Entrepreneurs need to be prepared to pitch their company, anytime, anywhere. An elevator pitch should be short and crisp – you only have a few minutes (2 – 5 min.) to explain your vision and trigger a spark of interest from your audience / investor. Pitching a startup is really difficult and we have a lot of respect for that. Founders need to master this skill set, as there are many talents out there, setting the bars higher every day.
Following the first introduction to the pre-revenue startup valuation, in this article we review the other well-known model for pre-revenue startups: the ‘Berkus Method’, named after its inventor, Dave Berkus, a well-known Californian angel investor.
Startup founders and business angels often see external advisors as an unnecessary cost they are not willing to bear. In only very few cases we have seen business angels having a strong enough network, willingness to invest time and resources and skills to support all their startups in multiple rounds. Sometimes this means that they had to raise for five companies at the same time and provide one bridge round after the other themselves. Is that efficient?
Pre-Seed companies sometimes do not even have a minimal viable product yet, their business case is an idea and likely to be changed quite frequently during the first 18 to 24 months until a first product market fit is tested. Numbers and financial plans are worth nothing at this stage. Yet, there are valuation models Business Angels use to evaluate such early-stage startups. The most prominent method one is the “Scorecard” method. Developed by Bill Payne, this top-down approach compares a startup to other typical startups at the same stage (investors benchmark the “standard” value of a pre-seed or early seed company in this case), within a geographic region and startup-sector (regtech, digital health, fintech, SaaS, etc.).
Company valuations – especially startup valuations – remain an art based on experience. We expect to see cuts of over 50% and tougher terms. Higher liquidation-preferences (multiples 2 to 3x) will be the new normal. The numbers about in this article reflect the current market view, based on feedback our valuation and transaction specialists gathered through interviews last week.
Investment during COVID-19 crisis
The ongoing pandemic crisis is a shock for our economy. Startups were particularly severely hit by the market turbulences and ongoing governmental restrictions. In a lot of countries governmental rescue mechanisms do not consider startups in particular – we say, it is playing with fire leaving them all on their own or even to abandon them. France has done the best job so far when they introduced their EUR 4.3b plan to support startups, followed by Germany with a number of different programs for the vibrant startup ecosystems of Berlin, Munich and Hamburg. A lot of investors – in particular Business Angels – have trouble saving their main (family) business and focus currently on helping their portfolio companies.
Investors who ‘oppose’ the crisis
Most venture funds have reacted the same way. Nevertheless, there are quite a few investors who are still investing. You may expect them to be as selective as they were before and – beware – some of them might look for bargain deals during the crisis. A recently published crowd-sourced list (still work in progress) or a list by Techstars show all investors, who are still investing.
BUT STAY CALM! Even if you desperately need funding, make sure you do not just contact hundreds of funds in an act of desperation – just because you found a list! Stay calm and think rational! Make sure you get proper introductions to the investors who make the most sense for your business. Read the investment criteria carefully before you reach out to investors. Pitching online is also quite different – we recommend to check out this free tutorial video to improve you skills.
DON’T BE BOLD. It is a deep crisis and you should hit the breaks if you face uncertainty. Cut your burn-rate, extend your run-way. Down-rounds might be the result and a long fundraising winter might be the mid- to long-term reality of this crisis. Come up with a survival strategy and have it ready, when talking to investors. VentureBeat nailed this in a recent article – we highly recommend to read this one.
We highly recommend to apply at European Super Angels Club – Europe’s leading investors network, if your company is within the investment scope of the club. Venionaire Capital´s analyst- and transaction team supports the club in selection of startups alongside partners of KPMG Austria. Members range from family offices, high-net-worth private individuals to corporate venture Capital funds – a network of thousands of potential investors who could consider investment during Covid-19 crisis.
If you need any assistance – don’t hesitate to reach out to us. We support startups in fundraising day-in and day-out – who knows, maybe we have a fit and we can leverage your efforts to raise a successful round.
About the author: Berthold Baurek-Karlic is Founder and CEO of Venionaire Capital, with many years of experience as a serial entrepreneur, corporate finance expert and early-stage investor. He supports the startup ecosystem in various roles such as President of the European Super Angels Club, Board of Austrian Private Equity and Venture Capital Association and General Secretary of Business Angel Institute.
We have collected 100 thoughts, resources and questions from CEOs, in four core fields of attention, for you. Reflect for yourself and see, if there is a better chance to adapt your business. Try to consider this crisis as a unique opportunity to revisit and redefine processes and ways of doing business. And, if there are synergies to leverage together we are eager to hear from you!
How to Master Remote Working working?
The recent Coronavirus crisis forced many of us into unexplored territory – everybody became a remote worker overnight. Considering our place of work is an essential part of our corporate DNA, the requirements of different generations, laws and regulations – mastering remote working is a challenge for entrepreneurs in any industry. It is a balancing act between legality, sanity, freedom, and efficiency in the new working conditions. Some of our clients adjust better, others move projects to Q3 2020 or cancel them completely. In our case that will not be necessary; we will offer the European Super Angels Club events, as well as Business Angel Institute trainings an option to be held online – we have all the necessary tools in place and have already done so in the past.
It looks highly likely that we will come out of this crisis with a new working culture. Sales estimates of video-calling and integrated communications solutions, like Grape and Phone-Automation systems, like Yodel.io, are going through the roof. Even Digital Team Österreich (an initiative from the Digital Ministry in Austria) is helping SME’s to find attractive solutions and special offers for any company in need of such services right now.
Not everyone can adapt to the new working environment equally. For most people, remote work is still a relative novelty. Even though laptops, cloud solutions and video calls are often supplementary to traditional office work, things become substantially more difficult once the entire team goes remote. It feels a little odd and you have to adapt and find ways to keep up your company culture – which can be tricky. There is certainly a lot we can learn from startups when it comes to remote work. Most millennials and startup founders practically grew up in remote teams at schools and universities. Global startups commonly have distributed teams, and some even work as digital nomads (while living on the beach or traveling the world). Some of our portfolio startups (in particular Grape, Butleroy and YodelTalk)have shared their learnings from previous years in blog articles (eg. Remote Work Checklist Guide, The World is Your Office), which we highly recommend reading).
We have summarized our personal experience, as well as learnings and insights of our startups for you in this article and hope sharing these tips for working remote from home will help you be more efficient in the coming weeks and maybe even beyond.
1. Be present and communicative with colleagues and clients
In order to be present and available for your team while working remotely, we recommend using a high-quality communication software. At Venionaire, we opened all our employees an account in an advanced unified communication platform named GRAPE.io. We also invite external project partners and clients to the same platform, albeit with restricted access.
We used to use WhatsApp groups for informal communication within our team; however, with everyone now working 100% remotely, we needed a much stronger solution, where we would not lose track of projects and developments. We needed to get a solution, which allows us to invite clients into private rooms and enables video chats, sharing of documents, and reduces the number of tabs open in our browsers. Switching between 5 to 10 solutions in parallel can drive you crazy really fast.
For those depending on multiple SaaS products (and working on a Mac) we highly recommend Stack, a specialized browser for multitaskers. Setting up our solutions only took a couple of minutes to structure the chatrooms and user-settings and some guidelines on how to work with the new tools. After only one day, we are good to go and everyone seems to have accepted it.
2. Set remote working guidelines
In our case, we have set very basic standards of communications – we say “hi” when we check in in the morning, we say our goodbyes before we go offline. Lunch and coffee breaks are still as important as before – therefore we encourage our team to chat during breaks and keep up social ties within the team. We use a separate chatroom for off-topic conversations and private video chats. We encourage our employees to use this for the sake of social relations and exchange while drinking a coffee.
Due to higher amounts of calls, email and chat-messaging through all kinds of channels, we encourage to plan in some “buffer-time” between meetings and in addition, introduced the concept of Timeboxing. We block times for internal meetings, for emails, for calls (internally and with clients) – this way our days and the workweek have a clear structure.This concept makes it easier for team-members and partners to engage with you, when you are ready for them.
My workweek is structured very simple and looks like this for myself:
- Meeting Monday – Internal Meetings (only), here tasks and targets for all team members are set
- Project Tuesday – Project Teams work on their milestones
- Relationship Wednesday – Schedule (Video) Calls with clients
- Silent Thursday – Take time to get your stuff done, with as little disturbances as possible
- Client Friday – (Video) Calls with existing clients, partners, and all other external stakeholders
4. Set your top 3 priorities a day
As we cannot simply walk by our colleagues and get a sense for their current stress level and resource allocation, things need to be done differently. Every team member needs to be transparent about their work schedule, tasks and targets, and share it pro-actively amongst colleagues. For the sake of simplicity, we ask for 3 main priorities for the day to be shared. A personal checklist will naturally have more sub-tasks, however 3 topics of the day are enough to give an idea of the workload and rough schedule.
If a job or task is done – we pro-actively share it in our team chat and tag a manager to make sure this is noticed.
5. Set limits for how much you work
Unless you’re working on a deadline, limit your workday. Schedule breaks at least every two hours and save time for sports. On a normal workday you would sit in the car or public-transport for 30minutes or maybe even more – use this time for physical activity. You will be most productive, if you set yourself goals and a timeline to deliver them. Create a balance so that you can enjoy your surroundings, take time for yourself and your family, which requires your support in troubling times such as these.
6. Be patient with your colleagues – share tips for working remote
Try to remember that nobody chose to be in the situation we find ourselves these days. Some adapt quicker, some slower – some struggle, some handle it more easily. This is a challenge, but at the same time an opportunity. It is important to share experiences and to listen to your colleagues when they share their personal situation and difficulties – we should all learn from each other and support each other every day. It’s up to you to ensure everyone else feels comfortable and welcome!
7. Congratulate yourself (even if it is weird)
Praise yourself when you get something done. Working remotely is a challenge. It may look easy – looking at digital nomads and startups from the outside. Inquire deeper, however, and those who are honest will confess that they smile after every hurdle they jump over – keep on celebrating your wins and involve your team in it (even if it´s only on video) to really master remote working!
About the author: Berthold Baurek-Karlic is Founder and CEO of Venionaire Capital, with many years of experience as a serial entrepreneur, corporate finance expert and early stage investor. He supports the startup ecosystem in various roles such as President of the European Super Angels Club, Board of Austrian Private Equity and Venture Capital Association and General Secretary of Business Angel Institute.
The Venture Capital Method is often used for valuing early-stage companies. We show you how it is done.
Fundraising is as much an art as it is hard work! We show you how it is done.