November - 2000 - issue > Cover

What do you do next? Here are six practical ways to advance your idea beyond being just a twinkle in your eye, and nurture it through the first months of its life into a promising venture worthy of your ambitions - and outside funding.

Drive home a compelling point. Can you describe your business idea in traffic-stopping terms? Have you found a way to explain your idea so whoever is at the table becomes intrigued and the entire conversation begins to revolve around it? This compelling story is sometimes called the elevator pitch. Despite what you may hear, venture capitalists and other decision-makers are not just interested in finding great people; a phenomenal idea is the bait that will capture their attention.

Craft the story as if it were a presentation with a beginning, middle and ending, and gear it to be delivered literally in two to four minutes. You can create a longer version later. The beginning should have an attention-grabbing hook, including the “pain” the customers feel, the itch, the need they perceive. The middle, obviously, is how your solution scratches that itch like nothing else ever has. The ending is not your successful IPO, by the way, but the approximate impact of your product/service on a market that matters. Like a presentation, practice the story in front of a mirror and try it on friends – particularly business friends in the appropriate industry – and adjust accordingly. Throw it out and start again, if need be. Cultivate and invest in the story as if it were the most valuable asset your business had – because, at this stage, it is.

Map out the territory. There’s no excuse for failing to do your homework when it comes to potential customers for your business. You’ve heard of “customer intimacy.” Do you know what keeps your customers awake at night? Do you know how much they would pay for a solution to their problems, and why? If you don’t know, find out. Ask questions. Dig. Know their pain points, and why/when/how they would take the time to learn about your product and switch to using it. With this base of knowledge, you will have a fighting chance of positioning, pricing and building the product to suit the market it is intended to serve.

Gauge your fuel. Running out of gas is a guaranteed way to fail. Calculate how much money, effort and talent it will take to reach the next milestone in developing your business (e.g., building a proof of concept). This will help you address the tension between raising the least amount of seed money, because you don’t want to give away too much cheap equity, and raising enough to get to the next round of funding. You will need proof of concept, so determine what your compelling story would need to include at that stage, and establish a set of short-term objectives that will get you there.

Leave the passenger seat empty. Many businesses start with an incomplete management team. You may be missing a great marketing mind or a key financial person. You may realize you are not truly CEO material (let’s be honest!) in your chosen industry, although you are the founder. Wait to fill the empty seats until you have first-class options. It’s better to have an incomplete team than a mediocre one. Again, it makes your business plan more credible if you can spell out the characteristics of the missing team members you will need in future.

Have an extended warranty plan. Some VCs will ask, “What if we provide you with funding and your product or market does not prove out?” You can, as many founders do, simply argue that it’s not likely to happen and then change the subject. Wrong answer. Acknowledge that it’s a possibility, and seriously address options such as continuing with corrections, shifting markets or applications, or shutting down at a sensible point. In other words, be prepared ahead of time to spell out ways to migrate or redirect business assets. You don’t need to raise this ugly specter yourself, but be well prepared to answer the question if it arises.

Get on the road again. If your idea doesn’t seem to be working, don’t be afraid to abandon it. If you offer it and people aren’t interested, if you test it and it doesn’t work well, if you refine it to no avail, then don’t be wedded to it. You are bigger than your one idea, and most inventors invent all their lives. In fact, creativity gurus will ask you to throw away your first good idea on purpose, just to prove to yourself that there are more where that one came from.

Go back to square one, and ask yourself, “What will I say to the banker who just got on the elevator?” The doors are about to close, and you have the next two minutes to tell your story.

Ashok S. Kalelkar, Ph.D., is Managing Director and General Partner of I-Group HotBank NE, Boston’s early stage Internet investment firm and a SOFTBANK corporate affiliate. Kalelkar is also an active angel investor and mentor, serving on the board of four high-tech start-up companies. He was a founding member of TiE-Atlantic.