Since 2004, through Prevail Ventures, I've been consulting with clients on how best to grow and scale their technology companies. This combination of Adviser, Board Member, occasional Investor, and sometimes Interim Executive, has provided me an unique perspective on what's necessary to succeed as an early stage technology company seeking growth and scale.
Clients typically seek my services when they're:
In need of capital (usually Venture, though some Angel or Strategic)
When I started Prevail, I used the phrase "Strategy | Funding | Execution" to explain what services I offered. After 12 years, I still feel this phrase summarizes, though I hope not over simplifies, the essentials for building a sustainable technology company. Allow me to explain:
I'm an early riser. I wake, head to my quiet place, clear my thoughts, and prepare for the day ahead - I develop a plan. At day's end, I review my plan - what did I complete, what's still "in-progress," where can I improve, what needs collaboration or delegation? My plan evolves and endures. Call me anal or detailed (I prefer focused....)
"Failing to plan is planning to fail" ~ Benjamin Franklin
Strikingly similar in each of these approaches is the notion of including the prospect in the initial product definition & development exercises. Without "customer" validation (a prospect who pays) there is no market. Without customers and a sizable growing market, there's no revenue, no profit.... and no company.
Too often, I see early stage companies who presume they "know" what a prospect needs. Founders get frustrated when a prospect doesn't "get it." They spend countless hours and attempts at "selling" the prospect a new Value Proposition for a product they don't really need. "No thank you," or un-returned phone calls and emails are painful, but provide meaningful market feedback. The sales, or customer, inexperienced CEO tells his Team "it's a numbers game, throw more stuff on the wall - something will stick!" I submit the prospect wasn't properly involved in the product definition & development phase.
I advise clients to "engage" prospects early and often. Prospects like to be involved in the creative process - they're empowered, and become early stewards and Company advocates (read references). Sell them what you can deliver and recognize revenue on today, but engage them in a vision for the future. Customers desire to be part of something big.
When defining a plan, consider it a living organism - adaptable and evolving. it need not be an exhaustive Business Plan using authoring tools which spit out template driven documents, nor a boiler plate PPM (Private Placement Memorandum). I tend to think in terms of a Roadmap - we know our starting point and desired destination. Many factors determine the actual route of the journey; budget, time frames, mode of transportation, points of interest, baggage, personalities of journeymen, etc.
When clients contact me prior to a capital raise, I ask for; an Executive Summary, an Investor or Sales Presentation, and documented Market Validation - closed contracts, wins / losses, and formal feedback from clients. From this information, I get a good idea of how well organized the team is at this stage.
Take aways - include Prospects in early product creation, develop a flexible Roadmap, gather formal market feedback
High Level Plan - (Roadmap, Key Assumptions, Milestones)
Team - (Current capabilities, needs - Engineering, Sales, Marketing, etc.)
Metrics - (Cash - on hand, flow, burn, cash out date)
It's truly unfortunate when a good idea or company dies because of a lack of funds. Unfortunately, I see it too often. Miscalculated burn rates due to drawn out development schedules, understated sales cycles, underestimated marketing spend, all lead to loss of momentum, morale, customers, and finally employees - a sad ending.
Understanding the true "capital requirements" is not mystical. However, it does require pragmatic planning, a milestone-based approach, an eye for cash flow, and ongoing fine tuning. Investors aren't likely to fund "ideation" or Sales experimentation, unless you're a repeated successful entrepreneur. I preach, "Repeatability, Predictability, and Scaleability" - meaning, until we can repeat a defined Sales Process on a Target Account with predictable results, we shouldn't attempt to scale operations (seek growth funding).
FACT: The first capital in the door is the most costly, in terms of valuation, and possibly restrictive terms.
Therefore, it stands to reason that a young company should seek only enough capital to satisfy it's initial market validation. During the Market Validation Phase, lessons can be learned as to CAC (Customer Acquisition Costs), the Sales Cycle, LTV (Lifetime Value of Customer) and the Customer Engagement, Acquisition, and Delivery models will be begin to take shape. As these metrics are better understood, the process to raise additional capital can be initiated in earnest.
It's an important process to constantly evaluate cash requirements for market validation, market penetration, growth and scale. Understanding the key metrics and levers of the Marketing, Sales, and Financial models is a critical step in understanding when to raise capital at the most equitable terms and valuation.
Comparables - (Similar or competitive Investments & Exits)
Detailed Due Diligence Kit - (Exhaustive list of documents necessary to expedite process)
"Strategy without execution is hallucination!" - Michael Rhodes, CEO CGI
I love that quote. Get busy, engage prospects, customers, partners - listen always. "You have two ears and one mouth...listen twice much as you talk!" The essence of consultative selling. ~Losh
Upon funding, execute metrics driven operational blueprints to achieve market penetration and competitive advantage, utilizing; GTM campaigns, Sales Playbooks, Partner Ecosystems, continual improvement in the products capabilities, and full life-cycle Customer Engagement, Acquisition, and Delivery.
My experience (hands-on and observed) is there's no magic methodology, nor specific course of action that leads to absolute success. However, the essentials begin with:
Strategy - a team inspired vision & Roadmap for a Company, coupled with a product definition and manifestation (MVP, V1, etc) which meets a growing and sizable market need.
Funding - capital resources adequate to meet the immediate and ongoing needs to satisfy the market's demand for the Company's products and services.
Execution - metrics driven Operational campaigns to drive revenue, expand market presence, improve profitability, and maximize market value of the Company.
This broad approach is similar to wearing a parka in a rain storm - it protects from the elements, yet allows room for maneuvering vs. wearing a wet suit, which is restrictive, uncomfortable, and limits mobility.
It's important to note, the Roadmap and it's stated goals need to be reviewed in light of market feedback. Be willing and prepared to adjust the plan as the market dictates. Thus the significance of active customer and prospect feedback throughout the entire Product Development, Customer Engagement, Acquisition, and Delivery phases.
Prevail - pre·vail / verb - prove more powerful than opposing forces; be victorious
Ventures - ven·tures / noun: a risky or daring journey or undertaking
Continued success to all! If your Company is in need of assistance in any area of business strategy, raising capital, revenue growth campaigns, or maximizing market value, contact me.
As always, I'm interested in your feedback and experiences.