Journey of a entrepreneur, one step at a time
When I was starting my company 4 years ago, there were few resources available. Through meeting people, going to conferences, and talking to other startups in the aging space I discovered new conferences, new groups, and new competitions focused on senior care startups.
What is one ride that every carnival has? The one that stands out from miles away in the night’s sky, with glimmering lights and fun sounds? The last hint is that the first one was built in Chicago, IL.
My company is slowly running out of money again. It is the ongoing struggle of starting a startup when the incoming revenue does not meet or even exceed the outgoing expenses. This situation, unfortunately, means that it is time to raise money yet again.
I had a conversation with my co-founder about how I could raise better, or faster this time around. For context, I tried to raise this round of $500k back in January. The result was a significant amount of interest and intrigue, but little conversion to investment dollars. Since then, I have been racking my brain about why I was not able to raise. I have analyzed, and microanalyzer each part of my pitch, about my product, my financials, and market size, and have been coming up with no apparent weak spot. My co-founder said that the pitch is fine, “you have improved greatly in the pitch, but I still have not seen you put effort into getting comfortable with the numbers.”
The numbers, there were a lot of them. The financial figures in the deck, what did they all mean, how were they going to work as we scale, unit metrics, and all. Then there are the other numbers, the investment and the ROI. On calls I had with potential investors, I would lean on my co-founder to answer those questions because he had a background in finance. But now he is saying it is my turn, “you are the CEO, if the investors can’t believe in you talking about the numbers then they will not feel comfortable placing their money in your pocket.” Well, that does makes sense, but where to start.
After thinking about this problem for a while, this week, I finally made a plan and started to take action.
Goal: To be able to confidently walk through the numbers in the model and the investment opportunity with an investor
Action Items
This week I started attacking the investor books. I am a visual learner, so when I read, I often draw diagrams or write notes while reading. After 162 pages into the VC handbook, I finally understood their perspective and investment. Investors want to get in early on the ground floor, ride the ride for the ups and downs and all-around a then get off at the top. It hit me; it’s just like a Ferris Wheel.
This concept may be simple and understood by most, but for me, everything finally clicked. I get it now, and I get what my job is; to sell investors a ticket to ride the Ferris Wheel. Among all the other rides at the carnival who claim to get as high as the Ferris Wheel, none do. I need to position my startup as the company that stands out from the rest and goes the highest.
I’ve been doing a lot of information gathering lately. Talking to entrepreneurs who have sold their companies, talking to investors from angels to venture capitalists and talking to advisers. From every conversation, I have come away with 1 consistent word: traction. When I dug further that term seemed to fall apart into a million different pieces. Some said traction was having a million dollars in recurring revenue each month, others said traction was having letters of intent and contracts signed and others said traction was having 1000 of your first products in the hands of customers.
For the longest time, I thought that building hardware was hard. Coming from a software background with little exposure to engineering or hardware, I thought the odds were stacked against me to build a hardware startup. The age-old advice in entrepreneurship always struck a core with me that said, “stick to what you are good at.” I was clearly not set up to succeed from the beginning.
In college at Indiana University (IU), I studied informatics with a focus in business. For those of you who don’t know what informatics is, it’s the application of technology to different disciplines; basically, the idea that there are all of these computer science folks out there and business people and they don’t know how to talk to each other. Coming out of informatics I was given the toolset to be able to program as well as translate requirements from one side to another. The other thing to consider from my time at IU was that at the time they didn’t have any engineering programs beyond computer science. If you wanted to do engineering you went to Purdue up north, and for everything else, you went to IU. This also meant that there wasn’t a community of people familiar with hardware projects in Bloomington, IN which added to my misfortune. More
I was talking to a friend of mine, let’s call him Dan, the other day who works at an incubator. We were talking about this program that he became in charge of through a transition for the organization and now no longer runs it. The discussion was interesting as I was very impressed with the program as it had been around for 9 years and had incredible results with each cohort. In the startup
In the startup world, you see a lot of hype for the next best accelerators or incubators that can “truly help startups accelerate their ventures”, but many of them disappear after a few cohorts or years. When I heard about this program that Dan had run and its track record for 9 years and over 100 companies that have gone through it, I was thoroughly impressed. Programs just aren’t built for sustainability these days. I was intrigued and proceeded to ask Dan how he was able run the program so well and ensure its lively hood after he finished running it. He replied that “it does no good to just have a great program while I am running it.” He said, that his goal with taking over the program was not to be the end all be all but to build out the processes and standards to make the success repeatable in order to train the next leaders. I was clearly very impressed.
Just finished the first meeting with a new group of advisors with the Chicago Innovation Mentors group. I was accepted into this group as a startup company to work with 5 incredibly experienced startup advisors over a 6-month period as a Board of Advisors.
The first meeting was tonight. I prepared as much as I could for the meeting. I spoke to each advisor before the meeting and organized an agenda to cover topics I needed help with. The meeting started without a hitch, it went very well according to the agenda. We introduced ourselves and got to know each other better than delve into the deep dive about the company. Understanding where we came from and where we are today. As you may have expected, we were bombarded with questions during this deep dive to help get the advisors up to speed on the company and what value we provide to the industry. It was very interesting to hear their thoughts on where we are today and their insights.
This is a short entry today, but a powerful lesson. Over the past few months, I have been getting very nervous when having conversations around raising capital. I am not sure why, but it has been occurring and throwing me off in discussion. Last night, I brought this up to my business partner and he was able to share his perspective and give me some new insight on the matter.
Beyond showcasing my product (see more here), I was able to connect with so many other companies doing innovative things in a variety of spaces from AR to wearables to robotics. I am hoping that some of these companies will become collaborators or even partners in the future, but even just seeing what they had to offer was exciting.
My top 5 coolest things I saw
Sitting here on the airplane flying back from Las Vegas, all I can think; am I dreaming? I just had a crazy week in Vegas. Not the kind of crazy you see in movies, with all the gambling, drinking, and shows, but with insane meetings with multi-billion dollar corporations, press from the show organizers, and interest from around the world.
A long time ago, I learned that it is important to take advantage of everything that comes your way because you just don’t know where it could lead. Last month, I received an email from Next Gen email list about upcoming opportunities for speaking, funding, and startup marketing. On the email was an opportunity to apply to talk on a panel about entrepreneurship at Johnson and Wales University’s Under 25 and Ready to Thrive Conference. The conference intrigued me, essentially the premise was that many alumni 40+ come back to the university to speak, yet students don’t often hear from the younger alumni or people to learn from. The organizer of this conference wanted to change that and give students an opportunity to see and hear from young successful entrepreneurs who were around their own age.