Are You “Deal-Ready”?  Come to our October 18 class if you have any doubts.  What kind of doubts?  Consider this story:

You have done pretty well at slogging through setting up your business over the past five years.  You have a product.  You have customers.  You have an excellent pitch document.  You are hoping you can elevate your game by getting in some more investment.   Aha!  You have a nibble.  They look serious.  You sign an NDA.  They send you an outline of the information they want to proceed to a term sheet.  The outline is six pages long–single spaced.  Holy Guacamole!  Are you ready with answers?  Or is this a crisis?  Are they asking for things you know you should have, but have postponed getting together?   You know they want info back in a week.  That’s not enough time.  What in the world do you do?

To avoid panic, long before you reach this point, you need to think through what you need to be “deal-ready”.  Most of the items are obvious, but getting them done is rarely on the top of the list of priorities.  But knowing what all needs to be done well in advance gives you time to prepare.  Here are a few examples of the kinds of information that show you are not “deal-ready”:

1.  You took in money as a “loan” from a family member and you signed a one-page note.  But you said the interest rate would be set based on the conditions of an equity round greater than $1 million.  Or it will convert to equity at a 30% discount to the equity round.  Pretty loose.   Can you get this tied down?  What if the equity investor does not agree with the 30% discount, and offers only 10%?  What happens?
2.  You have verbal employment contracts with several key employees.  Do you think they will remember the deal the way you do?  Did you promise them equity?  Did you issue that equity or say it would be handled later?  If you issued it, what valuation did you use?  What if that is wildly different than what your potential investor has in mind?  Did you promise them raises if new money came in?
3.  Have you been deferring salaries of any of your employees to stretch your runway.  Is that deferral documented and signed?  Does it meet the legal test of a salary deferral?  
4.  You have been diligent in keeping a General Ledger, but never really had anyone assemble it into a system of accounts that meet current accounting standards.  You have been serving as your own chief accountant.  Now there are all sorts of strange entries on the Balance Sheet.  Your potential investor wants to see three years of audited financial statements with explanations.  What now?
5.  Did you tell any prior investors they would get “anti-dilution protection”?  Did you define what you meant?  Did you limit it in time or is it perpetual?
6.  Have you given anyone exclusive rights to sell your product or to sell within a certain territory or customer segment?  Is that documented?  Does it have an expiration date, or conditions which must be met for it to remain in effect?

If any of these sound familiar, our October 18 class would be a good one for you.  You can find details here.

What’s the #1 cause of a new business failure?  The inability to get customers to buy their product!    On September 13th a lively crowd heard from two fascinating experts on how to market and sell your product.  Key insight: 90% of new companies do a terrible job at selling and that makes everything else more difficult than it needs to be.  Most startups try to sell by describing the technology behind the product.  Guess what?  No one cares.  As Aaron Heinrichs and Ken Bossung described, it’s all about showing how your product solves a painful problem for a customer.  To do that, you need to understand your customers very well and then perfect your “story” on how you can solve their problems.  How do you do that?  How do you find the right people to talk to?  How do you get them to reveal their most important needs? Ken described some very clever techniques for getting answers to all of these questions.  Using his approach, companies can realize an excellent “hit rate” on getting responses and starting a dialog.  How do you get that to a close?  Always get an agreement on a next step before a conversation ends–no matter how small.

Because of the importance of the topic and the fact that most companies way underestimate how poorly they are marketing and selling, we will be offering this class again–and will be sure to get a bigger room!    Every small tech company in the area needs to hear what Aaron and Ken have to say.  Watch for further announcements.

The next class will be on “Being Deal-Ready” on October 18.  It will cover how to make sure you are getting all your ducks in line for that wonderful time when someone is interested in offering you money.  You need to show that you are a well-organized professional business. What all is involved?  Michelle Hallsten from Greeberg Traurig and Larry Kammerer from Moss Adams will be the presenters.  Registration is open now.

Two recent reports (from CleanEdge and Next 10) show the Sacramento region in the top echelon of clean tech regions in the country.  While the regional ranking has fallen over time, most of this is because the ratings are based more and more on third-party sources for some measure of fairness.  Unfortunately, in our case, those sources have missed some major accomplishments which undermined our ranking.  For one, the new Golden1 Center was not counted as a Green Building, when in fact it is the greenest arena of all NBA cities.  For another, progress toward installing EV charging stations counts only new sites, when we have been very active in adding more capacity at existing sites.  Sacramento is also listed as being #7 in customer solar installations in the state, with the top spot going to LA.  In fact, the LA region with 13 million population is only 8th in the state on a per capita basis.  Sacramento with 2.2 million people would actually rank ahead of LA at 6th position on this measure.  CleanStart is making both organizations aware of the bias in their measures so that in the future they pick up all the pertinent information in their next reports.

Discover more from Aaron Heinrich and other experts at CleanStarts Ramping Up Revenue — Sales Strategies for Early Stage Tech Companies.

Learn methods to increase you sales traction at this interactive workshop through the following parts:

1. Defining Your Brand
2. Sales Life-Cycle
3. Traction and Growth Hacking
4. Pulling