Startup: dall'idea all'exit

Augusto Coppola

Tutto quello che avreste voluto sapere, ma non avete mai osato chiedere

Roma, 23.09.2015

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Comunicazione social

#call4startups

@5anatre

@enlabs

Idea

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Business idea initial structure4

VisionMission

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Vision: why are we doing it?5

Understanding trends to anticipate value

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Great visions: examples6

Microsoft, 1975A computer on each single office desk

My first startup, 1997New services will be enabled and provided by Internet

My second startup, 2002Money will not be the only currency

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Visions can be humble and still work7

Real case, 2009Japanese food will be a major trend in Italy

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One vision, many missions8

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Mission: what we do? For whom?9

Microsoft, 1975Developing one easy to use operating system for any HW platform vendor

My first startup, 1997Developing a billing system for Internet services delivered by Telco operators

My second startup, 2002Developing a Telco real-time platform to price and charge any possible good by using any possible combination of currencies

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Vision and mission keep you focused10

Collect and organize data about pros and cons

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What market should we address?11

Large and quickly growing markets (CAGR > 10%)

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Jot down your initial business idea12

1. What are the emerging trends we are noticing?

2. What does our product/service do?

3. Who will buy it?

4. Why will they buy it?

5. What is the forecasted size of our market?

6. How will our opportunity window last?

Jot down everything in less than 200 words andstart pitching your targets

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Now the bad news13

The world is plenty of good ideas (not to mention the silly ones)

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Turning ideas into profitable businesses14

3. Team

2. Team

1. Team

To do it, you need 3 key elements

Team

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The fundamental question16

Can we do it?

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Spotting the weak element in your team17

You

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The key quality of a great entrepreneur18

DisciplineDiscipline is the refining fire by which talent becomes ability

(R.L. Smith)

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People make the difference

1.01365 = 37.8

0.99365 = 0.03

1.01

0.99

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Most critical discipline20

Learning

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What do you know about your market?21

Entrepreneurs live in world of surprises,they cannot afford the luxury of prejudices

Nothing

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Understanding your errors is critical22

Fail fast and cheap (and move on)

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Second most critical discipline23

Team Making

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Leaders on board since the beginning24

The best decision is the right decision.The next best decision is the wrong decision.The worst decision is no decision.

(S. McNealy)

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Questions about your teammates25

• Is every team member 100% committed?

• Do you have agreed roles and duties?

• What is each person going to do all day?

• Are you the right team to do it?

• How are you going to divide equity?

• Who is going to take a salary? How much?

• What if you run out of money?

• What if they are offered a full time job?

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Unpleasant issues26

Grey zones must be carefully discussed

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Working in a team means also...27

...be sure of what you know, but actively looking for different points of views to challenge your...

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...in other words...28

... understanding that harsh criticism is a value for your startup

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Business and friendship29

The startup making is not about making friends…

…but friendship is a by-product of well designed teams

A friendship based on business is better than a business based on friendship

(J. Rockefeller)

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Third most critical discipline

Market Focus

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What do you know about your market?32

You don’t know what your market will be BUTyou perfectly know what your market is

Everything

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Market size estimation: TAM33

Total Addressable Market

Available data and reports

Bottom up analysis

Revenue if you have a monopolistic control

Examples:

ice-creams in USA($10bn)

Billing systems for telco operators($30bn)

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Market size estimation: SAM34

Serviceable Addressable

Market

TAM you can get with your current business model

Examples:

ice-creams in supermarkets($6bn)

Billing systems for telco operators with IP services

($15bn)

Business Model

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Market size estimation: SoM35

Share of Market

SAM part you can reach in the near

future

Examples:

ice-creams in supermarkets in NYC

($240M)

Billing systems for new European operators with IP

services($6bn)

Business Plan

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Business Model: right questions to ask

Problem Solution

Key Metrics

Unique Value Proposition

Unfair Advantage

Channels

Customer Segments

Cost Structure Revenue Structure

Top 3 problems Top 3 features

Activities driving retention /revenue

Single, clear, compelling message stating why you’re different and worth buying

Can’t be easily copied or bought

Path to customers

Target customers

Revenue model, lifetime valueRevenue, gross margin

CAC, distribution costHosting, people, ...

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Chi sono i clienti di un progetto early stage?37

G. Moore: Crossing the Chasm

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5 ottime domande e 3 modi di dire38

• Chi è il nostro early adopter?

• Qual è il suo problema reale?

• Come risolve il problema oggi?

• Il nostro prodotto risolve il problema in modo efficiente?

• Come possiamo costruire una product roadmap?

Customer Discovery PhaseProblem/Solution Fit

Minimum Viable Segment

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Case study: Moovenda

codice sconto: call4startups

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Unique value proposition40

UVPWhat do you do?

Why are you better?

Customer experience?

Deve essere comprensibile in meno di 8 secondi

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Case study: Whoosnap

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Minimum viable product42

MVP is a strategy used for fast andquantitative market testing of a productor product feature

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How to build a good MVP

Not like this ...

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How to build a good MVP

... but like this

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Case study: Tutored

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Sales channels

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Marketing channels47

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Case study: Le Cicogne

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Il business model deve scalare

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Ma la prima fase della customer acquisition no!

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Growth Hacking

Growth hacking è l'insieme di pratiche e di tatticheadottate per ottenere un miglioramento delle metriche

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Tre fasi, due cammini sconosciuti

stage 1

Get Traffic

stage 2

Get Users

stage 3

Get Revenue? ?

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AARRR Metrics

Acquisition

Activation

Retention

Revenue

Referral

How do users/clients find you?

Do they run your service once?

Do they have a great (first) experience?

Are they paying you?

Are they telling others?

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Capture everything, focus on what’s important

One Metric That Matters (OMTM)

It depends on the stageIt changes quicklyIt requires a goalIt provides insights about the next OMTM

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Growth hacking foundation

Pick OMTM

Set a goal

Find improvmt

Make a guess(no data)

Find correlation(with data) Define test

Run test

Measure results

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Case study: Nextwin

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Competition: unfair advantage57

Don’t make silly assumptions

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A key concept

Wasting time is worse than wasting money

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Don't reinvent the wheel

...chiedete, ce ne sono migliaia

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Don't be afraid to dream BIG

Undestanding Investors

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Investor types by startup stage62

time

Idea Public Beta TractionAlpha

4Fs Public Funds AcceleratorsBusiness Angels

Venture Capital

startup stage

investor type

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4Fs63

Your startup first investor: YOU

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Public funds64

Investor goal:Creating wealthiness for the territory

Pros:Easy money (but usually small deals)Incentive to start doing

Cons:BureaucraticMight have territorial constraintsPotential plan distortion

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Accelerators65

Investor goal:Making big money by stats

Pros:Understand startups and investorsRapidly add value

Cons:Small dealsRapidly loose interest

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Is this concept clear enough?

Exits are a must

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How does an investor work? (simplified view)67

Lesson learned: Seek for x10 (at least!)

Example:Fund: 10MNumber of investments: 10 deals, 1M eachFund duration: 7 years

Real world stats:4 complete failures in: 4M out: 0M tot: 0M3 no return in: 3M out: 3M tot: 3M2 small x3 return in: 2M out: 6M tot: 9M1 good x20 exit in: 1M out: 20M tot: 29M

Fund return after 7 years: x2.9 = approx 16.4%

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Dilution formula68

Example:Company valuation: 6M (premoney valuation)Investment size: 2MDilution: 25% (postmoney valuation: 8M)

Dilution = investment

premoney + investment

investment

postmoney=

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How does an investor evaluate? (simplified view)69

Lesson learned: seek for startups able to rapidly scale on valuation (usually revenue)

Example:Investment: 1MEquity: 30%Startup revenue in 5 years according your plan: 10MMarket value in the industry: 2 x revenue

Value of your startup in 5 years: 2x10M = 20MValue of 30%: 6M6M < 10xDeal not closed

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Overwhelmed70

Go straight to the point because investors filter out whatever is not in target and/or time consuming

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How does an investor take decisions? (realistic view)71

basics + gut instinct + a little know how +a network of experts you can hardly imagine

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Understanding Cap Table72

Shareholder Idea Alpha BetaTraction(series A)

Growth(series B)

Founders 90,00% 75,00% 56,25% 39,71% 32,19%

4Fs 10,00% 8,33% 6,25% 4,41% 3,58%

Accelerator 16,67% 12,50% 8,82% 7,15%

BA 25,00% 17,65% 14,31%

VC 1 29,41% 23,85%

VC 2 18,92%

Total 100,00% 100,00% 100,00% 100,00% 100,00%

Premoney 250.000 1.500.000 6.000.000 30.000.000

Investment 50.000 500.000 2.500.000 7.000.000

Dilution 16,67% 25,00% 29,41% 18,92%

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How does an investor evaluate your plan?

1. Cut in half your revenue2. Double your costs3. Add a couple of years to your exit4. Save money for a follow on

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What can kill your startup?74

New rounds with lower premoney

oran unjustified lower investment size

Stupid errors

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Don’t know the fundamentals

NDATerm Sheet

Exit is a must

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Competitors: you have to perfectly know them

No excuses

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If you have a market, you have competitors

They are those who are eating your cake

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No user acquisition

A scalable business model A non scalable startup

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Stupid sentences

We’re addressing a huge $100M market

Our market is $10bn and we’ve an unparalleled technology. Making conservative assumptions we can forecast to get 5% of that market which means $500M/year

We need $250k to breakeven and scale globally

We’re really cool and our customers are eager to buy our products/services. What’s our competitive advantage? Our price is lower than competition

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The King of stupid errors

Your ideal world:

• EBITDA/Revenue > 70%

Real world:

• Amazon: 4.5%

• Wal Mart: 24.7%

• Pfizer: 29.2%

• AT&T: 30.6%

• Apple: 32.0%

• Google: 38.3%

• Microsoft: 42.9%

• Hogwarts school of witchcraft and wizardry : 45.0%

Call to Action

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La struttura

LVenture Group S.p.A.

EnLabs s.r.l.LUISS

100%

Struttura societaria

joint venture

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Incubatori ed acceleratori

Incubatorevalidazione dell’idea

Acceleratorevalidazione del prodotto

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LUISS ENLABS è un acceleratore

Portare nuove imprese digitali sul mercato in soli 5 mesi

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Investment target

early stage ICT

team + prototipo + mercato

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Board of Advisors

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Programma di accelerazione: selezione

Preselection

Advisors

Applications Selection Day

Call, Meeting

Sou

rces

università,politecnici,incubatori,

bizplan contest,organizzazioni,

startup community,altri investitori,

…

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Standard deal

Cosa offriamo?

- €30k cash- €30k servizi

Fully equipped workspace

Business NetworkBiz Dev SupportoCorsi di preparazione Investor networking

- Advisor internazionali

Cosa chiediamo?

- 10% equity- Full commitment

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Struttura del programma

5 m

esi

Costruzione Prodotto

Validazione della soluzione

Test di mercato

Activation + Retention

Acquisition + Referral

Revenue

Private Beta

Public Beta

Investor Day

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Ciclo di lavoro

Obiettivi misurabili e che danno valore alla startup

Planning

Demo Day

Execution

Time Box: 2 weeks

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LUISS ENLABS success rate

94%

relativo ultimi 4 programmi

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Domande

Cosa cerchiamo?Come fare ad applicare?Cosa avviene la selezione?Qual è il deal?Che succede se venite selezionati?Funziona?

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Founders: l’aspetto fondamentale

Video di max 60 secondi (no password!)Domande su founder e teamChi siete, quali esperienze avete fattoPortfolio (developer e designer)

(tutto in inglese)

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Product

Demo (link o video)Traction (nessuna traction non è un problema)

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Company

Twitter descriptionCirca mezza pagina di descrizioneCome suddividete (o suddividerete) le quoteIl pitch da 4 minuti (max 240 secondi)L’executive summary o il pitch deck

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Plan

Come userete i €30k del programma nei 5 mesi

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Concetto

Ho imparato che le grandi aziende hanno a cuore l'estetica perché trasmette un messaggio su come l'azienda percepisce se stessa, sul senso di disciplina dei suoi progetti e su come è gestita

(Steve Jobs)

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Feedback

Più andrete avanti nel processo epiù riceverete feedback dettagliati

100

Grazie

www.luissenlabs.com

www.facebook.com/luissenlabs

@enlabs

Augusto Coppola

@5anatre

www.facebook.com/augusto.coppola