Lead to Win

Lead to Win

Some Lessons LearnedJuly 28, 2009

Chuck Colford, CEO – Congruance IT, Inc.

Lead to WinSlide 2

My Biases

I like helping people solve problems– especially customers

I LOVE invoicing– its one of my favourite things to do

I like calling the shots– While I’m not a control freak – I HATE to be controlled– Don’t ever tell me I can’t do something

I like some VCs– 99% of them give the other 1% a bad name– I probably won’t do business with them again

I admire good private investors– They are cut from a different cloth than VCs

I’m a results junkie– I have a bias for action over study – I’m impatient– I believe I can do anything, but know others can do certain things

better than meI’m probably a lot like many of you

– but maybe with a bit more scar tissue– I would like to help you avoid acquiring that the hard way

Lead to WinSlide 3

Lessons to learn – LTW 2002 Class

• 29 participants• 10 went on to found firms securing VC money

– More than $90M VC funds raised– Every founder who secured VC financing is no

longer running their company (1 is still employed there.)

– Founders who used VC last time that have pursued VC for their next startup - 0

• 7 bootstrapped– 3 are still running their businesses

Graduates were good at raising money and launching businesses

Graduates had difficulty retaining control when VC financed.

Lead to WinSlide 4

Lessons in Venture Capital

You will deal with an employee of the VC firm– As employees they have salary & pensions – they may not be entrepreneurs -

Their skin in the game is not the same as yours– Their “experience” may not be applicable to a startup– They don’t want to own a piece of your company – they want to sell it

Types of VC firm players you will meet1. The analyst – Does not make decisions – screens & researches2. The displaced executive – Left a large corporation as VP or higher3. The one-hit wonder – Had a good exit – possibly lucky4. The serial entrepreneur – Did it more than once; Has scar tissue

# 1 is not that helpful, # 2 & 3 can be dangerous, # 4 is a rare and ideal find – May be very helpful and most respectful

Smart money has a centroid– Menlo Park first; Waltham next, then elsewhere

I pitched to over 100 VCs – Some things I learned

Lead to WinSlide 5

Listen to Customers

Your sales calls should outnumber your money-raising calls– My VC pitch went through about 50 iterations– My sales deck went through > 100– They got excited in what was unique about my product – and

told it to me• It was not what I thought• It was not what Gartner said (then; Gartner have learned too)• It was not what the VCs thought

Customers are your best referrals– To potential investors – Don’t release their identity too early– To other customers– To their strategic investment groups

Protect your customer advocate – at all costs!

Customers will help you find your story

Customers can be your biggest advocates

Lead to WinSlide 6

Learn to Sell

• Selling - Get over the discomfort– Learn, get coaching – Practice, practice, practice

– You will need to know this stuff to manage the sales team anyway

– It will put you in the situations to hear customer needs

– It gets easier as you go

– It gets more profitable too

• Don’t ignore channel relationship opportunities– If there is something in it for them – they can be GREAT

advocates

– Grease the wheels as necessary – Making the pie bigger can be more rewarding than owning all of it.

– With channels I send less time selling and more time invoicing

Good relationships can create many “pull through” opportunities.

Lead to WinSlide 7

Everything is Negotiable

• Extend your runway & avoid dilution– A dollar saved is $1 or more you won't need to raise

• Downturns are great for getting a bargain– Resist the urge to pay “the asking price” on anything

– Priceline.com + BetterBidding.com for travel

– Negotiate with hotel management – You can beat corporate rates

– Sharpen your own sales skills

• But don’t squeeze small businesses to death – leave some goodwill on the table– You may need relief and your suppliers can become good

advocates

Love recessions!

Lead to Win

Manage Your Personal Exit Strategy

• Plan to take yourselves out– Selling your business to someone else– Going public– Succession/transition plans & timeframes– Winding up– Handcuffs

• Who will your acquiring partners be?– Likely players who will acquire your business– Why?– Plans to attract and engage them– Window of opportunity (timeframes, triggers)

• Getting Cash Out– Voting rights – all players not equal– Registration rights– Severance payments– Dissent rights– Capital gains, Dividends (Tax implications, benefits)– Stock or Cash

How are you going to get money out of your business?

Will you exit your company? Or will your company exit?

Founder’s plans may differ from the investors!Slide 8