This document discusses different stages of business growth and the types of resources needed at each stage. It begins by explaining that as a business moves from concept to revenue generation, risk is reduced. It then provides an overview of the typical stages a high-growth business may go through, from crystallizing an idea to achieving sustained growth. For each stage, it identifies common sources of capital, such as founders/friends/family in early stages, accelerators for product demonstration, and venture capital for repeated growth. The document emphasizes the importance of understanding what stage a business is in to effectively communicate with coaches, mentors and investors.

1. What Stage is Your Business:
Where to go Next?
1
June 18, 2013

2. Agenda
• Entrepreneurship and Business Stage
– A few slides to set the stage for discussing “Stage”
– As a business moves from concept to revenue risk is
reduced
• Lessons Learned
– Mentoring and Coaching … find people who know the
stage
– Types of help … what do you need when
• Case Studies – What we see
– Investor’s View
2

3. Evolution of your business by stage
• Build
the
Business:
– Key
is
to
move
the
business
through
different
stages
of
growth
not
to
design
for
fund
raising
– But
building
a
business
is
about
gathering
resources
to
push
the
company
along
– One
class
of
resource
is
cash
….
But
the
message
of
this
session
and
the
day
is:
find
advisors
and
mentors
to
help
• you
oAen
find
these
folks
focused
along
the
path
to
investment
– Why?
..
Many
high
growth
companies
are
innovaFve
and
solving
the
problems
together
is
fun
…
• Understand
the
Lingo:
– Today
lots
of
info
will
be
about
financing
terms
– This
session
is
about
business
stage
– Coaches,
mentors
&
investors
expectaFon
are
set
by
the
stage
of
your
business
3

4. Many types of Entrepreneurship:
Don’t raise money until you know who you will be
Higher
Lower
5
year
growth
rate
$2-­‐5M
>>
>>
Investment
required
to
reach
breakeven
Project
finance,
etc.
“Normal
growth”
business
(MOST
COMMON)
Mostly
bank
debt
Maybe
new
crowd
funding
50–
100%
High
Growth
Cheap
fast
growing
business
(RARE!)
Angel
Funding
(and
some
VC)
Extreme
High
Growth
Home
run
long
shot
(VERY
RARE!)
VC
Funding

5. Capital
Needs
Time
High
Risk
Low
Risk
Friends,
Family
&
Founders
Formal
Venture
Capital
M&A
or
IPO
Crystallize
Ideas
Demonstrate
Product
Early
Scaling
Growth
Sustained
Growth
Angels
or
Accelerators
or
Micro-­‐cap
funds
CF,
Angels
or
Accelerators
or
Micro-­‐cap
funds
Angels
or
Accelerator
CF
Market
Entry
M&A
Later
VC
Rounds
Extreme
High
Growth
High
Growth
Angel
Group
(or
Micro-­‐
cap)
SyndicaQon
Different paths to exit…

6. A Summary of Capital Sources
6

7. Equity - VC and Angel
• VCs
invest
other
people’s
money,
from
pension
funds
etc.
– Returns
are
measured
on
a
per
fund
basis
– ~$26B,
~
3,700
new
investments
2012
• Angels
invest
own
money
• ~$23B,
~
56,000
new
investments
2012
• 22
New
England,
9
greater
Boston
– Angel
groups
~10-­‐15%,
– Informal
networks
&
one-­‐Fme-­‐investors
~15-­‐20%,
– Super
angels
~25-­‐30%,
– Family
offices
~35-­‐45%
• Lots
of
styles
-­‐
Club
style,
fund,
mix
• Must
have
exits
for
equity
model
to
work!!
– IPOs
– M&A
– Private
Equity

8. Focus on Stage …
Key Factors by Stage
• Purpose
of
this
Session:
– Learn
to
communicate
your
business
ideas
as
it
goes
through
different
stages
of
growth
• The
Reality:
– At
each
stage,
there
are
100s
of
things
“needing
to
be
done”
– Picking
what
most
important
is
the
key
– This
session
is
to
help
discuss
how
to
think
about
the
steps
in
order
– (The
truth
is
that
40
pennies
need
to
be
pushed
up
the
hill
at
the
same
Fme
–
but
because
the
posiFon
you
need
to
assume
to
do
this
is
unaoracFve
–
we
all
pretend
that
there
is
a
raFonal
order)
• Coaches,
mentors
&
investors
expect
things
will
be
aligned
by
phase
– If
you
know
what
phase
you
are
in,
you
can
communicate
more
quickly
and
accurately
with
folks
who
want
to
help
• Spending
13
of
your
15
minute
coaching
session
to
explain
is
a
waste
of
Fme
• When
the
entrepreneur
tries
to
present
one
aspect
as
being
complete
and
has
no
info
on
other
important
factors,
investors,
etc.
will
undoubtedly
get
confused
8

9. Equity Capital Sources:
High Growth Companies
9
Stage
Crystallize
Idea
and
Early
DemonstraQon
Demonstrate
Product
&
Market
Interest
Market
Entry
and
Early
Growth
Early
Scaling
Growth
Repeatable
Growth
Capital
Source
Founders,
Friends,
Family,
Grants,
Kickstarter,
etc.
Accelerators,
Individual
Angels,
many
others
now
“exploring”
Angel
Groups,
Angel
Group
SyndicaFon,
Micro-­‐Cap
Funds
VCs,
Angel
Group
SyndicaFon,
Micro-­‐Cap
Funds
VCs
Investment
$25K
-­‐
$100K
$100K
-­‐
$500K
$500K
-­‐
$1M
$5M
–
as
needed
as
needed
These
2
need
sophisFcated
growth
plans
This
is
the
stage
where
advice
can
make
you
eligible
for
outside
funding
later
Accelerators
and
a
few
individual
angels
play
here
…
unless
it
is
a
big
idea
This
is
where
Angel
Groups
do
most
1st
investments
….

10. 10
What Investors (and others) Need to Know
• 5
P’s
of
investment
– Product
–
differenFated
technology
or
service
that
serves
market
need
for
a
significant,
large
market
product
– PromoFon
–market
entry
strategy,
with
detailed
plan
– Profits
–
a
business
model
that
has
margins
and
distribuFons
costs
that
are
profitable
– People
–
a
team
to
meet
the
needs
of
the
business
– Plan
–
good
idea
of
the
steps
needed
to
create
a
repeatable
business
model
• Some
key
concepts
to
convey:
– What
our
poten-al
customers
are
saying
to
us:
is
this
a
nice
to
have
or
must
have
– How
we
plan
to
run
a
series
of
market
entry
tests
delivering
meaningful
metrics
– How
the
team
matches
the
needs
of
the
business
– How
we
will
scale
against
a
repeatable
business
model

11. Crystal: Idea to Business Plan
• Goal of Stage: Think out the issues
– No one wants to read a plan … but organizing your thinking in a structured
way will help you get things done at the right time
• The Team
– Why do you folks have unique knowledge to understand this market opening
• The Key Stage Specific Information
– Product: How big is the market, the product nice to have or is there a need
• How will we learn the answers
– What do we know about this industry
• What is the margin structure and how buying is done, how competitive,
etc.
– At the highest level … how long to reach a shippable product and how much
money does that take
11

12. Crystal: Idea to Business Plan
12
#2
Is
it
a
big
market,
with
a
big
need
…
when
will
the
product
be
done?
#4
What
are
total
expenses
#3
Can
this
industry
be
penetrated
and
have
we
talked
to
potenFal
customers
#1
How
much
experience
?

13. Demonstrate:
Product & Market Entry Plan
• Goal of Stage: Think out the issues to drive market
– Show the product works, show your path to market is working
• Traditionally called Beta test
– You want lots use so you can find patterns especially in how to find
and match with customers
• The Team
– Path to market is the … key
– Time to fill out team to reach the market … marketing and
selling skills
• The Key Stage Specific Information
– Customers
want
it,
…
can
we
fell
customers
leaning
in
…
goal
at
end
of
stage
is
equivalent
of
pipeline
– Product
Fit…
understand
use
of
product
– PromoFon
–
start
market
trails
…
develop
a
detail
list
of
ideal
metrics
and
then
start
filling
in
the
grid
13

14. Demonstrate:
Product & Market Entry Plan
14
#3
Build
metrics
to
show
sales
and
markeFng
cost?
#2
Fill
in
team
..
Start
to
build
external
team
#1
Understand
customer
….lots
of
market
trials
#4
Market
dynamics

15. Market Entry & Early Growth Stage
Early Repeatable Business Model
• Goal of Stage: Think out the issues to drive scale
– Show market metrics are scalable
– Goal of the stage: what resources will drive growth … exact
metrics for the immediate plan … big ideas for the “add-on”
products and markets
– Execution
• The Team
– Can this team scale
• The Key Stage Specific Information
– Refine metrics and build “what-if” plans
– Details plans for varying market conditions based on scaling knowledge
– Work with industry partners
– Find other market gaps
15

16. Market Entry & Early Growth Stage
Early Repeatable Business Model
16
#3
How
to
hit
the
rest
of
the
market
#2
Can
this
team
scale
#4
Asses
profitability
of
business
and
effect
on
capital
needs
#1
Understand
growth
metrics

17. Factors defining a Business
17
Factors Crystal Stage Demo Stage Growth
Product /
Service and
Market
#2 #4 #3
Promotion and
Market
Strategy
#3 #1 #1
Profits and
Business
Model
#3 #4
People
#1 #2 #2
Plan
#4

18. Agenda
• Entrepreneurship
and
Business
Stage
– A
few
slides
to
set
the
stage
for
discussing
“Stage”
– As
a
business
moves
from
concept
to
revenue
risk
is
reduced
• Lessons
Learned
– Mentoring
and
Coaching
…
find
people
who
know
the
stage
– Types
of
help
…
what
do
you
need
when
• Case
Studies
–
What
we
see
– Investor’s
View
18