Any startup that has successfully raised follow on funding (angel and beyond) is going to find itself with external investors to keep happy and to do this effectively requires some form of governance structure to be put in place. Achieving this is not actually that complicated but if you’ve never set up a startup Board before then it could feel like a daunting task.
Building a Board, and managing it effectively, is a key task for a startup CEO and founding team. Whilst no one will expect you to be an expert Board facilitator from day one, the way you manage your Board will be (to your investors) a reflection of how you manage your business. Your investors don’t sit with you in the office all day, so remember, it is at the Board meeting that they really see you at work. No pressure then! Actually there isn’t. Structured and managed well, a Board will add huge strategic value to your business and you should benefit from direct mentorship from your investors.
Here’s the key messages from a session we recently ran at the Seedcamp Academy, with Richard Hughes-Jones from Firewerks.
Why do you need a Board?
Credit to Mark Suster here who sums up perfectly the functions of an early-stage Board. This is a really important reminder that, when you choose your investor, you are not just taking the money but a whole lot more (or at least you should be).
How you build a Startup Board
My own mentor, himself and angel investor and Board Chairman at StudentFunder, told me that for him the perfect Board required a combination of experience, competence, personality and network. So how do you go about finding this expert mix? Here’s a few tips.
How do you manage a Startup Board
Managing your Board takes time so be prepared to factor this in. If you think you can turn up to a meeting once a month then you are missing the point of the meeting and neither you nor your investors will get value from it. Here’s some more advice for preparing for your Board meetings, and running and closing the meeting itself.
And here’s some final advice to remember (not necessarily from Warren Buffet himself).
Richard Hughes-Jones is The Boss at Firewerks. He is a trusted advisor to startups and organisations that support entrepreneurship. Drop him a line if you need help setting up and managing your Board. This article first appeared on his blog where you can view the full set of slides on Slideshare.
Four times a year we host our Seedcamp Week, twice in London and twice in Berlin. The application process is competitive; throughout the year we receive 3000 applications from 70 countries. We invest in 25-30 startups per year, meaning only one percent of applications get investment. However, don’t let this put you off as during each Seedcamp Week we invite 20 startups from all over Europe to join us, receive invaluable business advice and mentorship from experts at the top of their industry.
The week’s schedule typically looks like this;
We are on the brink of holding our third Seedcamp Week for this year in London, and applications close this Sunday 17th August.
To give you a sense of the levels of talent, experience, and connections from the mentors that attend, we thought it might be useful to highlight a few of those who are confirmed to be joining us for Seedcamp Week London. We’re incredibly proud to work with all of our mentors so please bear in mind this is just the tip of the iceberg, and there are many, many more extremely skilled mentors not included in this list.
Wednesday 10th September
Thursday 11th September
If you want the chance to be able to meet with these mentors and have them give you advice on your business there is still time to apply for Seedcamp Week London! You have until 11.59pm on Sunday 17th August!
Michael Zirngibl, co-founder of interact.io (SC 2014) , shares his learnings from a recent Seedcamp Academy onboarding session led by Rob Fitzpatrick. Rob lives and breathes startups. He’s a founding partner of Founder Centric, a YCombinator alum, and author of The Mom Test. Rob joined us at Seedcamp HQ to help onboard the eight new teams joining Seedcamp this February by sharing insights into customer interviews.
At interact.io we think a lot about conversations between sales people and their (potential) customers and how they can be improved (shameless plug: our software connects to sales peoples’ phones and then delivers the most relevant pieces of CRM and public information about a sales contact so they can adjust and perfect their ‘pitch’ in real-time), but our focus is mostly on companies selling well established products or services.
For early stage startups whose product hasn’t been fully built or developed yet, the main objective for customer conversations is to do smart ‘customer development’, which includes getting lots of meaningful feedback on your product idea or beta product from the people most likely to buy your stuff in the future.
So the Seedcamp Academy ‘deep dive’ session by Rob Fitzpatrick – one of the leading experts in customer interview techniques and author of The Mom Test, was a great way of getting a healthy dose of reality checks from some of the best in the industry on that topic.
Kicking off the first part of the session, Rob immediately got my attention by saying that he thinks the ‘WORST outcome’ that can happen at the end of any customer interview is the following statement:
“Your product idea is brilliant – let me know when it launches”
At first this sounded a bit counterintuitive especially when I realized that some of my most recent conversations with potential channel partners, which I deemed as ‘really good’ or even ‘great’ actually included a variation of exactly that statement, but it made perfect sense quickly, when Rob started stressing that
Every successful customer conversation or interview needs to have a commitment of sorts by the customer.
In most cases this might not be a monetary commitment (great when it is, of course!), since often you don’t have a ‘Generally Available’ product to sell yet and getting actual pre-payments on your lovely PowerPoint or beta app is a challenge for even the most talented and persuasive startup founder.
So Rob quickly helped us put together a list of alternative commitments (mostly in the form of ‘Time’ and ‘Reputation’ for the person you interviewed at the prospective customer) that every startup can ask for and which can be even more valuable in the long run.
If your interview does NOT end with a ‘NO’, you as the startup founder most likely haven’t done a good enough job or wasted an opportunity asking for the right amount of commitment.
This is the startup founder version of the Sales ‘ABC’ (-> Always Be Closing), but frequently is forgotten, since a lot of founders have a tendency to feel that simply getting ‘confirmation’ from potential customers is sufficient validation for their own brilliance.
The feedback on your product you received from a person who is not willing to give you any meaningful commitment in return for your time, does not deserve any prioritization.
This can be a tricky one, since most founders are generally grateful for any feedback they can get, but it’s actually great advice in the framework of Lean Startup where prioritization of functionality is everything.
The second part of the session focused mostly on actively driving the customer interview away from non-essential ‘fluff & chit chat’ and towards meaningful and specific insights.
Using a number of real-word examples and a mock interview with one of the other startups present, Rob quickly illustrated the key signals that every founder should watch out for in customer interviews that will most likely pinpoint the most valuable insights and the key areas worth drilling deeper into.
Rob recommended that each of the key signals listed below (along with strong associated emotions) should immediately prompt a set of smart and focused follow-on questions to further clarify the customer situation and hopefully lead to a realistic assessment if and how your product fits into the specific context.
Numbers – if the customer mentions a specific metric critical in their business
Goals – if the customer is able to articulate a key objective (especially ones that affect them personally)
Obstacle – if the customer mentions specific real world challenges that prevent them from being as smart, fast or efficient in their job as they could be
Person – if the customer mentions a specific person or role in their organization that is particularly impacted by an inefficient process
Workaround – if a customer mentions specific ‘hacks’ or other steps they take to get to a specific result or to circumvent an inefficient process
Actual Amounts of money – often the ‘kingmaker’ of all interview results – if a customer can identify a specific amount of money lost repeatedly because of inefficient processes (that could be addressed by your startup’s product).
Rob concluded his session by putting his finding and recommendations in the broader context of a S.P.I.N. selling (Situation, Problem, Implication, Need-payoff) strategy, one of the most commonly used sales methodologies used in the Western world and shared with us the most important question for every customer interview:
“What are you doing about [it] now?”
The more efforts, resources or money the customer puts into workarounds to address a specific problem, the better your chances that they will jump at and pay for your startup’s solution, when you’re finally ready to address their specific needs.
Just make sure to keep everyone at your early customer sites engaged and increasingly committed along the way.
In the third video of our series ‘Advice From Founders’, we ask our startups to talk about their own products, and what’s important when building it. You can find the entire playlist here.
There’s a lot of juicy advice in the short video, here are three top tips for Founders who may be currently building their MVP or product.
All the product details need to be right…from the buttons in the app to the email text in invitations
Sometimes there is no shortcut. To find out what your customers respond best to in your product, you just have to try, trial, and test. Most startups use A/B testing for this but you can also give Growth Hacking a try.
Focus is really, really important. At the start, we were all over the place.
Bill Cosby once said ‘I don’t know the key to success, but the key to failure is trying to please everybody.’ This is a message startups can learn from, especially in the early days of creating your product. Focus your product on one specific area and become the master of it. Don’t let yourself be distracted by new features, different verticals, and designs. Build it, ship it, and evolve.
When people start talking about your product to you, before you mention it to them, it’s amazing
This is the aim for a lot of startups and it’s a nice one to keep in mind. Word of mouth marketing still exists and is incredibly powerful. How can you encourage this with your product?
Don’t forget! Applications for Seedcamp Week London close August 17th.
As there is not much time left to apply for Seedcamp Week London (applications close 17th August) we’ve decided to take stock and look at our current Seedcamp family. We gave an overview of the numbers behind Seedcamp in our most recent infographic but this time we wanted to focus on a few areas in particular. Let’s crunch some numbers and see how Seedcamp is investing in the FinTech sector.
Let’s start by getting some basic facts about our FinTech startups.
Seedcamp as a seed fund is very horizontally focused so for FinTech to represent such a large portion of our portfolio is indicative of how significant this sector is. We are excited by the companies we have worked with and already have a great network of experts in place to support FinTech companies.
Unlike vertical accelerators or incubators we do not focus on one specific industry as our investment thesis is based on supporting capital efficient businesses. As industries evolve they become more and more cost efficient to serve. Therefore our thesis evolves alongside the startups that rapidly disrupt, expand, and alter industries. Since 2007, we have invested and built expertise across different sectors, including SAAS, Fintech, Marketplaces, Analytics, Mobile, B2B and B2C. You can read more about this topic here.
After investing in one FinTech startup in 2007 Seedcamp didn’t invest in another until 2011. This quiet period coincides with the market crash and reflects how the industry took a few years to recover, affecting FinTech startups too. But once the financial services were more steady FinTech has been a stable sector, with Seedcamp investing in at least 3 FinTech startups every year since 2011. In 2014, we’ve already invested in more FinTech companies than any previous year, and we’d love to invest in even more.
Here are the 12 teams we have invested in and even though they are all from the FinTech industry their products differ vastly. From servicing digital currencies and managing your cashflows, to microfinance solutions and providing accounting tools, Seedcamp has got the area covered and we’re helping our FinTech startups grow rapidly. TransferWise recently announced that they have transferred £1 billion (1,000 million) since launching only three years ago.
FinTech startups have a great track record by being in the Seedcamp family. We can see in the data below how successful they have been in raising follow on investment, owning a large percentage in our total $190million raised.
Financial services is a money-heavy industry and an area that has been ripe for disruption. For a while it felt that banks were too big to break but slowly startups have been chipping away at their services, which in turn encourages more startups to tackle this mammoth industry.
FinTech is an area that has received a lot of attention in recent years, and rightly so. The financial services are a traditional industry that has been put under pressure to improve their transparency, customer management, and overall experience. Customers are getting used to services being quicker, online, and mobile friendly and the rapid advances in technology has created widespread disruption. FinTech was not immune to this wave of innovation and now we’re at a point where FinTech no longer simply means mobile payments, but also peer-to-peer lending, equity crowdfunding, and money transfer services.
Globally FinTech financing has tripled over the past five years and it is doing especially well in Europe, with the UK and Ireland-based companies taking the lion’s share of Europe’s Fin Tech deals.
“We’re seeing a clear trend of highly-skilled fintech talent seeking opportunities in forward-thinking tech companies, rather than traditional financial firms,” Elliptic CEO James Smith told CoinDesk, “which means we have many great options in terms of growing our team.”
This is an interesting point, and a trend that is being reflected across many industries. From students just out of university to seasoned professionals, more and more workers are favouring the startup-style of work. Instead of joining a big corporation it is much more appealing to start your own company, co-found a project with friends, or join an established startup.
What’s next for FinTech? Will this sector keep growing or will other areas start stealing the lime-light? A recent report concluded that
The digital revolution is radically re-shaping just about every aspect of the banking industry, from customer service expectations to consumers’ understanding of what a bank is. It is also enabling companies to venture into other industries at amazing speeds.
This re-shaping allows startups to enter the market early, quickly, and become leaders in that field. Of course, banking is just one small area of FinTech, meaning that the potential for growth in other areas is estimated to be huge.
FinTech is a wildly exciting sector to be involved in and we’re looking for more FinTech startups to invest in. We’ve got great traction, global connections, and an established network of mentors and investors with experience in financial technology. With Seedcamp Week London just a month away, there is still time to apply for the chance to join the Seedcamp family.
This a rare occasion but we have an important request for the entire UK startup ecosystem. It only takes 5 minutes and it will benefit you, your teams, and all of UK hugely.
We know that for you all, building your organisation with the best and right talent is critical. We also understand that it is common for startups to spend a lot of time and energy when brining new talent onboard, often wondering what the standard compensation packages should be. To help you, we are assisting with the UK’s most comprehensive salary survey for the Technology & Digital market. As the startup sphere keeps on expanding, the need good data in this sector becomes more critical.
Here is the link to the survey: http://sdca.mp/startupsalary14.
It only takes 5 mins max to complete and the deadline is August 10th. It is completely anonymous and extremely valuable. The results should be fascinating so we really encourage you and your co-founders, team mates, or employees fill it out.
In order to get as much relevant comparable data as possible together from as much of the UK startup scene as possible, Seedcamp has partnered with ICE, Enternships, and Gordon & Eden on this.
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