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Opinion Editorials

6 surprising things startup investors don’t want

(Editorial) Startup investors are busy and they’re considering hundreds of companies at any given time, so be sure you know how NOT to waste their time or annoy them (if you want their money, of course).

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startup investors

startup investors

It’s time to deal with investors

It’s time to deal with investors
You’ve got your ducks in a row, you’re about to start pitching to investors and doing Demo Days, but do you really know what investors want? More importantly, do you know what they don’t want so you can avoid wasting their time (and frankly, avoid pissing them off)?

To learn what investors don’t care about, we’ve tapped into the wisdom of Launch Tennessee Chief Executive Officer, Charlie Brock who is hellbent on making his state the best place in his region to start and grow a company (and some say LaunchTN is succeeding at this mission).

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Brock acknowledges that early-stage companies should be over-prepared rather than under-prepared. “You should never waste time or money on things investors neither want nor need,” he adds. “Many investors consider 100 or more opportunities for every investment they make, so providing the exact information they need with a laser-like focus will help your startup stand out.”

When standing up against 100 others for a single opportunity, how can you stand out and avoid wasting anyone’s time?

In his own words, Brock outlines the 6 things you can skip, because investors care less – or in some cases don’t care at all – about them:

  1. A business plan. Investors are busy. They don’t have time to read a 15-page business plan that probably took you weeks to complete. Instead, prepare a two-page executive summary or a six- to 15-slide deck. Make sure your summary includes a description of your company, the problem it solves and your financial projections. This slide deck should not take more than 15 minutes to present.
  2. Burn rate (sometimes). As an entrepreneur starting a business, you need to know your burn rate. However, when it comes time to pitching for investment, it’s important to remember that depending on your location, investors in different parts of the country may have unique preferences. For example, Silicon Valley investors care far more about your market size than your burn rate, whereas in the South, investors want to know if you can “break even before breakfast.”
  3. A huge valuation. Presenting a huge valuation creates the perception that you are overestimating the potential of your concept. Instead of impressing investors, this will turn them off.
  4. Top-down forecasting. Investors definitely want you to be going after a large market, and they need to know your customer acquisition strategy. Put a lot of thought into the sales cycle and the customer adoption rate. When doing this, do not build your market from the top down. Meaning, do not tell an investor your company is in a $2 billion market, so you only need 1 percent of the market to generate $20 million in revenue.
  5. A non-disclosure agreement. For many investors, asking them to sign a non-disclosure agreement (NDA) is a non-starter. Keep in mind the number of business ideas investors see every day. It is likely that the investor has seen a company similar to yours and will see more in the future. Asking an investor to keep track of which ones have an NDA is asking too much. They won’t do it. Besides, the chance they will pass your ideas onto someone else to implement is pretty far-fetched.
  6. Your pride. Having a bad attitude and not accepting constructive feedback is a good way to prevent your company from raising money. Investors take a huge risk by investing in early-stage companies, and many have their own limited partners and investors to answer to. It’s great to be confident, but arrogance is a red flag that investors avoid. They want to be able to work with you in the long haul if they invest in your company.

“Every investor is different,” Brock concludes, “but the overall expectations of what they want to see to make their decision are the same. Know your market size and projections. Know your competition. Know how you will use the investment. Focus on those important details and leave the rest on your white board.”

The American Genius is news, insights, tools, and inspiration for business owners and professionals. AG condenses information on technology, business, social media, startups, economics and more, so you don’t have to.

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Opinion Editorials

Serial procrastinator? Check your mental energy, not time management

(EDITORIAL) Need a hack for your time management? Try focusing on your mental energy management.

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productivity

Your author has a confession to make; as a “type B” personality who has always struggled with procrastination, I am endlessly fascinated by the topic of productivity and “hacking your time.”

I’ve tried most of the tricks you’ve read about, with varying degrees of success.

Recently, publishers like BBC have begun to approach productivity from a different perspective; rather than packing days full of to-do items as a way to maximize time, the key is to maximize your mental energy through a different brand of time management.

So, why doesn’t time management work?

For starters, not all work time is quality time by nature. According to a study published at ScienceDirect, your average worker is interrupted 87 times a day on the job. For an 8-hour day, that’s almost 11 times per hour. No wonder it’s so hard to stay focused!

Second, time management implies a need to fill time in order to maximize it.

It’s the difference between “being busy” and “being productive.”

It also doesn’t impress your boss; a Boston University study concluded that “managers could not tell the difference between employees who actually worked 80 hours a week and those who just pretended to.” By contrast, managing your energy lets you maximize your time based on how it fits with your mental state.

Now, how do you manage your energy?

First, understand and protect the time that should actually go into deep, focused work. Studies continually show that just a few hours of focused worked yield the greatest results; try to put in longer hours behind that, and you’ll see diminishing returns. There’s a couple ways you can accomplish this.

You can block off time in your day dedicated to focused work, and guard the time as if it were a meeting. You could also physically retreat to a private space in order to work on a task.

Building in flexibility is another key to managing your energy. The BBC article references a 1980s study that divided students into two groups; one group planned out monthly goals, while the other group planned out daily goals and activities. The study found the monthly planners accomplished more of their goals, because the students focusing on detailed daily plans often found them foiled by the unexpected.

Moral of the story?

Don’t lock in your schedule too tightly; leave space for the unexpected.

Finally, you should consider making time for rest, a fact reiterated often by the BBC article. You’ve probably heard the advice before that taking 17 minute breaks for every 52 minutes worked is important, and studies continue to show that it is. However, rest also includes taking the time to turn your brain off of work mode entirely.

The BBC article quotes associated professor of psychiatry Srini Pillay as saying that, “[people] need to use both the focus ad unfocus circuits in the brain,” in order to be fully productive. High achievers like Serena Williams, Warren Buffet and Bill Gates build this into their mentality and their practice.

Embracing rest and unfocused thinking may be key to “embracing the slumps,” as the BBC article puts it.

In conclusion, by leaving some flexibility in your schedule and listening to your body and mind, you can better tailor your day to your mental state and match your brainpower to the appropriate task. As someone who is tempted to keep a busy to-do list myself, I am excited to reevaluate and improve my own approach. Maybe you should revisit your own systems as well.

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Opinion Editorials

6 skills humans have that AI doesn’t… yet

(OPINION / EDITORIAL) It’s not unreasonable to be concerned about the growing power and skill of AI, but here are a few skills where we have the upper hand.

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Man drawing on a roll of butcher paper, where AI cannot express themselves yet.

AI is taking over the workforce as we know it. Burgers are already being flipped by robotic arms (and being flipped better), and it’s only a matter of time before commercial trucks and cars will be driven by robots (and, probably, be driven better).

It may feel unnerving to think about the shrinking number of job possibilities for future humans – what jobs will be around for humans when AI can do almost everything better than we can?

To our relief (exhale!), there are a few select skills that humans will (hopefully) always be better at than AI. The strengths that we have over AI fall into 3 general categories: Ability to convey emotion, management over others, and creativity.

Let’s break it down: Here are 6 skills that we as humans should be focusing on right now.

Our ability to undertake non-verbal communication

What does this mean for humans? We need to develop our ability to understand and communicate body language, knowing looks, and other non-verbal cues. Additionally, we need to refine our ability to make others feel warm and heard – if you work in the hospitality industry, mastering these abilities will give you an edge over the AI technologies that might replace you.

Our ability to show deep empathy to customers

Unlike AI, we share experiences with other humans and can therefore show empathy to customers. Never underestimate how powerful your deep understanding of being human will be when you’re pitted against a robot for a job. It might just be the thing that gives you a cutting edge.

Our ability to undertake growth management

As of this moment, humans are superior to AI when it comes to managing others. We are able to support organization members in developing their skillsets and, due to our coaching ability, we are able to help others to grow professionally. Take that, AI!

Our ability to employ mind management

What this essentially means is that we can support others. Humans have counseling skills, which means we are able to help someone in distress, whether that stems from interpersonal relationships or professional problems. Can you imagine an AI therapist?

Our ability to perform collective intelligence management

Human creativity, especially as it relates to putting individual ideas together to form an innovative new one, gives us a leg up when competing against AI. Humans are able to foster group thought, to manage and channel it, to create something bigger and better than what existed before. Like, when we created AI in the first place.

Our ability to realize new ideas in an organization

Think: Elevator pitch. Humans are masters of marketing new ideas and are completely in-tune with how to propose new concepts to an organization because, you guessed it, we too are human. If the manager remains human in the future (fingers crossed!), then we know what to say to them to best sell our point of view.

Using what we know, it’s essential for almost all of us to retrain for an AI-driven economy that is most likely just a few years away. My advice for my fellow humans? Develop the parts of you that make you human. Practice eye contact and listening. Think about big pictures and the best way to manage others. Sharpen your mind with practicing creative processes. And do stay up to date with current trends in AI tech. Sooner or later, these babies are bound to be your co-workers.

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Opinion Editorials

Your business model doesn’t have to be a unicorn or a camel to succeed

(OPINION / EDITORIAL) It’s not unusual for people to suggest a new business model analogy, but this latest “camel” suggestion isn’t new or helpful.

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Camels walking in desert, not the best business model.

This year in 2020 I’ve seen a great deal of unique takes on how our system works. From 45 all the way down to children instructing adults on how to wear masks properly. However, after reading this new article published by the Harvard Business Review, I don’t think I’ve ever seen something so out of touch with the rest of the business world. Here’s a brief synopsis on this article on business model.

The author has decided that now of all times it’s drastically important for startups and entrepreneurs to switch their business tactics. Changing from a heavy front-end investment or “startups worth over a billion dollars” colloquially called “Unicorns” to a more financially reserved business model. One he has tried to coin as the “Camel”, using references to the animal’s ability to survive “long periods of time without sustenance, withstand the scorching desert heat, and adapt to extreme variations in climate.”

The author then goes on to outline best practices for this new business plan: “Balance instead of burn”, “Camels are built for the long haul”, “Breadth and depth for resilience”.

Now I will admit that he’s not wrong on his take. It’s a well thought-out adjustment to a very short-term solution. You want to know why I’m sure of that? Because people figured this out decades ago.

The only place that a “Unicorn” system worked was in something like the Silicon Valley software companies. Where people can start with their billions of dollars and expect “blitzscaling” (a rapid building-up tactic) to actually succeed. The rest of the world knows that a slow and resilient pace is better suited for long term investments and growth. This ‘new’ business realization is almost as outdated as the 2000 Olympics.

The other reason I’m not thrilled with this analogy is that they’ve chosen an animal that doesn’t really work well. Camels are temperamental creatures that actually need a great deal of sustenance to survive those conditions they’ve mentioned. It’s water that they don’t need for long periods, once they stock up. They have to have many other resources up front to survive those harsh conditions the article writer mentioned. So by this analogy, it’s not that different than Silicon Valley’s strongly backed “startups.”

If he wanted to actually use the correct animal for this analogy, then he should call it a tortoise business plan. Actually, any type of reptile or shark would work. It would probably be a better comparison in temperament as well, if we’re talking ‘slow and steady wins the race.’ Whatever you do, consider your angle, and settle in for the long haul.

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