July 10th, 2013 Pitch Night: ER Accelerator gives Startup Advice
New York’s tech startups are an interesting bunch. There are those in their advanced early stages who’ve had their website or their app for a year or so and already have a solid structure or following in place. Then there’s New York Pitch Night which attracts even more new tech founders, earlier than most, say, those who have launched their app just a week ago. The group was designed that way. People attend and pitch for 60 seconds and an industry leader gives them startup advice from the ground up.
On July 10, the pitch night proved to be much more interesting with Murat Aktihanoglu, founder and managing director of New York’s Entreprenus Roundation Accelerator, as its guest speaker. Folksy and friendly in his presentation, Aktihanoglu gave the 17 presenters and more than a hundred attendees invaluable advice on how to refine their ideas or get funded. He is also founder of Holoscape Inc.
“What is it like to go into business for yourself?” he asked the audience. “It’s like jumping from a plane without a parachute but making one while you’re going down.”
One after another, the 17 “pitchers” took to the stage to talk about their products or services in 60 seconds. Attendees are then asked to vote the pitch of the night. Startoiletpaper.com clearly gives new meaning to place-based advertising where the Nuqaq app tells you about meetup-like events in your area. Jobsuitors, for its part, promise to match your personality with a job. Not an issue for the all-female Kookopa team who have shown its commitment to their business by quitting their jobs.
With over a hundred attendees hanging on his every word, Aktihanoglu addressed several basic issues, ranging from fundraising to pitching strategies. “Building relationships is the only way to raise funds, because investors back people, not deals. Just remember, you are pitching your personality.” To do this, he believes in getting warm introductions and keeping a database of investors.
Of course, you may not need to sell yourself as much if you approach friends and family, still comparatively easier but then he also knows you may have to deal with accelerators and angel investors when the time comes you will need to grow your business.
“Who knows what a convertible note means?” Aktihanoglu asked. That’s when you sell equity to a venture capitalist—not to be paid in cash; it’s a short-term raise for a startup to get, well, started. The typical terms: a 20 percent discount at a 6 percent interest for a cap of $2 million to $10 million.
Then there’s the price equity round wherein you sell a share of the company to an investor, usually with a lead and closing date. It’s for bigger fund-raisers of $500,000 and up. “Use this when you’re ready to expand,” he said. The typical terms for this are a pre-money valuation, preferred stock, a board seat, a lead investor with other participating investors.
The extensive business plan we have to come to know is passé to him. “Just give a one-page executive summary—with all the information a VC will need, plus both a pitch deck and email deck.”
Below are some more of Aktihanoglu’s startup tips:
What your pitch deck must have (in order): 1. Problem. 2. Your solution. 3. Business model/market size 4. Underlying magic/technology. 5. Marketing and sales strategy 6. Competition 7. Team. 8. Current status/milestones. 9. References
How to make your startup look good to a VC. “You have to emphasize your biggest assets, your team, previous successes, traction and technology. “Just don’t generalize and say we improve how business is done. Know your numbers: market size and growth. Show how big your company can get.”
In his ER Accelerator, he said he looks for the following when investing: a good team, 70 percent; market size, 20 percent and idea, 10 percent only “because ideas change all the time.” 3 big mistakes you can make while pitching. 1. When you don’t listen. 2. You refuse to acknowledge the competition. 3. You have implicit/explicit assumptions regarding the knowledge level of the audience.
Learn your risks. Identify and minimize your specific risks--product, market, technology, execution and timing risks. Understand how startups are valued. It’s key to know you have a scalable sales model.Final thoughts. Understand how investors think; minimize their risks; raising money is just the beginning; pick an investor carefully, because there may be no divorce between an investor and a startup; look for a co-founder you’ve been with for a long time. And lastly, be humble and be open to advice.
The ER Accelerator reportedly offers 3 months of free office space, legal advice, workshops and accounting services with over 250 mentors. For more information on ER Accelerator, visit eranyc.com. For more information on the meetup Pitch Night, visit startuppitchnight.com or Pitchnight.tv