This month was crazy, I traveled to 4 technical events, had more than 200 business meetings, and I met more than 30 startup founders.
What did I notice all throughout this rollercoaster? That 95% of the Romanian startups suck at sales and business strategy. And that this happens even if:
- The Romanian startup ecosystem is booming right now, especially in Cluj-Napoca.
- Investments in Romanian startups have increased 3x in the last few years (according to eu-startups.com).
Which got me wondering: why so many of them are still failing? Why so many startups are not able to raise investment even if right now in Romania dozens of millions of euros are thrown into funding for startups?
And yet, just a few projects can access that money.
So I decided to share what I noticed founders DON'T do, where they lack in seizing the right opportunity, and some sales tips for startups to apply when at a tech event.
1. Doing sales at events (I made more than 100k in 10 minutes this way)
A CB report showed that lack of cash is the second reason for startups failing. In most cases, startups have cash just for a short runaway. And then, they face reality.
It’s just like Gary Vee put it in his Ask Gary Vee book:
“Cash is like oxygen. When you don't need it, you don't notice it. When you do need it, it's the only thing you need.”
In what follows, I'll talk about Techsylvania - the latest event I attended - and how you can leverage this kind of opportunity as a startup founder.
This event is a huge success - keynote speakers, Startup Avalanche program, networking area, more than 3000 attendees and there’s a lot more to say.
Ever since I started attending Techsylvania, I was quite surprised to see that a lot of startups participated in the expo area. What surprised me more, though, was that the number of startups who scheduled meetings with potential clients and investors was close to zero.
How do you make sure you get the most value from an event?
- Do your research and build the list of people you want to meet. By research I mean knowing essential details about the person, their background and trying to find something you have in common with them. You’ll use this as an ice-breaker.
- Most events have match-making tools (at Techsylvania I used Deal Room Events). They allow you to search for people who present interest for your startup, so my advice is start approaching them in order to schedule a meeting. If you don’t have these tools, most events have Slack channels with all the participants and if the Slack channel is missing, there are for sure Facebook events to pull contacts from. You get the point, there are a lot of ways to start connecting with people from the event you attend.
- Start contacting them - you can do it through different channels: Slack, match-making tools, LinkedIn, cold calling, cold emailing etc.
- Take the process step by step. The first goal when you contact a potential client/partner is to schedule a short 20-minute meeting. You don’t want to stay 3 hours at an event with a potential client. At Techsylvania, after a 10-minute discussion, I secured a 100k project. It’s about being there. Almost every time, it’s just about being there.
- The actual meeting. Like I said, find the common ground. It’s really powerful. The meeting should be an intro one, just to have the necessary context to go back to them.
- Follow-up. Everything you’ve read above means nothing if you don’t follow-up. For me, it’s the most important part in the sales process, because it shows your Be persistent, yet not pushy.
Here's an infographic you can save for further reference:
Basically, my goal at an event like this is to meet as many people as I can and to try finding how I am able to help them. I don’t say that this process is perfect (it can definitely be improved), I just say what works for me.
2. Hey startup, here is the business opportunity you just missed!
In Romania, we have really good technical people but we’re lacking in the business and sales departments. Right now, there are more money on the market than solid projects.
To put this into perspective, I asked for help from an insider, Mircea Vadan (managing partner at Activize.tech and founder of the community organization & startup hub Cluj Startups), who estimated for me these approximate numbers on the Romanian startup ecosystem in 2018:
- There were around 50 investment rounds completed by Romanian startups out of which:
- 15 startups raised more than €1 million in investment (most of them have Romanian founders based abroad)
- 11 startups raised between €100,000 and €1 million;
- around 25 benefited from accelerator funding (less than €100,000);
At Techsylvania, Adam Jackson (founder of Braintrust) indicated that the problem is not lack of funding for startups in itself, rather the way startups get in the position to present solid solutions:
"Raise double than you think you'll need" or— Around25 (@Around25Team) June 10, 2019
"There are more venture money in the world than there are good deals"
Is just some of the venture capital know-how shared by@adamjacksonsf, founder of @braintrust, during his talk at #Techsylvania #vc #seedround #startup pic.twitter.com/XlDB7lxmwu
So what's stopping all these projects to access the resources they need?
My take is their founders are not fully aware that if you have an idea, limited amounts of money, and no traction, then you have a window of only a few months to start growing your business and make it sustainable. For investors, it’s important to see that you are moving forward with your business.
Being actively involved in Around25 - a product development agency where we founded 5 startups -, and the Cluj Startups non-profit organisation (which helps startups find support for their business), I can say it takes an average of 2 years to start producing revenue.
The only way you can do it is to stop investing a big amount of development effort and start doing sales and marketing (upselling in the early stages). But how do you do that? I'll illustrate below, with a true story about validating an idea with zero (or almost zero) development efforts and also raise investment.
3. Doing research is crucial in sales
How and why? I use this two-lane approach:
- Desk research: it means I’m looking to find a solid amount of information about how the industry works, who is my competition, what they are doing right, what they are doing wrong. The potential clients are B2B, B2C, B2G, or all? Who are my early adopters? What are the problems they face in the market? Who can be a strategic partner for me? What are their needs? and a lot more information. For me it works very well, I know what and how to address matters in order to find relevant information. All I listed below may be found in dozens of other guides and articles, but I’m constantly surprised at how little these are actually put into practice, so I’ll write them down anyway :)
- Direct research: GOLDEN RULE - identify your potential users’ needs. Remember the CB report about why startup fail? Out of 101 startups, 42% of them failed because they didn’t solve a big enough problem. According to this report, this is the first reason why startups fail. Go to your potential clients, talk to them, pay attention to what they have to say and identify their needs.
By doing this kind of research, you’ll have an overview on the market, you’ll know how to start, and what to focus on. Ebbot - one of our partners at Around25 - nailed this process and are a good case practice for any early-stage startup out there.
Want to follow in their footsteps? We wrote about them here:
Meet Ebbot -
The Chatbot Startup in Sweden
4. Identifying clients' needs - a few hacks
Imagine you're really thirsty, get into a store, ask for a bottle of water and the cashier tries to make you buy some snacks. Would you buy those snacks? Most likely not. Because they obviously don't solve your problem.
Most startups in the early stages are just like that cashier - they sell snacks instead of water, because they haven't investigated enough before selling. If you don't want to be in this position, I have these two practices to share:
- Partner up with strategic stakeholders (clients, providers, mentors or investors) who have at least a few years of experience in the field you're targeting. These are the people who can best guide you to identifying your target audience's needs because they're been dealing with them on a regular basis.
- Questions, questions, questions. Even if you’re pitching your startup in a ‘sales meeting’, at the end of the day it’s just a discussion where you have a lot of curiosities. So one of my sales tips for startups is ask your potential clients a lot of questions. For instance...
Here are the 5 questions I usually ask:
- What problems you face when it comes to...?
- If you made a top of your roadblocks, which would be the first three of them?
- What would make you buy from me?
- What would be your expectations when it comes to working with us?
- You also can present them your product and ask them: What are the needs the actual product DOES NOT solve for you?
Finding out the client's problems could help you get a better image of the development workflow. By knowing what are the biggest problems of your clients, you'll have the opportunity to start implementing those features that can help you solve those problems first, and nothing more. The answers should help you prioritize the work you need to do.
5. The MDE Model Applied
Now that you have a rough idea about how to do sales in order to sustain your business, I will share a roadmap of how we at Around25 validated an idea with (almost) zero development effort and raised investment.
I called it MDE - Minimum Development Effort:
How do you go forward from here?
First, let’s recap what I shared with you about getting funding for startups:
- You can validate your startup in different ways (with mockups, Excels, presenting some clickable visuals to events etc.) without development effort. You don't have to get stuck in the development phase only to come forward with your product in an unvalidated market.
- Even if you’ll need to put a small development effort in your product, it’s not necessary to wait 2 years to build it and only then to launch it on the market. Ask yourself how you can validate your idea with MDE (Minimum Development Effort). After you have clients and a bit of recurrent revenue, you can invest in a complex product.
- Understand the market - know what your clients want, what their problems are. How do you do this the most efficient way? Partner up with stakeholders who are knowledgeable in the field, try to absorb all the input they have to share.
Second, have this high-level sales process in mind for the next tech event you're attending and how to leverage it for your startup:
- Do your research before meetings.
- Use any tool/channel to get to your clients.
- Start contacting them.
- Sell them an intro meeting.
- Find the answer to the question: What do I have in common with them?
You can look at this list as the answer to Why people don’t get funding for their startups?
It’s because they don’t put enough effort into finding their own path for each of the steps in the sales process. It’s because they don’t understand, from the get-go, that the window for startup scaling is as short as 2 years and that during this time, their best bet is getting out there with their MVP (as imperfect as it might be) to validate it.
And anyway, at the end of the day, validation is about sales. About how you communicate your idea to a lot of different stakeholders in a lot of circumstances.
So are you ready to connect these dots and actually get funding for your startup?