Month: October 2022

How to Find Angel Investors
Money Startup Fundamentals
2022.10.25

How to Find Angel Investors

A startup’s success is attributed to several factors including the company’s dedication, entrepreneurial skills, the consumer’s need for the products or services offered, effective marketing, business viability, and more. But as passionate, business savvy, and innovative as a startup may be, sometimes it all comes down to money. To launch, grow, and build a scalable startup, you need adequate funding, and a great option is to learn how to find angel investors and gain their support. 

 

What is an angel investor?

Angel investors are usually wealthy individuals who invest their money into early-stage companies in exchange for equity in the business. Typically angel investors are looking for long-term investments and are able to provide startup mentorship and business expertise in addition to their financial investment.

 

Is it difficult to find angel investors?

Generally, it’s not hard to find angel investors when you’re looking in the right places, but what can be tricky is learning how to get them to invest in your business which we will cover further down in this article.

Let’s first look at ways to find angel investors.

 

4 Ways to Find Angel Investors

 

1. Start with your local community

Angel groups and networks exist all over the world, but many angel investors take a greater interest in locally-based startups. Research groups that exist in your community. 

 

2. Use online databases

Many angel groups and networks are listed on online databases. Websites like Angel Investors Ontario list all Ontario-registered angel investor groups, making it easy for Ontario-based startups to find angel investors within the province. 

Other websites such as AngelList, Angel Capital Association, and Angel Investment Network give you access to thousands of investors. 

 

3. Search social media platforms

If your startup is active on social media, particularly on Twitter and LinkedIn, it can lead to connecting with angel investors. Your startup’s social media channels should follow and engage with relevant businesses and influential people.

In general, having an effective digital marketing plan can help you connect with influential people and angel investors.

 

4. Attend business networking events

Registering for local conferences, industry events, and business socials will bring you closer to connecting with angel investors.

Local networking events are often attended by angel investors, and it’s a great way to make introductions and plant seeds for building long-term relationships.

 

How to Secure an Angel Investment

Finding angel investors is one thing, securing investments is quite another. Landing funding from an angel investor is all about being prepared, polished, and passionate.

 

PREPARE a detailed yet concise business plan

Angel investors want to assess your startup’s viability and growth potential. Write a detailed and well-organized business plan that includes elements such as an estimate of how much funding you need, your business strategy, a competitor analysis, and financial objectives.

 

POLISH your elevator pitch

Whether you connect with angel investors online or in-person, having a well-executed elevator pitch is essential to capture their attention and interest. Aim to keep your pitch concise and simple, and include why your startup is a solid investment.

 

PASSIONATE entrepreneurs are an angel’s best friend

When angel investors invest their money, time, and expertise, they are not only investing in a business but in the person or people behind it. If you are not passionate and driven, angel investors may question if you have what it takes to go the distance.

How much money can you ask for from angel investors?

 

As a general rule, startups need to calculate two things before determining how much money they should ask for: Business valuation and funding requirements.

Determining your business valuation will help you come up with an asking amount that is proportionate to how much your startup is worth and also determine if this amount alone will cover your startup’s needs.

Most angel investors will not look at requests that exceed $1 million and will be looking to take a percentage of your company that equals the percentage of funding in relation to your business. For example, if your business is valued at $1 million, and your startup requires $250K in funding, the angel investor will most likely want approximately 25 percent of your company. 

 

How do I get help landing angel investors?

Startup incubators mentor entrepreneurs to launch, grow, and scale their businesses. Startup incubators place a large emphasis on acquiring funding as this is a large component of any new business.

Innovation Cluster Peterborough and the Kawarthas teaches clients how to secure investments, connects them with local angel investors through the Peterborough Region Angel Network, and prepares them by teaching them how to build a solid business plan, give an effective pitch, and ultimately get the funding they require.

IaaS, PaaS & SaaS: Choosing the Right Cloud Solution for your Business
Strategy
2022.10.18

IaaS, PaaS & SaaS: Choosing the Right Cloud Solution for your Business

Nowadays, the term “cloud” is widely known as an online solution for managing files and storing data. Businesses big and small utilize cloud services, but many are unaware of the extensive capabilities the cloud can offer. As a startup, becoming familiar with your cloud options such as Iaas, PaaS, and SaaS, and knowing the differences, benefits, and drawbacks of each one will help you choose the solution(s) that will help your company be more efficient, cutting-edge, and cost-effective.

 

What is IaaS, PaaS, and SaaS?

Before diving into the various cloud solutions, it is important to have an understanding of what “the cloud” is. 

 

What is the cloud?

Rather than acquiring physical servers and equipment that store, manage, and operate data and software, “the cloud” is composed of several servers that are located in large data centres throughout the world, accessed by customers remotely over the internet. By using cloud computing, users don’t have to manage physical servers or run software on their own machines.

 

IaaS, PaaS, and SaaS

Cloud computing can be broken down into three main categories: IaaS, PaaS, and SaaS. All three types offer enormous benefits to businesses, but understanding their differences will help you determine which solution(s) is the best fit for your company’s needs. 

 

Infrastructure as a Service (IaaS)

Allows customers to manage their company’s resources — network, servers, data storage, etc. — on the cloud. IaaS is made of scalable and automated computer resources that businesses can access themselves via a virtual data centre in the cloud, and can purchase resources on an as-needed basis rather than having to buy the hardware outright.

 

IaaS uses virtualization technology and is usually provided to the customer through a dashboard or an API. When using IaaS, you are responsible for managing things such as applications, runtime, OSes, and the IaaS provider manages the servers, hard drives, networking, virtualization, and storage. 

 

IaaS Advantages:

  • Easy to automate deployment 
  • Allows complete control over infrastructure 
  • Purchase resources as-needed
  • High scalability 
  • Allows for multiple users

 

IaaS Concerns:

  • Security threats to the hosting provider
  • Staff training may be required so your team knows how to properly manage the infrastructure

 

Platform as a Service (PaaS) 

Used by developers allowing them to host, build, and deploy consumer-facing apps through a web-based platform. Using PaaS, developers are given the freedom to concentrate on building software without worrying about operating systems, software updates, storage, or infrastructure.

 

PaaS Advantages:

  • Easy to use
  • Cost-effective app development and deployment 
  • Scalable
  • Customize apps without having to maintain software

 

PaaS Concerns:

  • Ability to integrate with other existing apps
  • PaaS may not be a “plug-and-play” solution for existing apps limiting its effectiveness 

 

Software as a Service (SaaS) 

SaaS is the most common cloud service with applications designed for everyday use for both individual consumers and businesses. The majority of SaaS programs run directly through your web browser, and rarely require downloads or installation on individual devices — a massive benefit for teams working remotely or working across international borders. 

 

By using SaaS applications, your business does not need to manage technical issues, servers, or storage which can often be a huge burden on time and costs if you do not have a dedicated I.T. person or department in place. 

 

SaaS Advantages:

  • Creates better efficiencies
  • Reduces time and money spent on installing, managing, and upgrading software. 
  • Frees up physical space (no need for on-site servers)
  • Easy to find and use applications as needed 

 

SaaS Concerns:

  • Limitation of app integrations
  • Data security
  • Ability to customize app features to the needs of your business

 

CCaaS and CPaaS: What are They?

Contact Center as a Service (CCaaS) is a form of SaaS that is specific to contact centres. These cloud-based contact centres are ideal for small and medium-sized businesses that want an easily deployable and easy-to-use solution. CCaaS products offer rapid deployment, however, they can have limited customizability and scalability. 

Communications Platform as a Service (CPaaS) is a cloud-based product that allows businesses to have real-time communications capabilities (i.e. voice, video, instant messaging) to business applications by deploying APIs. 

Rather than building your own communications infrastructure from scratch, you can use CPaaS products in existing applications by only adding a few lines of code.  

 

Examples of IaaS, PaaS, and SaaS

IaaS: Amazon Web Services (AWS), Google Cloud, Microsoft Azure

PaaS: Google App Engine, Heroku, Apprenda

SaaS: HubSpot, Dropbox, DocuSign

 

Which is Best: IaaS, PaaS, or SaaS?

Determining which cloud solution is best is completely dependent upon the needs of your business. Below are ideal scenarios in which IaaS, PaaS, and SaaS could be used to help decide which type of cloud service you need.

 

IaaS:

  • Startups with minimal cash flow that cannot afford their own hardware or software.
  • Only particular resources are needed.
  • Experiencing rapid growth with infrastructure needs quickly changing within short periods of time.

PaaS:

  • Multiple developers need to work on the same project.
  • Vendors are involved in the development process and need access to the application.
  • Creating a customized application.

SaaS:

  • Startups that need to launch their e-commerce quickly. 
  • Short-term projects. 
  • Applications that are only needed periodically and not regularly. 

 

Working with cloud solutions can add tremendous value to your business, but it can be difficult to decide which technologies to invest in when your startup’s needs are changing. 

 

Working with a startup mentor or joining a startup incubator guides you through your startup’s journey, helping you make decisions that are smart and strategic for your business. 

How to Build a Scalable Startup
Startup Fundamentals Strategy
2022.10.11

How to Build a Scalable Startup

The word ‘scalable’ is used frequently and as an entrepreneur, it is a term you need to become familiar with. Scalability is what investors want to see and what will lead to quicker success. But what exactly does it mean to be a scalable startup? How do you become scalable?

We have broken down the basics.

 

What is a scalable startup?

A scalable startup is a business that has the potential to easily grow and significantly increase its revenue with minimal additional cost.

When a startup is deemed ready to scale, it means it has already proven the success of its product and business model and is prepared to expand to new markets, regions, or demographics.

Example of a Scalable Startup

Many scalable startups operate within the technology industry. This is mainly because once a tech product has been initially designed, created, tested, and finalized, the cost to replicate it is minimal in comparison to the development process.

An easy example is a software startup. The initial development of the software can cost a lot of time and money, but to clone or mass produce it for distribution costs a nominal amount.

 

How do you make your startup scalable?

Understanding scalable startups is pretty straightforward, however, what leaves the majority of entrepreneurs puzzled is how to become scalable.

We have compiled a list of tips that can help you secure investor funding and experience exponential business growth.

 

1. Retrieve research to back up your business 

Your product or business may be innovative, but you need market research and facts to support how your innovative idea will be the next big industry or money maker. This provides investors with context which will make them more likely to jump on the bandwagon.

 

2. Prove your product works

You’ve heard the saying “talk the talk”; becoming scalable tests if you can “walk the walk”. As awesome as your investor pitches may be, it does not hold a candle to showing your product work in real time. It gives you far more credibility. 

Develop a Minimum Viable Product (MVP) and make adjustments to it based on customer feedback. Consider following the Lean Startup Methodology when developing your product to ensure it is a product consumers want. This can ultimately save you a considerable amount of time and money.

 

3. Have an attractive business plan

As cool and unique as your product may be, scalability to investors comes down to dollars and cents. Your business plan needs to show high profit margins, which can more easily be achieved by keeping your overhead costs as low as possible while still having enough momentum to grow. You should be able to show real sales of your product and that customers are willing to pay full price.

 

4. Recruit a solid team

To scale a business, you as a startup owner cannot be tied up with day-to-day business operations; your attention needs to be focused on big-picture strategy. To do this, you need to have a solid hiring process so you can acquire a team of driven and skilled people who you can depend on to keep the business running smoothly.

 

5. Implement an effective marketing strategy

Your startup needs to invest in marketing in order to scale. If people do not know your company or product, they will not buy it. Every company and product is different, and so is the audience they are targeting. Therefore, there isn’t one “tried and true” strategy to follow.

Develop an effective digital marketing plan or consider if following an account-based marketing strategy will be beneficial for your startup. We recommend recruiting a marketing person or working with a marketing agency that has the expertise you need.

 

6. Increase your startup’s efficiency 

Eliminate or adjust any manual and time-heavy processes that hinder your startup’s efficiency which may include staff processes, administrative tasks, manufacturing, or others.

 

7. Be able to pivot and adapt

The global pandemic taught us that businesses must be able to pivot. Remaining open to better ideas, new products, and constructive feedback will show investors that you have the leadership skills to recognize what is best for your business and its growth.

 

To learn more and receive mentorship throughout your journey, inquire about joining a startup incubator that can provide you with the knowledge and guidance you need to scale.

Lean Startup Methodology: What it is and why it has changed everything
Strategy
2022.10.04

Lean Startup Methodology: What it is and why it has changed everything

For many years, startups have been built by taking a business idea, discretely developing a product or service, launching it, then marketing it to consumers. This process can result in business success, but it can also leave many startups vulnerable to failure. When startups spend a lot of time and money on product development without including customer needs and perspectives in the process, the number of sales that will be achieved becomes a guessing game — a high-risk gamble when early revenue is imperative to keep the business alive. 

 

When approximately 50 percent of small businesses in Canada won’t survive longer than five years, more and more startups are following the Lean Startup Methodology to lessen risk and create a higher probability of success.

What is Lean Startup Methodology?

 

A great way to think of Lean Startup Methodology is that it aims to discover if a product should be developed, not if it can be. 

 

First introduced in 2011 by Eric Ries in his book, “The Lean Startup”, Lean Startup Methodology designs and builds businesses and products based on consumer needs and demonstrated desires rather than first developing a product and hoping there will be a demand.

 

Too many startups make assumptions about what consumers want and spend years perfecting a product only to discover that consumers have little interest or are unhappy with its features. If your product is super innovative but people don’t want to buy it, a business will not exist. 

 

5 Key Principles of Lean Startup Methodology

 

1. Entrepreneurs are Everywhere

There are many types of entrepreneurs and therefore startups don’t need to fit a particular mold to apply lean startup principles. 

 

2. Entrepreneurship is Management

Lean startups look a bit different than traditional startups. It is less about processes and protocols and more about being learning-driven, flexible, and making changes as you go. 

 

3. Validated Learning

Through experiments and retrieving results, lean startups make decisions by learning and adapting to the needs of consumers. 

 

4. Innovation Accounting

Keeping detailed records of experiments and analyses is important to determine how to proceed. Lean startups must monitor processes objectively and come up with next steps.

 

5. Build-Measure-Learn

Lean startups build a Minimum Viable Product (MVP), then put it through extensive testing and evaluation with customer feedback. By building a product and then measuring its effectiveness, lean startups learn and improve their product before finalizing it.  

 

How has Lean Startup Methodology changed everything?

 

a) Detailed planning used to be one of the most crucial elements for a startup. Lean startups now consider experimentation more valuable, and consider five-year business plans an ineffective use of time.

 

b) Lean startups already have an established customer base by the time their product is ready for wide distribution because they have been involved since the beginning stages of the product.

 

c) The hiring process has pivoted giving preference to applicants who can learn and adapt easily and placing less emphasis on experience and technical ability. 

 

d) Financial reporting focuses on customer acquisition costs and lifetime customer value among other things rather than traditional income statements and balance sheets.

 

How to Apply Lean Startup Methodology

 

Learning why Lean Startup Methodology can benefit your startup is much different than knowing how to apply it. We recommend turning to an experienced startup mentor to help guide you through the process of becoming a lean startup. 

Having a startup mentor or joining a startup incubator provides you with invaluable knowledge, expertise, and support so you have more confidence and success in applying the Lean Startup Methodology.

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