind of secret phrase you can say, or a certain order of slides that will simplify the process of raising funds. It is never easy, even if you have a good idea. That's the whole point. That is why few people manage to get investments. That is why the best thing that can be done is to accept this fact and to wade forward again, again and again.
Reading about something and doing something are very, very different things. If you want to learn how to attract investments, then the best way is to go and try. This is a boring thing. But now you at least know that you can do without a business plan.
* In my opinion, this was the founder of Backupify, who took a sip of beer right in the middle of his speech. I remember, I thought to myself: “SUCH I have never seen business angels at a meeting”.
Like many of you, I have read blogs about startups and ventures for quite a few years. I reread a lot of posts about what to write in my business plans and how to make financial forecasts. But in the end it invariably tired me. I have always been a man of action, not planning; I was resourceful, not looking for money. At the thought of spending precious time working on a business plan, I was pretty sick.
For several months, until I finished attracting investments in Backupify, my view has changed a lot. On the one hand, I was able to raise money without a business plan and financial forecasts. It pleased. On the other hand, I learned some things that changed my view of the process of finding funds. When I do this again for our next stage and for future start-ups, I will approach this differently than this time. So I thought that while these thoughts are fresh, it would be good to record my experience of passing the path from a novice in the field of venture capital to the general director of a company behind which venture capital investors stand. As time goes by, I don’t remember the events in such detail, and therefore here’s a post about what I learned and want to share with those of you who first step on this path.
There are no right ways, but there are wrong ways.
Blogs about what venture capitalists want should be treated very skeptically. In my personal experience, they all want completely different things. At best, from a particular post, you can find out what this particular investor wants from the company and the team. I once sat in front of venture capital investors who thought I was insane - because I did not have a business plan. They asked, “ How can you manage your business at all without a written plan?” "Another investor said:" I am glad that you did not spend time writing a plan, we would still not have read it. "In fact, it is more art than science. This is something like a date. By this I mean that ...
The task is not to convince them, but whether you are suited to each other.
I have always believed that the presentation should be resourceful and cunning in order to conquer skeptical investors with my impressive arguments. So: this is not the point. Either they or you like your idea or not. It’s like a date — after all, the purpose of a date is not at all to convince someone who doesn’t fit at all, that you are suitable for them. This is the way to divorce. In fact, a date is a stage in the search for the most suitable partner. Investors are in exactly this way.
')
A good example is the questions I received after each presentation. If someone asked: “This is interesting, but why on earth would anyone want to back up Twitter?”, I immediately realized that they were not suitable. They saw Backupify as a small project. They saw only what he is now, but did not see what he could become. Those who eventually invested, after just a few slides, realized that it was not about backing up Twitter.
Search for a concept
The best that your presentation can give is a lot of ideas from potential investors. If investors start asking questions like “what if you manage to make X?” Or “have you thought about creating an option for Y?”, Then that is a good sign. So they understand. So they can add value. So you found a good partner.
Visible results are more effective than EVERYTHING
I had the opportunity to participate in startups, who spent months on drawing up business plans, then to go and look for money. And I am not an opponent of planning in general. Business plans can definitely be an excellent exercise when you are thinking about a future company. But the only great thing you can do to impress these guys is to go and achieve visible results in your business every day. According to Mark Custer (Mark Suster), entrepreneurs should, @ # $%, just do business , and I more than agree. A lot of people think that it’s good to be an entrepreneur, because it's cool to run your own company and “be your own boss” (which is actually not the case). You can cut off this audience by looking at who among them is able to develop a project without large resources. All venture investors know that a lot can be done with a bag of money, so whining that “we can’t create anything because there’s no money” is a waste of time. Think about how to get the most out of what you have. Investors see many types of people who work in permanent jobs, who have little free time, little free money, but have great ideas. Most of them do not create visible results. And others find how to do it. It is they who receive funding.
In Backupify, we dodged, as we could, within the small amounts that we managed to scrape together. At times people worked for us for free; we used any links or resources we could find; we called out to others for help. I sometimes felt ashamed when I showed people my brainchild, because it was good for nothing. But listen, even if you do not have enough money, then there is always time and creativity. Look for opportunities.
During the presentation at the open forum of business angels in Los Angeles, I told investors that they could talk with me if they were interested before 10:00 pm (the presentations, I remember, ended at 9:00 pm), since I also had to catch the night flight to Boston to get to the morning presentation at a venture capital investment company. Someone from the back rows exclaimed: “I like that!” Many of the business angels were once in your skin, and they like it when you demonstrate that same stern determination that made them successful. Show them that you are ready to go to the end, whatever the cost. Create visible results. As a result, someone will finance you.
Practice and listen
I have done my presentations a LOT of times. I was given 30 minutes for the first presentation for a group of investors. After 40 minutes, I crossed only half of my slides. But each time the presentations got better. Every time I reworked the slides to make the presentation more coherent. This occupation is a diabolical longing, but this is exactly what you have to do in order to achieve perfection. This is the same technique as in manufacturing and marketing; just apply this thinking to your slides. And most importantly, it is to listen to feedback. Investors of the first stages are faced with a myriad of startups, and as a result, they develop powerful filters that cut off real projects from unrealistic ones. They are not always right, but their knowledge of the metastructures around you may be useful. So take them seriously.
Be yourself
David Cohen (David Cohen) has already commented on my drinking beer * during a presentation at an open forum of business angels. Under normal circumstances, I would not recommend you do this, but at that event it was appropriate. It is very tempting to start listening to the advice of potential investors to behave one way or another, but in the end you have to be yourself and feel comfortable among them. After receiving the money you have to take a lot of difficult decisions, and therefore the last thing to do is to create a false understanding with investors, since it will lead to bad disputes over serious issues.
The point of all of the above and the reason why I decided (while the memories are fresh) to shake out information from my brain is that many people writing about startups either cooked in the subject for too long, or have never been to your slippers, and therefore look at problem from the point of view that you do not fit. Do not think that there is a miracle cure, some kind of secret phrase you can say, or a certain order of slides that will simplify the process of raising funds. It is never easy, even if you have a good idea. That's the whole point. That is why few people manage to get investments. That is why the best thing that can be done is to accept this fact and to wade forward again, again and again.
Reading about something and doing something are very, very different things. If you want to learn how to attract investments, then the best way is to go and try. This is a boring thing. But now you at least know that you can do without a business plan.
* In my opinion, this was the founder of Backupify, who took a sip of beer right in the middle of his speech. I remember, I thought to myself: “SUCH I have never seen business angels at a meeting”.
Source: https://habr.com/ru/post/206938/
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