The insight was shared by Robin Hood Ventures angel investor Ellen Weber, National Constitution Center digital lead Kathleen Cohen, mobile development firm Chariot Solutions marketing director Tracey Welson-Rossman and legal staffing startup Hire an Esquire cofounder Julia Shapiro. The panel was moderated by business consultant Amy Larrimore.
Here are some important answers from the event.
What is the most important part of building a company?
Julia Shapiro says it depends on the stage. If it’s very early on, you must find people who are the same kind of crazy and willing to take that leap of faith with you. There’s “a very different type of fit you need at the very beginning. I found fellow quirky people. Some people have come and gone, and it’s different when people haven’t been there since the beginning.” She suggests the book Slicing Pie for guidance and mentioned cliffs in contracts, which was obviously a new concept to many in the audience, including me. I stopped the conversation to ask her to explain. It’s a way to give someone a slice of the pie only if and until a certain goal has been met. If that goal or milestone is not reached within a certain time frame, the other party no longer has equity.
How should you pitch your ideas?
“You can do it with Power Point. I’m not going to read a 35 page business plan anymore,” said Ellen Weber of what needs to decide if she’s interested in possibly investing. She went on to state that parts should be left untested, but enough to give a potential investor a clearer picture.
Are you in a very early stage? If so, an investor may fund you to test your first hypothesis, but you have a much stronger case if there is some data available. Another option is to ask for funding for different milestones. Break up your goals into phases, she said.
Be as clear as possible. Sometimes, when you’ve had an idea in your head for so long, or worked on a problem, you might not get your product across to someone who’s never heard of it before. Also, entrepreneurs don’t always understand that investors are putting money into the company with the hope that they will make money. Remember this and be prepared for the question, “What’s the exit strategy like?”
How do you get investment in your early idea?
Succinctly and clearly present the problem you’re trying to solve, how you will solve it, and why you are the person to solve it, said Weber. “It’s all about metrics, credibility, and proof of concept.” Data is key and knowing your minimal viable product like the back of your hand is absolutely necessary. Be able to explain it in and out.
Another valuable suggestion was to practice pitching your business model to someone not in your market or space. Running it by others before officially pitching will help work out the kinks and provide pertinent feedback.
Cast a wide net. One of the Julia Shapiro’s biggest investors came from a cold email, she said. Her team was shocked when they got a response from someone in Silicon Valley, where she recently raised a new round, but they learned the importance of not limiting themselves.
How do you make sure your idea doesn’t get stolen?
The topic of non-disclosure agreements (NDAs) came up quite a bit and it was clear that the panelists unanimously agree that a non-disclosure agreement is unnecessary when pitching an idea.
Welson-Rossman said, “I will sign your NDA, but don’t send me three pages of one.” That’s a red flag and indicates that the founder is not going to go out and talk to a lot of people about it, which is how you get the best feedback.
Shapiro said, if this is your very first pitch, “unless you have the cure for AIDS or cancer, no one’s going to steal your idea.”
People tell her all the time that they had the idea for her company years ago, and she’s gotten some accusatory stares, as if she stole their idea. The fact is, she said, it’s all about execution.
“On the investor’s side, if we ever stole it, no one would ever come to us again, so we would never do that. No idea is so new and different that they’ve never heard of it,” said Weber. Although she warns not to “give away the very secret sauce.”
When asked what not to divulge, Shapiro said, “if they’re in your space, downplay anything you’re working on if someone else is on similar footing to you,” but Welson-Rossman, whose team builds mobile applications for clients, disagreed.
“There’s nothing [to keep secret]. We’re looking to partner. We are like your priests. We have to know everything that’s going on, so that we can advise you. Is this something that you can do?” she said. “A lot of folks that come to us are not technical, so they don’t know what they really can [accomplish], so we can build the right thing. If you’re not giving me everything, it’s gonna be harder for us to help you.”
Good partnerships rarely start off with secrets.
“That’s good business,” she said, and the entire panel nodded in agreement.
An unedited version of this story can be found here.
Knowledge is power!
Subscribe for free today and stay up to date with news and tips you need to grow your career and connect with our vibrant tech community.