What You Missed at the 'Startup CEO Roundtable'September 18, 2016
Reading time: 8 eye opening minutes
We work with many startups who have completed a funding round and are not clear on what their next move should be. Once the high of raising the first round dies down, there’s that moment when you realize that you now need to start putting your VC money where your mouth is, and not just figuratively. You’ve let outsiders in and it’s not only you and the team working your asses off after hours, now investors are checking in as well, waiting to see you scale and fast.
We partnered with Barnea & Co., a law firm that specializes in startups and came up with the ‘Startup CEO Roundtable’, by invitation only, meetup. Our meetups help startups decipher where to focus their energy and resources in the short term and what to look out for ahead.
Last week was our second ‘Startup CEO Roundtable’ meetup. The positive response from the crowd has caused us to share our insights with you :).
One of the hardest things for startups post a significant funding round to wrap their heads around, is that you're no longer building a product, you're building a business. No matter how and why you started off this world changing project, now you have bills to pay and investors to answer to.
The legal implications
Michael Barnea, CEO of Barnea & Co., spoke about burning money more quickly than originally thought and needing to move to second round relatively quickly.
Putting valuation first -- there’s a lot more to an investment than bragging about your company’s worth. Raising too much or too little is very problematic in the long run.
- Founders – avoid equal treatment of founders. There is a natural
course where some founders are worth more than others… and some need to leave altogether.
- ESOP – you need to give out more shares to your employees if you want them to stay.
- Investor(s) – more investors is better than fewer as it means that not all eggs are in one basket; divide and conquer.
- Preferred shares – liquidation preference becomes important to investors in the second round so negotiate well.
- Board of Directors – maintain control by the board.
- Employees – keep in the money.
On analyst relations
Nancy Shapira- Aronovic from Gartner joined us to provide her views on the key to success with analysts, the difference between public relations and analyst relations, and the importance of these collaborations.
Number one rule when you begin working with analysts is that your PR and marketing all need to sync. As with everything, all is connected, product, marketing, operations, PR etc. Once you get that into your head and unite all elements you’ll begin to skip down the yellow brick road.
Analysts Relations is a job and companies disappointed by their relationship or coverage by analysts are usually the ones who are not dedicating resources to feeding the analysts with information.
IT analyst’s bread-and-butter is creating recommended short lists of technology products and services for buyer consideration. Competent analysts ask their clients a series of probing questions to determine what the client really needs and then match up the vendors that meet those requirements.
If an IT analyst doesn’t have the most current or complete information about a vendor and its products, the vendor shouldn’t be surprised that it didn’t make the short list they are qualified to be on.
It’s up to you to reach out to the analysts and make sure they get to know you and your product.
For more on how to do that, here’s the full deck from Nancy’s talk.
Words from blazing startup CEOs
The CEOs of two funded startups shared their fundraising experiences and insights.
Every CEO believes, or even knows, that theirs is the best product, and everyone should want it. If they didn’t think this they wouldn’t be the CEO. But the difference between the excitement in the office and reality is enormous. VCs meet hundreds of startups all the time, so how can Startup founders and CEOs make their business stand out from the crowd?
Roy Katmor the CEO & Co- founder of enSilo shared his two cents on how to raise post seed:
Make sure you stand out in the hyper-crowded segment of your world. Hire a VP of marketing from the beginning or make sure one of the founders can take on the role, either way it shouldn’t be ignored. Your marketing and product need to be in sync and communicate the same messages. Seek out influencers from your ecosystem and create relationships with people who can later vouch for your product and help you spread the word.
- Getting your first clients
Manage your prospects like you would manage your projects. Keep a record of who you spoke with, when and what went down in the conversation. Follow up and be professional, you’re the one looking for money, it’s your responsibility.
Having said that, you can and should be picky. Your first clients will set the tone for the way you’re perceived by VCs and other investors so you want to make smart deals that will benefit you in the future. If you close a small deal with a multi-million dollar company, where are the big bucks going to come from? Know your business plan and stick to it.
Your industry ecosystem is your neighborhood. When the block hosts its annual party, you show up, mingle, find out the latest gossip, maybe bring a quiche and share the recipe. The same goes for meeting investors, they want to know that they’re talking to a businessman (or woman). Someone who knows what the latest talk is, who has built partnerships and knows what they contribute, and most importantly knows his competitors (yes, you have competitors. Everyone does).
Don’t shut down the option to patent your product, it’s pricey but can also be a guarantee of money, and work to your advantage. Be professional and share what you’ve got; VCs won’t risk their reputation just to hear about your product, not until you prove you know what you’re talking about anyway.
Finally, remember that everybody talks (you know, the block party), the review you received from one, will reach the next before you look up.
Don’t agree to anything on the spot and don’t commit to milestones. Be true to yourself, make sure your valuation is one you can live up to. Breathe, think and choose right.
David Barzilai, Chairman & Co-founder of Karamba Security focused on what he sees as the main element in growth: Product- Market - Fit
- Stop being so optimistic
Entrepreneurs are optimists at heart, they have to be in order to constantly believe that
what they’re doing will truly make a difference and that somewhere out there, someone is waiting for their product. They also need the rest of their team to be realistic and continue to tell them that what they perceive as success at a given time, is only temporary and that there needs to be something else in the pipeline.
- Initial success doesn’t lead to more success necessarily
Your first success isn’t necessarily an indicator of ultimate success. Your product could be a great fit for a company at a certain time and place, but the world keeps spinning and your market, and probably your product, will need to move and adapt alongside it.
- Listen to everyone
One of the biggest challenges for startups is to keep up with industry trends while building their baby. A meeting with a potential client, and listening to their requirements can shift the vision of your product to further fit the market. It’s crucial for a startup to be able to identify trends, change the vision and then capitalize. It’s even more crucial at times that the investors understand this and are on board with it.
If you’ve gotten this far, you probably have a product with potential. There's no need to jump off the roof and give up just yet. Continue to evolve and look for the right path for your company, and do it before you run out of money.
Hope you enjoyed my overview of the meetup. Our next event will take place in November. We hope to see you there, but if you can’t wait, sign up for our updates now.