The five most common startup mistakes

Colin Kinner

Innovation Centre Sunshine Coast13 June 2012

1. Single founder

• Strongest correlation with startup failure– Too much work for one person– No alternative views -> myopia– Hard to stay motivated– Limited skill set

• Two founders ideal: 1 x technical, 1 x business• Three or more: Risk of committee-style

decision making

Diversity is vitalCommon Ideal

Tech TechTech Business

Other (eg. sales / marketing)

Finding a co-founder

• You probably already know the ideal person• Networking events• Cofounder speed dating events

eg. www.cofounderspeeddate.com.au• Co-founder matching services

eg. www.founder2be.com

Co-founder dynamics

• 50/50 (or 33/33/33) intuitively seems fair• BUT: – More than half of all startup founding teams end up

dysfunctional– Impossible to predict value contribution at outset– Risk appetites vary– Life circumstances change

• Alternative approach: “Hire” your co-founder(s)– 10%-30% equity plus modest salary– Involve fully in running business– Retain right to terminate

2. Business plan mania

Perspectives on business plans

• “Most business plans don’t survive first contact with a customer” . . . Steve Blank

• “I want to know that the founder has written a business plan. . . but I don’t intend to read it” . . . Silicon Valley VC

Lean Startup approach

• Rapid prototyping• MVP• Talk to customers!• Iteration• Learn and feedback• Pivot if needed

Business Model Canvas

www.businessmodelgeneration.com

3. Can’t communicate value proposition

• I’m [name] from [Company]• The problem we’re solving is. . .• Our solution is. . .• This is a big opportunity because. . .• Our target market is. . .• We will acquire customers by. . .• We make money by. . .• Our main competition is. . .• We’re better because. . .• Our team is. . .• What we’ll do next is. . .• Currently we are seeking. . .• Summary

http://pollenizer.com/universal-startup-pitch-deck/

Elements of an investor pitch

• 30 second pitch• 5 minute pitch (6 slides)• 20 minute pitch (12 slides + extras)• 1-page executive summary• 1-page cashflow forecast (incl. use of funds)

4. Aiming too low, growing too slowly

• “If I invested ten times what you’re asking, could you grow the company ten times faster?”– Competition is global– Most parts of the world an apply risk capital faster

and in larger amounts than in Australia• US has 16 times more VC per capita than Australia

5. Inability to pivot

• Deal with poor-fit or underperforming people• Listen to customer feedback – even if you

don’t like what you hear• Listen to investor feedback – but apply a filter

• YouTube – started as a video dating site• Flickr – started as a multiplayer game

Funding trends

Funding trends

• Crowdfunding– US: Kickstarter (US$230 million; 23,000 projects)– Australia: Project Powerup, iPledg, Pozible

• Seed accelerators• Angels• Super-angel funds• Venture capital• ASSOB?• Government funding (CA, R&D tax)

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Thank you

Colin Kinneremail colin@spikeinnovation.com.au Ph 0411 122 976www.spikeinnovation.com.au

@colinkinner http://au.linkedin.com/in/colinkinner