Networking event brings Miami’s brightest business minds together

Miller Lite Tap the Future, the business plan competition that offers entrepreneurs a chance to win over $200,000, hosted its first Business and Beer networking event in Miami. Hosted by Founder and CEO of Rolling Out, Munson Steed, the event featured a panel discussion with industry leaders including prior Miller Lite Tap the Future winner Nestor Villalobos, business coach and entrepreneur Stephanie Clark, and ABC’s Shark Tank participant and winner Al Nelson.

Nestor Villalobos

Nestor Villalobos

How Much Capital Should I Raise for My Startup?

Nestor Villalobos

I get this question from startup entrepreneurs all time. The typical answer is that startups should raise about 14 – 16 months’ worth of capital. The reason is that it takes about a year to actually get a company going to where it’s able to hit some major milestones. It then takes an additional 2 – 4 months of capital raising to complete the next funding round.

The first round of capital is called the “Seed Round”. Seed rounds range between $100,000 to $2,000,000 and are funded by friends, family, individual angels and angel groups. The next round after that is commonly referred to as the “Series A” which is typically where you start to see institutional companies invest. After that, you have “Series B”, “Series C” and “Series D” rounds and so on and so forth. This article is mainly referring to the initial ‘Series A’ and ‘Seed’ Rounds.

Showing traction or achieving what are called ‘milestones’ are absolutely critical when raising capital from investors. The more traction you can show, the higher the valuation you can command. It is because of this that you want to be careful not to raise too much capital early on. Here are three reasons why you don’t want to raise too much too soon:

  • Valuation: At an early stage, your company isn’t going to be valued that high. Therefore, the more capital you raise at an early stage, the bigger the slice of the company you will be selling to investors. If you have the luxury, it is always better to raise a smaller amount, hit major milestones and then raise more later at a higher valuation.
  • Frugality: Having too much capital might cause you to be lax in your spending and not bootstrap enough. When investors see that their funds are being mismanaged, there is a high likelihood that they won’t re-invest in future rounds.
  • Future Rounds: Raising too much capital early on makes it harder to raise at a future stage. The reason why is your post-money valuation. The definition of post-money valuation is your current valuation PLUS any investment that is made into the company. Considering this, if the post-valuation number is too high, it may scare off future investors.

You also want to make sure not to raise too little capital. Here are three reasons why you don’t’ want to raise too little:

  • Disrupting Operations: Whenever you have to stop working directly on the business and instead go fundraising, you are putting the business at risk. Unless you have someone managing the operations of the company, focusing on fundraising while your company is in motion might cause you to miss critical milestones that would otherwise raise the valuation of the company.
  • Market Volatility: You never know what the future may bring. Predicting the state of venture capital 6 to 12 months down the road is a very difficult thing. If you sense that raising capital later will be more difficult due to external market factors, then you may want to raise more now.
  • Rapid Market Expansion: When developing a company that has a unique value proposition that is not easily protected, stealing market share quickly before competitors are able to catch up may be an essential part of the growth strategy. If this is the case and you don’t have enough capital to get a big head start, it might significantly dampen your chances for success.

In order to figure out the right amount of capital to raise, I suggest you calculate your projected burn rate for 16 months. Your burn rate would essentially be the total of all of your reoccurring monthly expenses. Once you have figured that out, add an additional 30% on top of that in order to account for unexpected expenses (they always happen). Once calculated, multiply this number by 16 (months) to figure out your total raise requirement.

1.3 * Reoccurring Monthly Expenses * 16 Months = Needed Capital Raise

Know Your Runway  – There is a term in the venture community called “runway”. Essentially, it means how many months you have left to operate the business until it runs out of cash. Assuming you have $30,000 in the bank and your burn rate is $10,000 per month and you aren’t generating any revenues, then that means you have 3 months of “runway” left. You want to make sure you start raising capital as soon as you hit 4 months or less of runway.   Don’t wait until you have less than 2 months of runway as you might not be giving yourself enough time to raise the capital you need.

How To: Calculate Valuation for a Pre-Revenue Startup

entrepreneur-593378_640

Over the years, this is a question I have heard a number of  startups ask me. The honest truth is that there is no cookie-cutter approach to doing so. It is NOT an exact science. It always requires a little bit of creativity and some basic calculus (don’t worry – I hate math too).

The first place to start is Angelist. They have a nifty Startup Valuation Tool that allows you to see what valuations other similar companies are getting in your industry. Their tool will let you filter by industry which is especially important since these factors play significant rolls in valuation figures. For example, “Property Management” companies have an average valuation of $3.6 Million whereas “Big Data” companies average $4.6 Million.

You also have to keep in mind that location has a lot to do with valuation. You see, in Florida, the typical pre-revenue startup valuations are significantly less than those in California, Massachusetts and New York. This is simply because there are fewer angel investors and thus less competition for deals. From personal experience, in Miami, $2 million represents the bare minimum and $3 million would be on the upper end. If you again use the Angelist tool mentioned above, you will see that Silicon Valley is listed as having an average startup valuation of $5.1 million.

The best method to figuring out and valuation (and be able to back your claim with investors) is to use a variety of methods in calculating your valuation. There are four popular methods: these are the Venture Capital, Dave Berkus, Scorecard Valuation, and Risk Factor Summation methods. I created a tool called the “Startup Valuation Calculator Template” which is an Excel document that will allow any startup to figure out their pre-revenue startup valuation in just a few minutes using ALL of the methods combined. Investors loved it when I presented them with this document as it showed the considerable thought that went into my valuation calculations. Simply fill out the YELLOW cells on the “Assumptions Tab” and then click over to the “Valuation Average” tab to see the results. Here is the file:

Startup Valuation Calculator Download

Regardless of the valuation you choose, just keep in mind you probably don’t want to give away more than 30% of your company in the seed round.  Anything more than that and you will be run into a founder dilution issue that will be compounded in future rounds. So, if you are valuing your company at $2 Million, try not to raise more than $600,000.

Good Luck!

How To Use Your Facebook & LinkedIn Contacts to Build an Email List

In a recent business seminar I was mentoring at, one of the attendees asked me how I first built my email list for my business.

I responded that I initially started by leveraging the email addresses of all of my contacts Facebook and LinkedIn. Doing this with LinkedIn is fairly easy and straight forward since they easily give you access to your connection database. However, pulling your contacts from Facebook is a bit tricky since they actually don’t want you to have access to your friend’s emails. The good news is that there is a hack that involves leveraging a free Yahoo account.

I received so many questions relating to how to do this that I decided to create a set of how-to videos.

Enjoy!

P.S. One of the videos refers to a website that is needed to complete one of the steps. Here is that link: Facebook Export Page

Personal Branding for Startup CEOs Part 10: Leveraging a Blog to Build a Following

Nestor Villalobos

  • If you want to look professional, build a following and have a strong online presence that investors are attracted to, then I highly recommend creating a blog.
  • By telling the story of your entrepreneurial journey, you can get other people excited about your business. Keep in mind, once you build a following, marketing to the individuals that follow you is completely
  • Furthermore, blogging can help you keep a growing list of thoughts and memories together in one place. This can be enormously helpful when reflecting on your own entrepreneurial path. This is therapeutic in ways since it’s a break from the frenzy. This will give you an opportunity to re-frame and gain some perspective.
  • Blogging can also be an excellent tool in making people aware of any issues or challenges you are facing that they potentially might be able to help you out with.
  • Blogging is a great way to give back to the community. If you have experienced a difficult situation and have figured out ways around them, sharing this knowledge with the community helps everyone else around you. For example, well known investor/blogger Brad Feld writes a lot about depression which hits home with many entrepreneurs. You can read more about it here: http://www.feld.com/archives/tag/depression.
  • Finally – some bloggers with great followers are able to get sponsors and actually make money from the blog. However, to get to this stage, you really have to build a lot of content and have a fairly large following. My opinion is that monetization really shouldn’t be the goal of your blog.
  • These days, publishing content on a blog is very easy. If you already know how to use a word processor like Microsoft Word or Apple Pages then you can absolutely learn how to build and run a blog.
  • Furthermore, search engines really like new content and will feature them pretty high on their search results. If you post regularly, these search engines will continue to post content you create.
  • Finally – there are a number of famous CEOs which have blogged while they were working on their (now famous) businesses. Reid Hoffman (the founder of LinkedIn) has been an avid blogger since back in the day. Evan Williams (founder of Twitter) is also no stranger to blogging.
  • Creating a Blog:
    • The easiest way to create a blog is to visit WordPress.com and follow the onscreen instructions to “Create a Blog”. Furthermore, there are a ton of other websites that will easily teach you to design and craft a great looking blog. Spend your time and have fun with this.
    • You can also build a blog on a personal URL domain that you own. GoDaddy has a really great and easy tools for building it yourself which I highly recommend trying out. Simply go to Goddaddy click on “Websites”. Then, under “Do It Yourself” click on “WordPress”. I suggest starting off with a “BASIC” plan and upgrading later if you find you need the extra features.
  • Topics to Blog About:
    • Your Product – Here is where you can feature any existing or new products on your blog. This is free marketing for your business.
    • Your Clients – Providing plugs for your customers is a great way to build relationships with them. Who doesn’t like to be written about?
    • Industry Information – Here is where you can show your expertise in the industry. By writing about it, you become a quasi-expert/authority on the subject.
    • Running a Business – This is where you can give back to the community. By writing about the everyday issues you encounter, aspiring entrepreneurs can learn from your experiences.
  • Do’s
    • When creating blog posts, make sure that before you upload pictures, you tag them with your name. This way they will show up on the search engine “image” databases when someone searches for your name.
    • If you run out of topics to blog about, ask your followers/employees/partners or fellow entrepreneurs.
    • Consider blogging at least 3-4 times per week. This will ensure there is always fresh content on your site and keep people interested in what you have to say.
  • Do Not:
    • Forget to blog at least once or twice per week. WordPress actually allows you to stage the release of posts so there is no excuse for writing a number of posts in one sitting and having them released ever few days.

Personal Branding for Startup CEOs Part 9: Public Speaking

Nestor_Villalobos_Speaking2

Speaking at a public event about a topic you know gives you instant street cred within your industry. Unfortunately for many people, this presents a big problem. According to a recent Washington Post article, American’s biggest fear is speaking in public. If you are part of that statistic, I have some bad news for you. To be an entrepreneur, speaking in public is going to need to be a skill that you need to master. Especially if you are ever have hopes of pitching to a large room full of Angels or VCs to raise capital.

I can typically tell when someone is uncomfortable when speaking to an audience – they tend to rush through their lines, fidget with their hands, stay unmovable behind the podium, read text directly from slides, and avoid eye contact with the audience. You better believe that Angels and VCs will absolutely be able to pick up on these kind of behaviors and lose confidence in any entrepreneur displaying these traits.

The best way to hone your public speaking skills is to practice. As such, I highly recommend joining an organization like Toastmasters. They are a national group with over 300,000 members that encourages members to give speeches, get feedback and lead teams which ultimately helps provide you the experience need to master public speaking. You can also practice speaking at home. One if the best ways is to record yourself using your webcam or smartphone. When done, play back the video. Watching yourself speak is kind of surreal but it really helps to hone your skills.

Landing a Speaking Gig

  • Once you have developed some basic speaking skills by practicing alone and in groups, I suggest that you begin speaking (for free) at relevant industry events, local chambers of commerce and industry associations.What you need to do is network with the event coordinators and ask them if you can present a relevant topic during their event.
  • When you do land a speaking gig, make sure bring along a friend that will post pictures or video of you speaking to social media. You have to create your own marketing buzz and this is really the best way to do so. Make sure you leverage Twitter and Instagram as these posts will likely be picked up by search engines further helping to drive up the search results for your name.

Speaking Tips:

  • I highly recommend telling a story during your presentation. This is sometimes one of the best ways to engage an audience in your pitch.
  • It is expected that you memorize what you are going to say. One of the worst presentations I ever saw was where an entrepreneur had his back to the audience and was literally reading word-for-word what was on the screen.
  • Practice to where you have the whole presentation memorized. You will need a few days to do this. You need to nail down flow, slide transitions, timing, clarity of concepts and the story.
  • Make sure to project your voice so that those in the back rows can hear it clearly.
  • Use your hands to emphasize important points during the presentation.
  • Remember to breathe. SLOWWW down your pitch when you get to complicated details. This will help with comprehension. When you are telling a story, you can speed it up a bit. Just keep in mind that most people are nervous are nervous about presenting and tend to blaze through the entire presentation quickly. This is a mistake. Take your time on the points that matter and modify your pace as needed.
  • When presenting, make sure to make eye contact with the audience members – focus on one person for a point, then move on to another person when making another point. This will allow you to connect with your audience at a deeper level.
  • When something goes wrong with your presentation, don’t stop and acknowledge it. Simply continue on. Recognizing an issue with the audience and apologizing for it will derail your presentation.
  • I don’t recommend giving a handout to the audience. This will keep their eyes off of you and on a piece of paper in front of them. You should be the focus of their attention at all times.
  • Do NOT use a monotone voice! Make sure to vary your pitch and pace to keep the audience interested at all times. Your pitch should exude passion. It is literally contagious!
  • I would advise you against standing behind the podium as it creates a physical barrier between you and the audience. Walk around the room when pitching. If the microphone is on the pedestal, see if you can remove it and walk around the room. Just make sure you aren’t pacing back and forth as that could prove to be a distraction. Believe it or not, doing so cuts investor fatigue. This keeps them engaged.
  • If you are using a microphone, keep it close to your mouth at all times. Some people inexperienced with microphones tend it hold it at stomach level which makes the presentation extremely difficult to hear for the audience.
  • Follow the rules for the KISS principle – Keep it Simple, Stupid. What I mean by this is to keep your language and graphics simple – don’t distract your audience with fancy graphics or vocabulary. In many cases, I have presented to foreigners where English wasn’t their first language. What I learned was that many times my jokes or fancy vocabulary went right over their heads. Don’t let that happen to you.
  • Don’t use filler words including ‘ums’, ‘ahs’, ‘likes’ or ‘you know’s during the pitch.
  • Finally, if anything goes wrong during your presentation – the computer freezes, the power goes out or the presenter remote doesn’t work, don’t try to fix it right then and there. You will waste valuable time. Set everything aside and complete your presentation without those tools.
  • Try to get the audience to laugh at least once. However, don’t make it a comedy routine.

When Speaking with a Slide Deck

  • Pictures are far more memorable than words. Think about how Steve Jobs pitched his products vs. Bill Gates. Take a look at their slide decks behind them. Just by looking at these images which presentation do you think is more effective?

Jobs_Gates_Presentation

  • If you use a slide deck, keep in mind that you don’t have to repeat word-for-word exactly what you have on the slide. In fact, it’s a lot better if you don’t. It’s also fine to have content on your slides that you don’t mention in your pitch and vice-versa.
  • The slides presented should be mostly visual. Use pictures to tell the story you are taking the audience through. As such, you absolutely want to minimize the amount of clutter you have on the slides. In today’s day in age, less is more. Try not to use more than 5 bullets per slide and no more than 5 words per bullet. Keep in mind, these do not have to be grammatically correct fully structured sentences. Single words are OK!
  • When choosing a font and color for the text on screen, make sure that you use a color that stands out from the background of the slide. Imagine you are looking at the screen from 50+ feet away. Will it be legible to those people in the back of the audience? Also make sure to keep your choice of fonts, line spacing and colors consistent. There should be one common graphical ‘theme’ throughout the entire presentation.
  • I would highly recommend that you buy the images you use from a stock photography website as they will be of very high quality which will make your presentation stand out.
  • Put too much information/text on the screen at one time. 5 bullet points maximum with 5 words each.
  • Don’t use live videos or demos. These hardly ever work during actual presentations due to the incompatibilities of operating systems, as well as presentation hardware. Typically they only serve as a distraction. Avoid this at ALL costs.
  • Don’t ever turn your back to the audience to look at your slide deck. You should just be able to glance at it and know where you are in your pitch.
  • Try not to use any fancy slide transitions, animations or sound effects in your presentation. These just serve as a distraction. Plus, if you built your presentation on one operating system and the presenting OS is different these transitions could “break” your presentation.
  • This might seem trivial but make sure that your presentation deck is less than 5mb. If your file size is any larger it is going to prove difficult to send over email.
  • Once you are done drafting your document, you may want to consider saving it as a PDF. This way, you’re formatting stays consistent across all devices.

Before Your Presentation

  • Arrive at least 20 to 30 minutes early. This will give you a chance to test the presentation equipment, connect to Wi-Fi and work out any last minute kinks.
  • Bring your own wireless presenter device (with extra batteries). You may also prefer to use your own if they allow it. A number of times I have seen speakers fumble with an unknown presenter device and have it devastate their presentation flow.
  • Absolutely take your laptop (and it’s charger) with you. Do this just in case the computer that is being used to show your presentation falters, you will be able to save the day. This actually happened to one of the companies I mentored. When we arrived at his pitch event, the laptop computer being used to control the projector died. Our team simply swapped it out with their own laptop and was able to save the day for all the other presenting companies.
  • If you are using a MAC they typically have funky connectors on them requiring you to have adapters in order to connect them to projectors and monitors. Make sure you keep feeding the Apple machine buy bringing those (expensive) dongles with you.
  • I would also suggest taking a USB flash drive that contains the presentation. You never know if the file you sent over email gets corrupted or the computer they are using crashes as I mentioned previously. Basically, always have a plan B AND C hardware when presenting!
  • Turn OFF your phone! Even though I once put my phone on mute and had it in my jacket pocket, the buzzing has disrupted my flow of thought and it absolutely messing me up a few times. Before you pitch, turn your phone completely off or use airplane mode.
  • Finally, if you are using your own laptop connected to the projector, close down the email, skype, and any other applications that might provide you with a pop-up or notification during your pitch. The last thing you want is your mother to call you on Skype while you are pitching to a group of investors.

Additional Resources:

  • I recently read a great book by Oren Klaff called Pitch Anything. It truly was a great book and I believe has helped me with my pitching abilities.
  • If you have the time, I highly recommend you check out Steve Job’s iPhone Introduction from 2007. He does a masterful job with his slide deck that has now become the standard by which most presentations are judged.

Personal Branding for Startup CEOs Part 8: Dressing for Investors

  • Investors don’t just look at your executive summary, business plan and projections when considering working with you, they look at YOU. As such, you must accept the fact that how you look and how you carry yourself is very important.
  • I am not claiming that you should show up in meetings in a three piece suit with one of those fancy handkerchiefs in your breast pocket. I personally hate ties. The trick is that you should never truly be uncomfortable with what you are wearing as people will pick up on it. Now, this does not mean you should show up in shorts and flip-flops either. You have to balance a fine line.
  • Here is the key: when in doubt, overdress.
  • Generally speaking, you need to match your attire for the meeting environment. Do you think Mark Zuckerberg only wears t-shirts and hoodies to business meetings? Think again, here is a picture of him in South Korea where wearing a full suit and tie which, in that country, is the way to dress in order to conduct business.

Nestor_Villalobos_Zuckerberg_in_South_Korea

  • Dress for the occasion. If you have a meeting with an angel or VC at a Wall Street office, then you should absolutely consider wearing a suit or a business-blouse. If you are meeting someone for coffee at a local shop, then a suit would probably be overkill.
  • Also keep in mind that, at least in the United States, the west coast startup entrepreneurs dress very differently than their east coast brethren. Investors on the west coast (especially those in Silicon Valley) are totally fine with a founder wearing a T-Shirt and jeans for a meeting. Just make sure that that T-Shirt has your company logo.
  • The previously mentioned dress code, doesn’t really fly much on the east coast. In New York, Boston and even Miami, entrepreneurs typically can’t get away with T-Shirts. My recommendation is for women to wear a semi-formal blouse. Men should consider wearing a dress shirt with jeans and maybe even a dinner jacket or sports coat.
  • In fact, you really can’t go wrong by wearing a sports coat. Even when wearing jeans and a t-shirt, a sports coat can instantly “level-up” your attire.
  • If worn, the jacket should be well-fitting meaning that it should conform to your body when buttoned. Also, don’t wear shorts with your blazer unless you are meeting with an investor on a yacht!
  • For women, consider wearing clothes that don’t show off too much of your skin as that can be distracting. Also, avoid using too much makeup. In this case, less is definitely more. Finally, try to avoid using large pieces of jewelry as those too can be distracting.
  • Whenever possible, use custom fit articles of clothing that work well for your body type. You never want to look like you are swimming in your clothes or they are too small for your frame.
  • Don’t overdo fragrances, either. Try to use mild fragrances or none at all. Chances are you are going to be sitting close to the investor, so try not to go overboard it in this department as it can be very off putting.
  • Make sure to hide any tattoos and avoid wearing non-traditional piercings. You need to convince the investor that you can act professional in any business setting.

Personal Branding for Startup CEOs Part 7: The Business Card

Note: Much of what I learned about business cards comes from my sister and personal branding expert Michelle Villalobos. If you would like to learn more about this topic as well as others related to branding. I highly recommend reaching out to her HERE

  • Creating unique and different business cards is one of my favorite things to do. You will find that 99% of people have pretty much the same rectangular card with just slight variations in paper type, font and information. What they don’t realize is that by spending a little bit more money and brain power, they can create something incredibly unique that will help them get noticed.
  • Your job as an entrepreneur is to capture the hearts and minds of investors, partners, clients and even employees. Having a great business card can help you accomplish this.
  • The first step to creating a great business card is to watch the below 2-minute video on YouTube called Your business card is CRAP!

  • Let me clarify something – you should NOT spend $4 a business card. However, the essential point of his rant is that your business card should be a reflection of YOU and your business. If your card looks just like everyone else’s, then you have lost an incredible opportunity to get noticed.
  • First, let’s start with differentiating both the size and shape of your card. Consider getting a vastly different size or shape. My latest set of cards are small and round and even without reading the information on the card, most people are already “oohhhhing” and “awwwwing” all over it.
  • I am of the camp that including your addresses on the card is no longer necessary. If someone is going to visit your office or send you something in the mail, they are likely going to call or email you first. Furthermore, startups tend to move around a bit and you shouldn’t need to re-print all your cards every time you want to do so. Furthermore, addresses just takes up a lot of vital space on the card that could otherwise be put to better use.
  • Consider putting a picture on your business card. The reason is that in business networking events, people will rarely, if ever, remember your name. Most people are much better with faces. As such, adding a photo of you will ensure you are remembered long after the event.
  • Your card should also have some sort of “Call to Action”. Meaning you need to give the person receiving your card a reason to reach out to you. You can do this by explaining the results you or your business generate for your clients. This way, they clearly know what it is you do and if they should be interested. You can also give something away for free – like a 30 minute “consulting” session. This encourages engagement which is also a great call to action.
  • If you are having a hard time coming up with unique/different card ideas, then there is a great article on com by DJ Andrea entitled “These Unique Business Card Ideas Will Make You Stand Out From Others”. I highly recommend you check it out for some inspiration.
  • Finally, if cost is a concern, then I would suggest creating two sets of business cards– one for conventional folk that aren’t as expensive and another set for those people you want to leave a lasting impression with. Those cards you can and should give out sparingly.
  • In my previous career, I used to travel extensively to the Far East. Over there, they have a tradition with regards to the ritual of exchanging business cards. When accepting other people’s cards or when handing out their own, they do so by clasping the card with the thumb and forefingers of both hands. This tradition was a sign of great respect for the person you were meeting. I recommend that you try employing this method. When you receive someone’s card, hold it in both your hands as if you were just given a prized possession. Throughout the conversation, look at it, and then back at the person who gave it to you. This simple act will help you win over anyone you meet – including angel investors.

Nestor_Villalobos_Business_Card

  • On a side note, one of my old business card was actually “seeded” meaning that if you planted it and poured water over, over time it would actually grow wildflowers. This was a neat way of showing how ‘green’ we were. A ton of people asked me where I got them made so here is the link: PrintGlobe. They cost under $0.70 each and you can get an even better discount by ordering higher volumes.
  • My last comment regarding business cards is to buy and use a nice business card holder. Nothing exudes professionalism more than someone whom takes care of both his own card and others that he/she receives by storing them in a holder that will prevent the cards from becoming damaged or creased. Amazon has some great looking ones for just a few bucks.