People tell me there may be over 8,000 dating sites with scientific matchmaking algorithms worldwide, but I couldn’t find one that focused on scientifically matching companies and people for business-to-business (B2B) relationships. Yet, every business expert tells me that finding good business partners is just as tricky as a good marriage, minus the sex.
Business partnerships come in all shapes and sizes, from finding a single partner to help you run your startup, to signing a strategic agreement with another large company for development, marketing, distribution, or international sales. As with personal relationships, unbalanced deals don’t work, since the dominating entity finds it hard to adapt and appreciate the value of a partner.
Everyone agrees that successful business partnerships can provide cash for growth, reduce costs, provide new geographic markets, or bring whole new customer sets to the table. Bad ones will suck the energy out of your company, and leave you wanting more. The thrill of the chase is always the fun part, but making it work is a lot harder.
Just like personal relationships, if you are contemplating a business partnership, the first consideration should be the characteristics of the key people involved. In addition, your company engines have to synchronize, which requires changes beyond the honeymoon period. Here are five of the key elements of both:
- Principals on both sides need to be ready and willing to work with a partner. Some executives prefer to operate in solo mode. If you have worked for yourself for a long time, like living alone and making decisions without consulting anyone else, it may be hard to adapt to a shared decision-making environment.
- Look for a match in operating style and work ethics. A business partnership doesn’t come with a no-fault divorce clause. During the “dating period,” look hard for those characteristics that suggest complementary strengths, compatibility, chemistry, motivation, and values. Consider a business “pre-nup” agreement.
- Both sides should write down the shared objectives and vision. If there is nothing to write down, or the results are quite different, that’s a big red flag. At this point both need to put in some serious thought about common value systems and how integration will impact current operations and the “next generation.”
- Agree on performance indicators measuring partnership effectiveness. Every relationship needs to be mutually beneficial to foster trust and common commitment. If the value is channeled to one beneficiary, with more cost and effort to the other, the equation won’t work for either.
- Understand required changes to the current business model. These need to be understood up front, since implementation will likely require staff changes, process changes, and a more complex communication system. Both sides need to evaluate the intangible impact of these.
Even with the best of efforts, in my experience a high percentage of partnerships don’t work in the long run, because the underlying entities have different long-term objectives. This means prior planning for an easy dissolution. Document early the partner agreement detailing what each person is responsible for, who makes what decisions, and how disagreements will be resolved.
In summary, I did find a few sites, like MyBusinessMatches.com and EventMatches, which are a step in the right direction, but they still seem focused on letting you do most the work (at an event) to find the ideal partner. How about finding the best fit for you through something like eHarmony’s “scientific approach to matching” with 29 DIMENSIONS® of compatibility?
I wonder how many dimensions of compatibility there are to a good business partnership? I know it is rarely love at first sight. There is still time for you to be the first eHarmony.com of the B2B crowd!
Startup Professionals Musings
“AWS provides easy-to-deploy and scalable technology, managed with a simple console,” says Sagi Briteman, vice president of research and development for CropX. “It is also easy to establish the architecture. We started with building blocks, with uncertainty about our physical deployment and how much we needed. Using AWS, it was easy to create instances as we grew.”
Read more here.
I am a jack of all trades, I do marketing, coding, graphics, copy, and sales. However I want to launch in the next month or so.
The platform already has a couple million in development, but it needs UI/UX and misc touch-ups as well as someone to keep things running smoothly when we are getting clients.
- Is there a place for these types that want to join company, that I can post in?
- What is a good stake to offer to someone? Like do I say after x many months, or x many clients, or x many years you get x amount of equity?
Fundraising has never been easy, what are investors looking for in 2020?
It’s clear that 2020 has thrown a wrench in the gears of startup fundraising; conferences are canceled, meetings are virtual and spontaneous, in-person investor/founder meet-and-greets are almost completely nonexistent. What’s less clear, however, are the right steps a founder should take to make the most of this virtual world, especially with regards to their fundraising pitch deck.
With larger funding amounts per round and more dollars per investor meeting on the table than ever before, founders in the modern seed round either sink or swim in the fundraising process, especially in this chaotic year.
Fortunately, DocSend’s new report on seed-level fundraising provides some helpful insights and guidance for startups on what constitutes a successful fundraising process. After looking at a year’s worth of data and input we uncovered a condition we call the Seed Squeeze — seed startup founders caught between the pressure of more discerning and decisive investors and increasingly demanding market expectations. Founders can learn from the experience of other startups to best navigate this situation.
Based on the trial and error data of 175 opt-in seed-stage founders, we’ve gleaned three steps fundraisers can take to maximize their chances of wowing investors and securing a term sheet.
Show investors your product is ready to roll (and don’t be shy about it)
When making your case to earlier-stage investors, your business model, team and “why now” sections of the pitch deck did a lot of the heavy lifting. But in the seed round, the state and viability of your “product” can make or break your pitch.
According to the report, not only did successful companies (those that achieved funding) have product slides 10 percent more often, they also had at least one more page of product details demonstrating traction than their unsuccessful (those who didn’t achieve funding) counterparts.
In this sense, “traction” refers to any measurement of product success: the number of people using the product, success in competitions, industry awards, credible testimonials, and other indicators. While 1.6 pages was the average length of the traction section for a pre-seed round, 2.3 pages was the average for successful seed rounds. Also, 75 percent of successful seed founders had demonstrable traction, as opposed to just 60 percent in pre-seed.
The bottom line is seed investors need to believe your company has made the successful transition from just a “good idea” to a profitable venture.
Don’t make the investor’s job harder, use a clear format
As an early-stage founder, a lot of factors are outside of your control, from your geographic location to your age and founding team size. While it’s what’s INSIDE your deck that matters, HOW you present your deck has a big impact on how potential investors digest your pitch.
The golden number of slides is 20. There are some instances where you might need more slides if your product or space is exceptionally technical, but that’s the number that investors prefer, according to the report.
By examining the most successful decks, we can gain a fairly clear picture of the ideal way to order your pitch deck. The chart below shows how often each slide was present in the given order in successful seed decks.
While a “why now?” section is important (and you definitely should include one if your business has had to significantly pivot since the pandemic), the timing of your fundraise takes a back seat to the product in the seed round. In the seed round, investors can generally trust that the proper “why now” vetting and due diligence has already taken place by earlier investors.
To reiterate the earlier section, it’s the product information that should take precedence in your deck, 87% of successful decks had a product section of 3.58 pages.
Plan your outreach well in advance, the stakes are getting higher for each meeting
Across the entire sample size, the average amount raised per meeting in 2019 was $ 52,600, an increase of almost 40% since 2015.
With more money on the table, contacting more investors may seem like a logical strategy, but the data shows that’s not the case. While it has the potential to garner more meetings, pitching more investors doesn’t equate to more funding. In the Seed round, there is a clear point of diminishing returns when contacting investors (it’s somewhere around 70).
In a chaotic year, focus on what you can control
For better or worse, the fundraising demands of 2019 have prepared seed-stage startup founders for the 2020 digital-first approach to pitching investors and closing deals. While very few founders planned for a pandemic to dominate the fundraising ecosystem in 2020, they were in many ways prepared to succeed under its virtual conditions.
Founders are by nature adaptable and should be able to read the room when necessary. With these data-driven steps, founders can ensure they’re putting their best foot forward in the seed round.
Unfortunately, perfecting your process is only half the battle. DocSend’s data uncovered a serious Funding Divide in the seed round that’s keeping many founders stuck on the sidelines. Read more about the challenges facing women and minority founders and what DocSend is doing to help here.
The Seed Squeeze: 3 Ways Founders can Navigate the Fundraising Labyrinth of 2020 was originally published in Entrepreneur's Handbook on Medium, where people are continuing the conversation by highlighting and responding to this story.