Answering Questions Under Fire

Whenever I work with teams on their investor pitches, one of the things I try to work on is dealing with questions.  We’re all used to answering questions effectively in our day-to-day lives, and most of those questions arise in a very comfortable way.  Dealing with questions at a pitch is not so comfortable:

• Questions from investors can appear quite confrontational
• The questions may cover unfamiliar territory
• The answers can be very complicated
• Sometimes it can feel like the presentation is “over” after the last slide and my concentration slips

In spite of this, dealing with questions is one of the most important aspects of a pitch meeting.  It gives the team an opportunity to show how they think on their feet and communicate spontaneously.  It is also key to remember that only interested investors ask questions.  If they weren’t interested, they wouldn’t waste their breath.  They ask questions because they are interested enough to want to understand more.

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Opinion: Is Lean Scotland a firework in a steel box?

There is a new lean startup community forming in Scotland, following the principles captured in by Eric Ries in his book The Lean Startup.  Typically lean companies develop web applications, hosted in the cloud and usually with strong social components.  They can often start to test a “minimum viable product” with customers after only a few months development, and are bootstrapped by the founders.  I think of companies following this pattern as web-tech - calling them “lean” is confusing  since principles can be applied to business of many types.

The needs of web-tech companies are very different from the startups that dominate the portfolios of Scottish angel groups and the support of Scottish Enterprise.  Currently supported companies are traditionally high-tech, bio-tech or med-tech, and need to spend months or years and hundreds of thousands of pounds to get to a working prototype and even more to get to market.  They have protectable IP (often from Universities) and there is an established pipeline of support through universities, RSE Enterprise Fellowships, SMART, Investor Ready, HGSU and other initiatives.  We have a number of excellent angel groups that dominate the startup investment market and understand this model well.

Right now I am seeing a lot of energy and activity in the lean/web-tech space – perhaps most recently exemplified by the Turing Festival – but I fear that this energy is being blocked by the immaturity of the ecosystem supporting companies of this type.  Are we in danger of putting these beautiful fireworks in a steel box and stifling them?

In many respects, my current business model in supporting startups is typical of this problem.  My work is mostly with high-tech startups and is funded by the schemes mentioned above (SMART, HGSU, Investor Ready) and a change of model would be required for me to get involved in the lean web-tech community.

So what might this new ecosystem look like?

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Investment (Part 3): The Right Investors

Pick an investor, any investor…

There are lots of angels, angel groups, and Venture Capitalists listed on websites on the internet, but many have tight investment criteria.  Most invest in only a specific range of deal sizes.  Many are specialist by industry sector and location.  Some are always looking for a strong patent portfolio, or other protectable IP.  If I am raising £50k for a new social media website, any time spent talking to a specialist biotech VC who typically invests £10m at a time is likely to be wasted.  Fortunately, it isn’t too hard to find out who is worth talking to.

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Investment (Part 2): You Don’t Need a Plan

The final resting place of most business plans…

Investors base their investment decisions on some combination of the Team, the Idea, and the Market.  As long as I can communicate effectively about these three areas, I am ready to start talking to investors.  Talking to investors DOES NOT NEED A WRITTEN BUSINESS PLAN.

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Investment (Part 1): Start Now

Start NOW!

One of the ways I judge a book as really good is when it still has me thinking about its content a few weeks later.  I recently read Angels, Dragons and Vultures by Simon Acland and quickly wrote one post on the subject of having a plan B, and I have been continuing to think about a lot of the ideas in it.  I almost universally agree with the ideas, but I think that there are lots of practical details of the experience that differ from location to location.

I started trying to capture some of my thoughts in a blog post, but it got crazy long so I’ve split is into a mini-series, and this is the first one.  I have the following list of working titles for the instalments – this may change as I fill in the details:

• Start Now (also thanks to a conversation I had with Scott Torrence’s on his Start It Lean blog)
• You Don’t Need a Plan
• The Right Investors
• Look Beyond the First Round
• Don’t Do It
• Connecting to Investors
• Courtship
• After the Honeymoon
• The Great Escape

As always I am sure plenty of people with other experiences will read this and have different ideas – please share them and help to get a debate going!

Investment (Part 1) – Start Now

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