Five steps to build a crisis-proof business
In the previous translation, we talked about tightening the belt in our difficult times. The investment banking industry is collapsing, the IPO markets, mergers and acquisitions are depopulated. Startup founders should rethink strategic priorities. Business angels and venture capitalists are reviewing their investment portfolios - money is becoming less.
Now what? What should I write in the presentation for investors? How to show venture capitalists that your strategy meets the current needs of the investment community? The popular blog GigaOm asked for advice from Faysal Sohail , managing partner of CMEA Ventures .
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With your decision close the hole left by the big players. Count on two or three potential buyers with a real market share, who are able to pay a substantial amount for your decision. For example, in software development, you can build a vertical solution that will then be interesting for SAP, Oracle and others. If everything is successful, you already have at least two potential buyers. In the field of Internet projects, Google, Yahoo, Facebook, eBay have good abilities to pay for your work. Do something very significant on the basis of available technologies instead of inventing a completely new platform. No matter how brilliant your idea is, it is very difficult for existing players to integrate the new platform with their solutions. On the other hand, a product based on an existing platform costs money on the very first day.
We often say "Starting, think about how to finish." Avoid areas of business with low profitability and large investments. For example, industries with large capital investments or companies in the consumer market. Instead, select sectors where breakthrough technologies are very important. These are usually high-growth areas of the market, for example, clean technologies, pharmaceutical companies or high-tech developments. Also make sure that there are already a few potential buyers with healthy market positions in the area you have chosen - which will mean competition for your decision when selling.
(Note: many companies are now one step away from a catastrophe. Choose potential partners who are still interested in making revolutions. There is a significantly higher margin).
Good things sell fast. Avoid "lower costs" or "increase productivity." At CMEA, we often see technology entrepreneurs who optimize a small portion of the entire solution. In principle, this is important and attractive in good times, but now it is absolutely not interesting to anyone. You can increase the efficiency of a small area of work - but on the scale of the entire product, the investment will not have an economically significant effect. The lack of a look at the whole picture very often leads to the disruption of investment attraction transactions.
(Note of translator: Who will pay for a 10% reduction in the cost of servicing one client of an investment bank?)
The development of new sales methods significantly increases costs. It is completely illogical to use venture capital for this.
This will help resolve the initial investment issue and possibly provide a potential sale of the solution.
Now what? What should I write in the presentation for investors? How to show venture capitalists that your strategy meets the current needs of the investment community? The popular blog GigaOm asked for advice from Faysal Sohail , managing partner of CMEA Ventures .
Five steps to build a crisis-proof business
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1. Find a blank niche in an existing business.
With your decision close the hole left by the big players. Count on two or three potential buyers with a real market share, who are able to pay a substantial amount for your decision. For example, in software development, you can build a vertical solution that will then be interesting for SAP, Oracle and others. If everything is successful, you already have at least two potential buyers. In the field of Internet projects, Google, Yahoo, Facebook, eBay have good abilities to pay for your work. Do something very significant on the basis of available technologies instead of inventing a completely new platform. No matter how brilliant your idea is, it is very difficult for existing players to integrate the new platform with their solutions. On the other hand, a product based on an existing platform costs money on the very first day.
2. Start thinking about the ultimate profitability - your decision with your buyer.
We often say "Starting, think about how to finish." Avoid areas of business with low profitability and large investments. For example, industries with large capital investments or companies in the consumer market. Instead, select sectors where breakthrough technologies are very important. These are usually high-growth areas of the market, for example, clean technologies, pharmaceutical companies or high-tech developments. Also make sure that there are already a few potential buyers with healthy market positions in the area you have chosen - which will mean competition for your decision when selling.
(Note: many companies are now one step away from a catastrophe. Choose potential partners who are still interested in making revolutions. There is a significantly higher margin).
3. Focus on key products / opportunities for large markets.
Good things sell fast. Avoid "lower costs" or "increase productivity." At CMEA, we often see technology entrepreneurs who optimize a small portion of the entire solution. In principle, this is important and attractive in good times, but now it is absolutely not interesting to anyone. You can increase the efficiency of a small area of work - but on the scale of the entire product, the investment will not have an economically significant effect. The lack of a look at the whole picture very often leads to the disruption of investment attraction transactions.
(Note of translator: Who will pay for a 10% reduction in the cost of servicing one client of an investment bank?)
4. Look for existing sales channels that you can use.
The development of new sales methods significantly increases costs. It is completely illogical to use venture capital for this.
5. Look for strategic financing from corporate partners.
This will help resolve the initial investment issue and possibly provide a potential sale of the solution.
Source: https://habr.com/ru/post/41134/
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