Mentoring
Having a personal coach when learning any new skills can
be extremely important but having a personalized coach that is tailored to your
specific industry and company goals is priceless.
Direct Gain provides mentors who are qualified ENTREPRENEURS
IN RESIDENCE (EIR) and Founders in Residence. This means we’ve been
through what start-ups go through and can offer options and methods to avoid
pitfalls that many start-ups experience.
We also provide “fractional” help up to a full-time C-Suite level staff that
can help identify and fill the voids that are preventing you from expanding or
securing the necessary funding.
Customer Discovery – This is often a surprise to
start-ups, but yes, an investor will want to see that you have a firm
understanding of the market that you intend to pursue and that your market due
diligence confirms that customers are waiting to buy your product or service.
Building Your Company
TAM/SAM/SOM is another way for investors to gain insight
into your business's potential for their investment.
Total Addressable Market (TAM)
Focus
on: Total market size
Example: Total LED market size
Service
Addressable Market (SAM)
Focus
on: Your own technology/service size
Example: Total market size of the living color LEDs
Serviceable
Obtainable Market (SOM)
Focus on: Which
realistic market share can be obtained by myself, considering the competition,
countries, trends, expected demand/forecast, my sales/distribution channels,
and other market influences.
Example: My realistic goal is to
sell living color LEDs into the LED market
There
are many websites online that further explain the TAMSAMSOM method and
why it is important to understand. Investors
will want you to understand these differences and hear how you will address
them or use them to target your customer base.
Team
Building –All investors want to see that your team includes experts who
can manage the development, positioning, and protection of your business to
safeguard their investment. You need a
strong complement of business, technology, and risk management to give your
investors and eventually, stockholders the feeling of security that their
investment is safe and what risk there is (and there is always risk) is as fully
mitigated as possible. Making sure your CXO team has the right experience and
background is extremely important.
Due
Diligence - Data Room Creation – After you have convinced a
potential partner or strategic investor that you are the right choice for them,
they will want to examine your management of key documents that provide proof
of what you have been telling them. Telling them about dozens of interested
customers or other strategic partners will kill your deal quickly if you can’t
back it up with letters of intent (not letters of interest).
A data room should contain signed documents that confirm what you are saying
through signed MOUs, LOI, and/or contingent purchase orders.
Pitch
Decks –
Creating several strong, detailed pitches (summaries) that best describe your
company and its goals is very useful to have when meetings or other
opportunities present themselves. Optimally, a two, ten, and thirty-minute
pitches, will help you convey your company’s message professionally and
thoughtfully, wherever you are. Your
decks need to be tailored to the specific target audience. Whether that is an angel or strategic
investor, a customer, or a crucial supply chain partner.
Funding
Opportunities – There are several ways to raise money for your
business. These include angel investors, strategic investors, and most
importantly, non-dilutive grant opportunities. SAFES
There has never been a better time to pursue grant funding
thanks to the new Government IRA, which has mitigated the risk that the private
investment sector perceives and is normally constrained by.
Manufacturing
Supply Chain - This has gotten tougher and tougher since the
pandemic and the geo-political struggles that we find ourselves in these days
have intensified. Guidance for operations include R&D, raw material
sourcing, component suppliers, manufacturing, transportation, distribution and
retail channels, and consumer management all need to be thought of as potential
challenges that must include options and solutions for unforeseen obstacles.
Non-equity-diluting Financing – Finding financing
whether in the form of grants, loans, limited licensing or other financial
options that will not dilute your company’s equity is extremely important,
particularly in the early years. Our
partners have been singled out by programs that request our assistance in
developing plans for startups to ensure that they maintain control of their
vision, IP and operations while still allowing enough resources to accomplish
the day-to-day tasks necessary to keep a steady forward growth that keeps in
step with the company’s vision.
These are just a few of the critical areas that mentoring
can help you prepare for. In addition, we provide critical networking
opportunities with key partners (i.e., universities, certification companies,
and market channels, etc.)
Sales-Sales-Sales - Out of all the topics above, nothing is as important as
sales. Depending on the stage of your
technology readiness level (TRL) or business readiness level (BRL) is in, you
will want to concentrate all your team on some level of sales. The TRL is usually one of the main drivers of
what stage you can secure sales at. For
example, TR- levels range from 1 to 10 with 10 being ready to start spending
money on marketing and hiring salespeople because you have product on shelves
ready to ship. TRL 1 is often just an
idea, usually not even at the bench lab scale, without a minimum viable product
(MVP) developed to see if the concept works.
While all these levels can secure funding, the higher the TRL and BRL
the higher your valuation and less of your company you will have to give up.
On the other hand, a company that has developed their
technology and/or product to a TRL 3 or 4 level may be ready to find a
development or manufacturing partner that can commercialize the technology but
can’t because they have not done enough customer discovery work to show that
there is a market ready and waiting for this product which is backed up by
either Purchase Orders (POs), Memorandum
of Understanding (MOUs) or contingent Pos.
Without some (signed) commitments by potential customers, it
will be very hard to get investors to believe you have de-risked their
investment appropriately.
Commercialization
Customer Discovery
Website - A well-developed
website will prove to be one of your most important avenues of sales…..
Pre-seed
Investor Relations - When your technology or product is sufficiently ready for
thorough due diligence you will need a data room that holds various levels of
entry for various levels of interested parties.
In the beginning, a startup often hears from investors “we never sign
NDAs” or “we couldn’t stay in business if we didn’t treat all potential customers'
technical and business IP with the utmost security as if it were our own. What they mean is that they never sign NDAs
at an early stage of the evaluation process but they ALL sign NDAs once they
are convinced that you have something real, and they need to have their
“experts” take a look under the hood.
The trick is to give them just enough non-confidential information to
convince them that you have the goods without giving them any trade secrets or
proprietary information or process info.
They are tricky so you will likely need coaching on this. Hopefully, you already have patents so they
can see the basis for your claims and can be convinced without giving them the
trade secrets that prevent a multibillion-dollar company from buying your
patent from you on the cheap and running with that on their own. Or worse yet, the Patent simply provides a
roadmap of how to circumvent the technical issues and still gets them where
they need to go. Worse even still is
someone who files a similar patent and sues you for infringement eating up all
your money until you are forced to sell your company to them for pennies on the
dollar.
