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Today John Elton from iNovia Capital stopped by for lunch and spoke to the teams about mergers and acquisitions. Here are a few things he shared with us:

First off, he knew what we were thinking: “Why would I talk to early-stage entrepreneurs about planning an exit? You guys have bigger fish to fry right now. But I think it’s useful to discuss right now [...] Ron Conway says if you can’t name ten companies in ten seconds that would potentially acquire a company then he wouldn’t invest.” – That’s why it’s important to think about exits from the get go. 

The fundamental question is “What’s your goal? [...] Do you want to hit a home run, raise a lot of venture capital? [...] Are you really looking to build a business that’s looking to fulfill some of your own individual goals? [...] Or are you trying to do a quick flip?”

“So one of the things I always hear when entrepreneurs pitch is “This is either going to be huge or it’s going to be nothing.” And the reality is that it’s neither. Most exits happen around $74 million, and the numbers are skewed by the larger numbers. Most outcomes are small [...] We [investors] don’t necessarily want to swing for the fences every time, we want to have a profitable fund with smaller outcomes.” 

“New trends: secondary markets are a new thing [...] Founder liquidity [...] Financial investors, later stage fund, hedge funds, private equity firms [...] other characters that traditionally haven’t been in this market.”

M&A: “A lot of it comes down to ego. It’s still very much a people-driven enterprise where someone falls in love with an opportunity [...] and wants to make it happen, to own the company. Or there’s some sort of necessity that there’s companies laying in their tracks that they need to acquire to keep going.”

“My advice to you guys [...] is to keep your options open. The best way to combat some of the inertia is to be capital efficient, getting profitable, really building value to your business, and making the right decisions early.”

A central question that startups ask themselves is, “How do we keep people coming back?”

User retention is a big question mark and a it’s difficult to hit the nail on the head when it comes to designing a product that makes the user want to come back over a long period of time. Many apps get downloaded and then deleted within a matter of weeks (if not days) because the user can’t remember what value the app brought to them. So the question startups ask themselves is, “What motivates people to come back?”

One answer is usability. It’s no surprise that user experience is becoming one of the biggest game changers in the industries of web and mobile applications. User experience has become the keystone to user retention, and usefulness the center of attention of many startups.

In her article on user experience as the heart of any company, Mary Ellen Muckerman notes that ”Usefulness is best achieved by thinking about everything as user experience. If you start with “useful” as a first principle, then you automatically place customer need and experience first. And you’re less inclined to get lost in your own jargon, product-development silos, or legacy.”

When you think about some of the most popular and used apps, they’re not feature frenzied, they’re simple, usable, and get users coming back. They’re focused on how people use the product, which brings me to another good point that Muckerman makes: UX principles say that “how people actually use your product is much more important than how it was intended to be used. So engaging your consumer in ongoing, iterative product development is more valuable than holding out for a “perfect” product launch. It is far better to get started in a live environment and be prepared to change fast around the needs of the user.”

Don’t say that you want to build an online community and not be a part of it. You need to be present and active in what you’re building–you should be a user, too. When Facebook started integrating new features, they made a point (after not making a point and seeing how people reacted) to share the changes with their users by explaining them, giving them the option to opt out, and being there if the user had any trouble. This made “them more fluid, responsive, and relevant than their competitors.”

In her segment of the Game Changers report (download it here), Mucker looks at the fact that ”companies that put usefulness at the heart of what they do become part of their customers’ lifestyle. It makes marketing an ongoing conversation instead of the stop-start engagement that characterised the twentieth century. This makes it much easier for customers to come back, and keep coming back.” Being a part of your users’ lifestyle means that you’ve seamlessly integrated what you do with what they do. Aim to be seamless, useful, and create an experience that keeps your customers coming back.

Learn about the game changers that are changing the way we do business (purposeful, useful, experimental, boundaryless, and value creative) in Wolff Olin’s (not so ironically beautifully designed) report. 

We’ve included several cool UX infographics below (they’re all linked to the original files if you can’t read them). Let us know what you think of UX and how you’re putting your customers first in the comments!

We’re fewer than 20 days away from Demo Day and at this point in the game, the CEOs need to start seriously thinking about pitching. That’s why we’ve got them pitching day in and day out, taking feedback, and rehearsing, rehearsing, rehearsing.

Today was the first day of pitching practice in the lead up to Demo Day. During the course of the day, lots of feedback was given, taken down in notes, and will show through next week when we start again.

A good point that Real Ventures partner John Stokes made was that, “everyone in this cohort needs to strip naked in front of a mirror and say to themselves, “What am I about?” and really know what you’re about. Once you know what you’re really about, that’s what your presentation is going to be.” A recurring comment throughout the presentations was the importance of knowing your story. Seth Godin touched on this point in his post titled, “Your voice will give you away”:

“It’s extremely difficult to read a speech and sound as if you mean it.

For most of us, when reading, posture changes, the throat tightens and people can tell. Reading is different from speaking, and a different sort of attention is paid.

Before you give a speech, then, you must do one of two things if your goal is to persuade:

Learn to read the same way you speak (unlikely)

or, learn to speak without reading. Learn your message well enough that you can communicate it without reading it. We want your humanity.

If you can’t do that, don’t bother giving a speech. Just send everyone a memo and save time and stress for all concerned.”

As the teams begin to pitch, they’ll need to learn their messages well enough to communicate them. Know your story and be ready to tell it.

Just under three weeks until Demo Day and the teams are working harder than ever. Today they took the time to listen to StartupCFO and Real Ventures partner, Mark MacLeod, on getting investor ready.

He gave them lots of insight, including views from both sides of the fence. Not only did the teams come away from the talk with lots of notes and great tips, but also with a better idea of how to approach investors and the whole financing process. Here’s a few things that he shared with us during the class: 

Here are his 4 “Ps” to being investor ready:
- plan and set your strategy
- prepare your documents
- prepare to do the pitch
- party afterwards

“The plan’s pretty simple. You’ve got to decide first of all, do you want to bootstrap? [If not, and] you do want to raise, then you’ve got to decide if you’re truly ready to raise, and that really comes down to status of the product, status of the story, and are you truly venture ready. If you’re not, then even if you want to raise, you’ve got no choice to bootstrap.”

What’s investor readiness? “It’s pretty simple. It means you know exactly how much you want to raise, what you’re going to achieve with that, and who you’re going to raise from (angels vs. VC’s). It also means that you have the basic set of investor documents: an executive summary, a pitch deck, a very basic financial model, you’ve got your deal team assembled and a pipeline of investors that you’re ready to go after.”

“The exec summary has one purpose. It’s to get you a meeting.”

“Get all the documents ready, and then you hit everyone at once. You don’t run in series, you run in parallel.”

“[Build] relationships with potential investors before you start asking them to invest in your company. This is particularly important for VC’s because it’s the potential for much more capital, it’s a longer relationship, and we need to get to know each other.”

“You need to target the right investors. You need to understand who is investing in this space, at this stage, investing the dollar amounts that you’re trying to raise […] You’ve got to target people who are known to invest in your geography, your sector, at your stage.”

 ”It really is all about traction. […] we’re skeptical, and the thing that gets us over the hump is actual traction.”

“This is a two way relationship, it’s a long term relationship, and you absolutely have to choose the right investors. [...] Above all you want to make sure there is mutual respect and trust […] This is the kind of person you would go on a flight to Asia with. If not, then don’t take their money. It’s going to suck.”

And here is Mark’s presentation:

Today we “Meet The Investors”

As promised in our Startups ♥ Ramen post, here’s how to stay healthy in your (Montreal) startup.

Occasionally at FounderFuel we have lunch & learns, where one of our partners buys us lunch and the teams either listen to a presentation or sit around the cafe talking to the partners. This is a great opportunity to socialize, ask questions relevant to the specific partner, and grab a (free) bite to eat. Usually lunch is some form of sandwich or pizza. Not the healthiest thing to be eating several times in a week. Of course, startups are on a tight budget all around, and eating lunch for free helps this immensely. However, in between pizza and beer at startup events, it’s important to keep what you’re putting into your body good for you. The health of your body is directly reflected in the health of your brain, and eating healthy is a great step towards feeling energized, thinking clearly, and improving your startup! 

Now, you might be thinking that eating healthy is just plain complicated and expensive. But it’s not! Montreal has a great number of fantastic markets where you can get fresh produce for cheap. Pair that with some protein-rich meat or fish from your local grocers and you’ve already gone miles on the highway to healthy. Here’s a list of Montreal’s best markets and grocery stores–find one near you and then get cracking on staying healthy!

Jean Talon Market - this place is a must when the weather gets warmer for its huge outdoor section

Atwater Market - great for produce and specialty foods, or to pick something up for a picnic on the canal

Maisonneuve Market - a market for all of your needs

Lachine Market - another great market

Provigo grocery stores - good staple to get your basics, meats, and poultry

Marche Lobo - great for fresh produce, rice, beans, and oils

Supermarche PA - awesome grocery store on Parc Ave.

Nouveau Falero - great fish shop and specialty foods store (upstairs), also makes ready to go orders

Inspired by Pizza and Ramen are Hurting Your Startup.

Brad Feld took the time today to talk to our 11 CEOs about prepping for Demo Day. Here are three questions that were asked and the answers that Brad had to share with the teams. Lots of insightful information as the teams charge towards Demo Day! Thanks, Brad! 

Q: “Teams will take 6-9 months to raise, typically, after a Demo Day. And that you shouldn’t necessarily be expecting to get a Terms Sheet right off the bat, that there’s still a lot to be done, that Demo Day is just a starting point. Can you talk about that a bit?”

A: “I think that it’s really important to recognize that the financing process is a continual process….the value of Demo Day is that it gives you the chance to be in the spotlight for a very focused period of time, and your goal on Demo Day should not be necessarily to get everybody in the room to have a meeting with you. Your goal should be to figure out how to get a set of people in the room to have a meeting with you to start a more engaged process when you’re raising money…what your goal should be coming out of Demo Day is to try to figure out how to have real conversations with a half a dozen or so potential leads…”

Q: “How do you recognize leaders and followers?”

A: “It’s mostly reputational…the nice thing is you can find out easily on the web what people are investing in….do your research. Don’t be bashful about asking about the last couple of financings they did…You have to hustle; go find the information…ask “was he the first one to write a check or did he hang around?”

Q: “What are some do’s and do not’s on Demo Day?”

A: “Thing #1 is practice your presentation fifty times. Recognize that the first 10-15 times you give your presentation, it’s going to completely suck. It’s going to take you 10-15 times to get comfortable with your presentation and you’ll be tuning it. And it’s probably another 10 times before you finally feel comfortable with the final presentation [...] Be as obsessive with the presentation as [you are] with the product [...] Don’t undersell yourself. Really own it. #2 is show, don’t tell…If you can show somebody what your product does [...] the progress that you’re making [...] that’s so much more powerful than if you just assert it or tell them. [...] The last is have a clear ask at the end. Be explicit versus passive.”

“Good luck on Demo Day!”

Today Pete LePage from the Google Chrome Web Store stopped by to talk to the teams. A super dynamic guy with lots to share on getting your apps out there, he shared a lot of insightful information on getting your apps into the Web Store and what Google’s doing to get the word out about those apps. 

He hit it home when he said that ”[Getting into the Chrome Web Store] is a great way to get more users. That’s really what we want.” And that’s what you app developers out there want too!