“There is no other event where you’ll have the opportunity to hear 3 minute pitches from 50 startups in a day.” - Startup Riot

Once a year in Atlanta, GA there is gathering of  entrepreneurs from around the world itching to tell the anyone with ears about their business ideas. OK, well they really are trying to get the attention of some investors (institutional, corporate VCs, and angels). There is ever room for larger companies looking for fresh ideas to either acquire or work a partnership deal. Unfortunately I personally have not had a chance to attend yet, but I caught up with someone who has. Hear his story about Startup Riot 2010:

RedMaven: Who is Andrew (Andy) Watson?

Andy: I’m a software engineer originally from Orlando. I’ve worked for huge companies like Federal Express and Cox Communications and also at small startups like MindComet. I enjoy creating things and have a knack for solving problems.

RedMaven: Almost everyone thinks they’ve had a great idea for a product or business, but complained that no one would ever take them seriously, let alone give them money for it. What enticed you to attend StartUp Riot?

Andy: I’ve wanted to start a company for a long time.  I graduated from the Executive MBA program at Georgia Tech in December 2005.  As part of that program we built a business plan around technology developed at Georgia Tech.  I found the entire prcess fascinating and it was at that point that I decided I wanted to start my own company.  A friend invited me to attend StartupRiot in 2009.  While I was sitting in the audience that year I became determined to be a presenter in 2010.  This year I was up there on stage.

RedMaven: Were you nervous the first time you attended? How did you get past it?

Andy: The first time I attended StartupRiot I was just in the audience.  It was incredibly exciting and I was intensely jealous of the founders who were up on stage.  This year I was presenting and I was very nervous.  I had spoken at conferences and in front of large crowds before but I never had this much at stake before.  Add to that Robert Scoble, Bo Peabody, CNN and 400 people and it’s a little intimidating!  The best thing for me was going to Startup Gauntlet the night before.  I got great feedback on my pitch and a lot of encouragement from Jeff McConnell, Keith McGreggor and Paul Freet.

RedMaven: Describe the atmosphere at the venue.

Andy: The venue was electric.  It was literally buzzing with excitement.  At one point in the exhibit hall I had to shout to be heard.  You could feel the excitement from people as the met other entrepreneurs and thought of new ways to combine their technologies together.  It was frenetic.  If it had lasted for 24 hours I would have stayed the whole time.  I talked so much that day I almost lost my voice.

RedMaven: What did you do to prepare for the event?

Andy: We printed out lots of business cards.  I moved our database to Amazon’s RDS in case we got slammed with traffic.  I setup a special phone number to show off our features but I forgot to mention it during my pitch.

RedMaven: If your intentions are to secure funding, beyond the 3 minute presentation, how would you suggest approaching potential investors? What are some of your do’s and don’ts?

Andy: Well, we weren’t trying to raise capital this year but if we had been, I would have tried to network with investors in advance by talking to my advisors at ATDC.  Find out what investors have made investments in your space recently.  Find a way to get introduced to them before the event.  Find out what it takes for them to invest in a company.  Find a way to meet those criteria or have a plan to meet them. Be ready to demonstrate either proven experience (successful exit) or traction (paying customers).

RedMaven: Any funny stories that you have come across while at StartUp Riot? Either personal or something you heard about at the event.

Andy: When I showed up at the event I thought I was speaking in the after-lunch group.  I planned on having a few beers at lunch to calm my nerves.  I thought I would have time to rehearse, practice, re-write, rehearse again.  The only problem?  I wasn’t in the after-lunch group at all.  I was in the first group.  I was THIRD.  Somehow the lists of people had gotten scrambled.  Nobody was in the slot they though they were in.  So I was sitting up in the front of the theater going over my outline and I didn’t even realize I was sitting next to Ben Dyer who I’ve wanted to meet in real life for a while.  I was a little pre-occupied.  I thought I was ready to go.  I had even worked in a line that made reference to Bo Peabody’s keynote.  Then Ben was done.  He started walking off the stage and my mind went BLANK.  I did alright though and in retrospect it was good that I went early so I could get it over with.

RedMaven: Haha, wow! Ok, so looking to next year, if you plan to attend again, what, if anything, are you planning to do differently?

Andy: I would definitely invest in signage.  We didn’t have any and I think it made us harder to find and we didn’t show up in any of the CNN footage of the event.
We also could have done better about having our demo up and running on my laptop on the table.  We’ll get better at the trade show thing over time.

RedMaven: What is the best advice you would give entrepreneurs interested in attending StartUp Riot as a presenter?

Andy: DO IT.  Seriously.  It doesn’t matter if you think you’re not ready.  You’re as ready as you’re ever going to be.  Boil your business down to its essentials.  Come up with 4 VERY simple slides and apply to attend.  What have you got to lose?

RedMaven: Can you tell us about any future projects your are working on?

Andy: We’re currently working on extending OtherNumber into some vertical markets like Real Estate where we can build out special functionality to meet their very specific needs.  We’re also working on an integration with Chirbit to allow post audio clips on Twitter by making phone calls.

RedMaven: What is the best way for our readers to get in contact with you, follow you, etc…?

Andy: My twitter handle is @andrewwatson and we post company updates with @othernum.  Our company website is http://othernum.com/ and you can find a million ways to contact us on our About Page (http://othernum.com/about/)

HBO’s new show, How to Make it in America, debuted on Valentine’s Day, Feb 14th. I watched it and thought it is was a great show. It is about two enterprising guys as they hustle their way through New York City, determined to achieve their version of the American Dream. It does a great job of showing what happens with ideas and what it takes to turn them into profitable businesses. If you have some time and HBO check it out on Sunday’s at 10pm.

I was doing to research on how to approach a venture capitalist, and I came across a great blog AsktheVC.com (ironic huh). Anyway after reading some of the post and the comments, there was one that stood out most to me. I want to share it with our readers as well.

If you have a startup looking for funding, this is for you! Enjoy.

I just don’t understand the “I cannot find a way to get introduced to a VC comment.”
Raising money is hard, whether it’s through an IPO, VC, angels, or whatever. You read stories of some entrepreneur who meets with a VC, has the meeting the next day, and walks aways with a $8 million commitment. You don’t realize that this happens because the entrepreneur has a fantastic track record, he already knows the VC, maybe the VC already made a 10x return with him on the previous deal, and the idea is one that is the VC’s list of trends the VC likes to invest in.

Make a list of all the VCs you might be interested in. It would be an unusual VC who did not have a web site with a list of portfolio companies.

Then show the list to everyone you know. You will need a law firm. Go talk with 10 law firms that specialize in helping startups. If the partner you are meeting with does not at least know some of them, you probably have the wrong law firm.

Meet a bunch of entrepreneurs. Ask them who they have dealt with and who they like and do not like.

Same is true of commercial bankers, accountants, business school entrepreneurship professors, etc. If you have a business degree, your alumni association is probably a good way to network.

After all this is done, you should have a couple of contacts for each VC. If you don’t, either the VC has not been around the block or your contact base is not very good.

Every startup which is seeking venture capital needs to have someone on the team who knows how to do this, how to write a business plan, how to hone your pitch, how to manage the followup process. It’s basic contact management. If you cannot do this, can you really run a business? Identifying and closing customers is just as hard as raising venture capital and I think it is a similar process. It’s important to realize that this will probably be a time consuming process. One person has to be in charge of this process and be responsible for making it happen.

One additional point — Read Brad Feld’s Term Sheet series, and you will have an idea of why VCs ask for what they are asking and what is negotiable and what is not.

Comment via James Mitchell

Which of the 4 components in a startup business is more important?

• The Team
• The Product or Service
• The Business Model
• The Market

Take your time…you do not have to answer right away. Pretty tough eh??

I know, as a serial entrepreneur and budding venture capitalist I have learned a few things about startups. If you would have asked me this question back in 2005 when I got my first real taste of a start up, I would answer, “the product or service is most important.” Ask me the same question in 2006, I probably would have answered, “man it’s all about the market.” Fast forward even further to late 2008 and I would answer the exact same question with, “I think I got, it’s all about the right business model.” Contrarily I have seen that a large number venture capitalist they say, “its all about the team, they make it happen.”

So what are you suppose to believe? I have given you four totally different answers to the exact same question. Confused?!? Don’t be.

I submit to you that ALL four components of a start up are very important.

Look at it like this:

• Awesome product + booming market + great team + a terrible business model = no profitability over the long term
• Awesome product + great team + excellent business model + no market = no sales & zero profit
• Awesome product + booming market + excellent business model + bad team = miss opportunities or failure
• Booming market + great team + excellent business model + bad product = almost no sales & low to zero profit

So the best situation to be in should look like this:

• Awesome product or service + booming market + pretty good team + right business mode = sustainable profits/success

There you have it. When it comes to starting a business or investing in a startup the way you can separate the winners from the loser is to see how all four components work together.

The new thing now is a side hustle or what we at MoneyIsJustAnIdea like to call a Cash Cow! Another source of income that helps you pay off debt, go on world vacations, buy new cars, pay for college, or anything else that you have been dreaming about. Well I have a book that will get you a lot closer to your goal. I recently read “The 4-Hour Work Week” by Timothy Ferriss. This book is totally different from many other books I read on starting businesses. It doesn’t dwell on the problem but provides an in-debt solution on how to start that side hustle!

He goes into great detail about the “New Rich” and how to design your lifestyle like a millionaire but not necessarily having millions of dollars. Then he gives step by step instructions on creating a side hustle or what he likes to call a “muse”. His personal muse paid him over 30k a month!! I’m quite sure this is way more than most people make at their day job. So, if you really want a lot of extra income and to get less dependent on your job, this book is definitely a must read! Remember money is just an idea!

OK, so you have an idea for a business, you emptied all your savings, borrowed all the money you could from your friends and family, but you still do not have enough funds to get your idea off the ground. Well, do not be dishearten, there is light at the end of the tunnel.

What light am I talking about? I’m glad you asked. The light I am referring to is called venture capital or private equity (cue the horns and harp music). Yes, if you are really passionate about your idea, and you have a detailed plan (preferably in a business plan format, not on the back of an envelope) on how you want to bring that idea to the market, venture capital may be the next step.

Before you react, let me give you a quick overview on what a venture capital or private equity firm actually is, and how to get money from them. Now, I am going to explain this under the impression that you have never heard of venture capital or private equity before.

First off, venture capital is NOT a new park at Disney World next to the Epcot Center (its ok you can laugh). But all jokes aside, venture capital in a simple sense is a way for individuals or firms with a whole lot of money to pool it together and invest it in early-stage, high-potential, growth companies that will in turn generate the investors a profit in the near future.

An example: Say I wanted to start a lemonade stand, and for whatever reason your two friends thought it was a wonderful idea. So wonderful that they said they would give you all the money to get started. You are super excited, because now you can use that money to buy supplies, material for the stand, and get a cool sign printed up at Kinkos. Your friends only had two conditions, you pay him 10% of all the profits on sales, and after the summer is over he wants a 25% return of the money he gave you. You agree to the terms, and your business is born.

Like in the example above, the friends who gave you the money would be considered the venture capitalists. They had the funds to invest in your idea, and they wanted a return on their money within certain time constraints.

So now you know a little bit about what a venture capital firm does, now you need to know how to get the money you need from them. Before you even approach a venture capital or private equity firm you need to do your homework on the firm. By homework, I mean you need to know what does this firm invests in and who do they usually give money to. Below are six questions that you need to know the answers to before you sit down with a venture capitalist.

1. Business Cycle: Do they like investing in brand new start-ups or established businesses?
2. Industry: What industry do they like to invest in? What is their focus?
3. Investment: How much do they usually invest in a company? Does that amount meet your needs?
4. Location: Are they regional, national or international?
5. Return: What is their expected return on investment?
6. Involvement: What is their involvement level? Are they hands on or do they allow management to run everything?

Once you know the answers to these questions you can begin to search for the right venture capital or private equity firm to invest in your idea. This is the first step.