How to maximize the value of your startup?

How do yo maximize the value of your startup? In order to maximize the value of your startup, you need to understand how startups are valued. In this article, we explain you how startups are valued and how you as a CEO can maximize the value of your startup.

Understand how startups are valued
One of the most important things to understand when you are creating a fundraising strategy is to understand how startups commonly are valued. You might think that the value of your startup has increased since you have been putting so much work into it. Unfortunately, this is not the way it works. Startup valuations are based on calculations of risks and rewards. The value of a startup rises as risks are being reduced. So milestones like hiring a strong team member or monetization strategy proved to work are contributing to risk reduction and automatically increases the value of your startup.

Customer traction = most important milestone
The most important milestone in reducing risks and creating value is customer traction. When you have evidence of increasing traction of paying customers, you could show that risk is being reduced. It shows that you have reached a product - market fit and your team has shown the ability to execute.

Identify the risks
What is the execution risk of your startup? This varies greatly from startup to startup. If you develop a technological solution, the major risk is if the technology will be working.

If you have a great execution track record, but no experience in developing software and your startup requires software, you would be more likely to get funded when you attract a techical co-founder to minimize the risks.

Other risks include the following:

  • Team: unproven team. Not clear if they can execute.

  • Competitive: crowded marketplace with significant competitors

  • Market timing: you’re confident about the long term market prospects, but it is not clear when the market will take off.

Reducing risk
Now that you have identified the risks of your startup, it is important to mitigate the risks as much as possible. Below, we have listed ways how to minimize the risks and maximize the value of your startup.

  • You could show how many potential customers there are. Show that you have been talking with prospects and that you know what the market wants and how much they want to pay.

  • If you have a large amount of free users of your service or product with high engagement, this is also contributing to the valuation of your startup.

  • In case you have already sold your product to a small amount of paying customers, it is important to show this.

  • Returning customers are also a milestone.

Other milestones and risk reductions you could think of are repeatable and scalable sales models. When you have tested your product for the product- market fit and you have increasing customer traction, it shows that you are capable of attracting customers. If you have found a sales model that is scalable and repeatable, it will increase your valuation greatly. This means that your company is ready to grow.

Anything that proves that your startup is scalable and that it fits the market, is a milestone and will contribute to risk reduction. Put this in mind when you are working on maximizing the value of your startup.

Do you want help with increasing the value of your startup? Apply for a free intake with Innovate Today

Checklist to onboard a new employee successfully

You are hiring. Finally you have the money to hire a new person in your team. Creating a strong onboarding process is the best way to welcome and retain new employees. Onboarding does not end when the paperwork is signed.

Hiring a new employee
Although it seems that onboarding only starts when you already have hired a new employee, the hiring process is very important to give that first impression of your startup. Therefore, your onboarding process already starts during the hiring. Make sure you write a clear job description where you manage the expectations of candidates. Make clear how you structure the hiring process as well and last but not least, follow up quickly and make sure you provide candidates with full information on references and background checks.

You have signed the papers, so what’s next?
Make sure you have arranged all necessary accounts and documents for your new employee to start. Go through the following check list:

  • Make sure all the necessary papers are signed before starting;

  • Do you have an employee handbook? Hand it out at least two weeks before the starting date;

  • Did you prepare the new hire’s tech? Do you provide a phone, computer, mouse, keyboard and headset? Make sure it is ready on the first day of your new hire;

  • Order new business cards for your new employee;

  • Schedule an introduction meeting in the first week;

  • Plan your new employees first assignment.

On the first day:

  • Create a welcome kit for your new employee which includes a welcome letter and some marketing materials of your startup (T-Shirt, sticker, pens, notebook, etc) ;

  • Send a message to your team to remind everyone there’s a new employee and encourage everyone to introduce themselves.

The first week:

  • Schedule regular one-on-one meetings with the management for your new employee;

  • Set clear goals for the trial period;

  • Schedule a feedback meeting for the end of the trial period of your new employee and provide them with meaningful feedback.

Is the new employee working satisfactory? And does your new employee like the job? Congratulations! Keep on scheduling regular one-on-one meetings in the next months in order to make sure you check in with your employee regularly.

Do you want to know more about team and hiring? Between October 28 and November 1, the Prepare Your Startup Bootcamp takes place in the Netherlands. You can apply for this training week through the button below.

Startup pitch essentials

You are on stage to pitch your startup. The timer starts and off you go. You have three minutes to share what you have been working on day and night. Only a few minutes to convince investors that your startup idea is worth their time and money. And you won’t be the only one pitching to them. There are so many more startups that are meeting with them and that are looking for funding. So how are you going to do this? Let’s guide you through it with some essentials for pitching.

If you have ever been to a pitch competition, you know that there are very passionate startups on stage who are convinced that their idea is the next big solution. On the other side is the audience: easily bored and distracted. Your mistake is to assume that they will be giving you their full attention for three minutes.

You will need great presentation skills which you can only obtain by practicing a lot. You will need great content and an outstanding pitch presentation. Let’s discuss the last two. How are you going to structure that pitch? What do you include in that pitch?

All pitch decks have at least one slide dedicated to the problem and the solution the startup is offering. The problem describes how relevant the issue is and how annoying it is for the target group. The solution is the way the startup proposes to solve the problem. This is very crucial to the pitch deck. In the end no one is looking to fund startups that are not solving any problem.

A good way of introducing your problem and your solution:

  1. Talk to your audience with ‘you’. This way your audience feels involved.

  2. How is the situation today?

  3. How it could be tomorrow when they apply your solution.

If you start your presentation convincingly with the problem and your solution, you could catch the audience with a relevant problem and convince them that you have the best solution to it, you already have done most of the work in the very beginning of your presentation.

Market opportunity
Include the market potential for your solution in your pitch deck. Your audience might be wondering if there is any market for your business, so you need to include the potential to convince them. Include a slide in your pitch deck which describes how many people could potentially adopt your solution.

It is always good to show that you are aware of the market, but also of the competition. Don’t be scared to the main competition and differentiate your idea. This way you’ll avoid awkward questions about competitors you might not know. Tell the audience about your killer strategy and why it will succeed.

Business model
How do you make money? Make sure your business model is always present in your pitch deck. You might be asking for money so you will need to prove that you will give back more money to investors in the future. Make sure you present the business model in a way that is easily understandable to anyone so your audience can immediately understand how you will be making money.

Team is everything. Show the faces of your team members and name the specific skills they have. This way you prove that you have the minimum requirements to succeed. Show why each team member was chosen to be part of your startup.

Fundraising request
Are you actively looking for funding? Then it is also important to mention how much funding you are looking for. Make it crystal clear how much you are seeking to raise and what you will be using the money for.

With these tips, you can structure your pitch well. Do you want to learn how to pitch like a pro? Apply now for Present Your Startup! Applications are open until September 1st.

Financial planning for startups: A quick guide

You have recently started a startup or you are in the process of creating a new business. A financial plan is of extreme importance to also include in the plans you create for your business. Why? First of all, it helps you determine short-term and long-term financial goals. This is very important in order to create a economically viable business. In this article, we highlight the do’s and don’ts when it comes to financial planning.

Getting to a financial plan is probably not the hardest. Online you can find enough excel templates and some excel-savvy can always help you to get around. The hard part, however, is how do you get to the numbers? How do you forecast sales? What is the size of your target group and your market? And what will you invest in your business to grow. Below we will discuss two methods to forecast your financials.

Top down forecasting

You can forecast your finances by using a so-called top down approach. This means that you take the industry estimates as a starting point and then you narrow it down into targets that fit your company. This method helps you to define a forecast based on the market share you would like to capture.

You could use the TAM SAM SOM model in order to estimate your market share.

  • TAM or Total Available Market is the total market demand for a product or service.

  • SAM or Serviceable Available Market is the segment of the TAM targeted by your products and services which is within your geographical reach.

  • SOM or Serviceable Obtainable Market is the portion of SAM that you can capture.

For example, your company has created an app. You look at the number of the consumers who have purchased apps for their phones. If there are 100 million active users of phones and half of them buy at least one app per month, you can extrapolate from there. You could estimate that of the 50 million active users who purchase apps, 1% of these consumers will purchase your app. That would give you 500K new customers.

But be careful using this model! Entrepreneurs generally tend to be too optimistic while putting this into numbers. So base your numbers on facts and create realistic projections.

Bottom up forecasting

The bottom up approach is less dependent on external factors.  bottom-up forecast is a detailed budget with spending plans by department. Hiring plans and revenue projections are based on actual sales forecast. Contrary to the top down approach, the bottom up approach starts with an inside/micro view and builds out to the macro view. This approach is a more strategic approach where you look at your current situation, your capabilities and you see where you can reasonably expect to go from there.

Instead of looking at the market potential, you need to look at your own market (existing customers or social media followers) and map out how you can turn your current standings into new sales.

Since you will be looking at the real numbers it is harder to get unrealistic projections with bottom up forecasting.

No matter what approach you will probably build some numbers on assumptions. As a startup, you probably have no historic data available so you will probably use one of the above mentioned methods plus assumptions to present the proof behind your numbers. Assumptions can be anything that validate your numbers ranging from market research, contracts with suppliers, pricing validation to conversion rates and website traffic.

Using this also helps you when you discuss with investors as they are interested in the reasoning behind your numbers.

Good luck with creating your financial model.

Do you want to receive training on financial planning, business model, legal framework, marketing and pitching? Apply now for Present Your Startup Netherlands

Applications Present Your Startup Netherlands 2019 are open!

Startup entrepreneurs, this is your chance!

The applications of Present Your Startup Netherlands 2019 are open again. Startups from all over Europe are invited to apply for this unique program. Are you a startup entrepreneur with an innovative idea or product? Would you like to have professional support scaling your business? In short, would you like to take your business to the next level? Then our program could be a great fit to you.

The program

You have applied for Present Your Startup Netherlands 2019. What happens now? On the 23rd of September, we organize an introduction meeting where you can meet us and our team and where you will also have the opportunity to pitch. After the meeting, we will shortlist a limited amount of startups based on their pitch, business model and motivation.

These startups will be invited to participate in the Prepare Your Startup Hotel which is a one-week intensive training. The training takes place in a hotel where you and other startup entrepreneurs will stay as well. During the week, you receive training on business model, finance, pitching, the legal aspects of a startup and on marketing. During the training, you will also get time to put the things you’ve learned in practice.

After the Prepare Your Startup Hotel, five startups will be shortlisted based on motivation, business model and pitch. The five selected startups will get the opportunity to pitch during the finals of the program on December 4th. In anticipation to the finals, finalists will be introduced to our investors from our network during an exclusive dinner and finalists will receive extra training just before the finals.

At the end of the finale, our jury panel will announce the winner of Present Your Startup Netherlands 2019.

How to apply?

  1. You apply at our website by filling out the application form.

  2. You will receive an opt-in confirmation email.

  3. By September 5th, we will let you know whether you are shortlisted and if we will invite you for our introduction meeting on September 23rd.

  4. After the Introduction Meeting on September 23rd, we will shortlist a limited amount of startups by September 30th to participate in the exclusive Prepare Your Startup Bootcamp. For the Prepare Your Startup Hotel program, we ask a fee of €795,-. per person. This includes 4 nights in a shared hotel room, 4 lunches and 5 dinners.