Frequently Asked Questions (FAQ) | SPARK

Paths to Market - Partnerships

Sat, 13 May 2006 00:33:26 -0400

How to reduce the cost and time to market

The cost of sales for my product is very high. What are some of the ways to reduce the cost for acquiring my first 10 customers?

Until you reach economic quantities to manufacture and can drive product prices down and establish a beachhead set of customers, the cost to acquire a customer can be very high.

The ways to reduce the cost of acquiring the early customers in the target market include:

(1) Sell the same solution to a closely related set of customers who share the same problem and attend the same confereces

(2) After generating interest, bring in a partner to help close the deal or provide co-marketed services to their client base

(3) Understand all of the steps for customer acquisition and where processes can change to make a shorter pre-sale process

(4) Consider using guerilla marketing tactics to prepare target customers for the selling process.

(5) Use online tools such as webinars to Increase the number of client potentials educated each month. Sales is ultimately a funneling process and numbers game.

(6) Compare the cost of securing the first 10 customers of this niche with the life time value a dominant position in the niche could bring. Often it makes sense to do a deferred revenue deal to secure a few of the top 10 customers.

Finding Top Talent

Sat, 13 May 2006 00:10:03 -0400

How startups attract and successfully hire talent

Where do I find and how do I hire world class talent when the company is an unfunded startup?

For any one of the audiences the entrepreneur will be selling to: Investors, Suppliers, and prospective employees, a compelling and well articulated business case is pivotal. Clearly articulate the vision and why the business can be successful.

Most top talent will be already employeed and quite successful in their current position. For this reason, an outside board direcor or retained recruiter can start a dialogue with these top talent candidates.

Recruit many more fully qualified applicants than the open position requires to ensure you have 3-4 finalist candidates to choose from. Investigate using TopGrading for your hiring process. Remember that a top performer is 3 times more valuable than a good performer.

Finally the simplicity and clarity of the business vision and plan will be crucial for recruiting top talent. Make sure yours is ready before approaching key hires.

Disclosure of Proprietary Information

Fri, 12 May 2006 23:49:53 -0400

What entrepreneurs should keep confidential

Should I divulge my technology to others without a Confidential Disclosure Agreement (CDA) especially to investors or potential strategic partners?

To understand what a company can do and how valuable that is, you must share some information. If the entrepreneur can focus on communicating the business benefit and not the technical "how to", most partners or investors will be able to understand what the fit for the product or service is without needing to sign a CDA initally.

Most professional investors will *not* sign a CDA to hear about your business or to receive a copy of the Executive Summary. Ensure that you do not convey the names of customers or strategic partners in the Executive Summary if that is prohibited by your own confidentiality agreements signed with partners.

While patents can be powerful in controlling who has the rights to use a technology, in many cases a combination of patents, copyrights, trademarks and trade secrets are used to protect various intellectual property assets. Ensure you work with an attorney to determine what should be protected and with which mechanism.

Startup Funding

Fri, 12 May 2006 23:40:54 -0400

Where to find finance for Startups

How do I find funding for a new venture without a track record personally or for the business?

Most startups will raise their first $10K on credit cards and their first $50K from friends and family. The SPARK Business Accelerator can help with funding for commercialization. Using these initial resources to achieve key "proof points" will enable the entrepreneur to raise money from Angel investors or achieve product sales.

Choosing milestones that are reachable with limited financing and recognized by investors as validating a critical assumption in the business and meeting those milestones is very important to build credibility with investors.

Finally a person on the management team who has successful built a similar business and raised capital for it gives investor confidence to make the investment in your company