Posts by Amanda Peyton
"The No": Making the Most of Getting Rejected
Published June 23, 2009 @ 07:46AM PT
When you get to the point where you're ready to present a business plan to investors, be prepared for an onslaught of rejection.
The idea generation and executive summary process can be very encouraging - it's relatively easy to find people who are willing to give you feedback on your ideas.
Getting people to part with their money, on the other hand, is incredibly difficult. Educating yourself on the what type of investment is right for your business will likely save you from a series of meetings with investors who were never right for you in the first place. Remember: investors are not all equal, and finding the right type of investment will add value beyond providing needed cash.
But first, you must learn to deal with rejection. Some of the most successful, seemingly no-brainer investments get rejection after rejection - for example, Bessemer Ventures said no to FedEx SEVEN TIMES. Rejection is a reality of the fundraising process.
Here are three ways to make the most of "the no":
1. Proactively ask for feedback
I have heard/read many stories from investors about entrepreneurs that flip out after hearing "no". Not every investor (and many times, only a small sliver) will "get" what you're trying to create - that is a reality of the investment process. Say thanks and see if the investor has any feedback for you.
Ask them what they don't like, and how you can improve your product. Listen to criticism and, if you think it's valid, incorporate the feedback for your next presentation.
2. Try to separate yourself from your business
There is an inevitable emotional attachment that you'll develop with your business and in the startup world the lines between personal and professional are so blurred that it's tough to distinguish between the two. When fundraising, put in extra effort to establish boundaries between your business and yourself - a rejection from a investor shouldn't feel like a personal rejection (though for many people it does).
3. Keep in touch with potential investors
If someone tells you no, that doesn't necessarily mean they never want to see you/speak to you again (though if you flip out at them they most definitely will never want to speak to you again). Sometimes an idea is not at the right stage for an investor (too early or late stage). Make an effort to keep in touch with investors you like - they might have passed on your current deal, but could very well be interested in the next one.
Persevering in the face of rejection requires a unique mix of confidence and modesty. You should be confident enough to believe that a pass from an investor doesn't mean your idea is dead, but modest enough to ask for feedback and know that you are not the only person who really "knows" the business. If you work on making the most of rejections, you'll soon notice that hearing a "no" might actually be beneficial.
For more on dealing with rejection - Y-Combinator founder Paul Graham's piece from Aug. 2008 has some great advice as well: http://www.paulgraham.com/fundraising.html.
This column is part of Amanda Peyton's "Bank It: Ca$h For Your Ideas" series about how to be successful in business plan competitions and the fundraising process in general. Amanda is an MBA student at MIT Sloan and one of the lead organizers for the MIT $100K Business Plan Competition. She is also on the executive committee for Sloan Entrepreneurs for International Development (SEID).
BANK IT: CA$H For Your Ideas – Three “Musts” for Executive Summaries
Published March 11, 2009 @ 09:01AM PT
I sometimes forget that some would-be entrepreneurs can be both completely passionate about their ideas and totally allergic to even the most benign business jargon.
Example: After listening to a brilliant pitch from one of my friends about emerging mobile technology in various countries in Africa I made the mistake of asking if he had put together an executive summary. Then, I had to repeat myself. EXECUTIVE SUMMARY. You know, the two-page piece of brilliance that convinces even the most ardent naysayer that your idea is a winner?
Most business plan competitions require executive summaries, and even if one is not required, it's a good idea to write one anyway.
If Step 1 is idea generation, the next logical step should involve expanding those ideas into a digestible summary.
Step 2 - Writing an Executive Summary or "Shock and Awe in 2 pages or less"
The executive summary is simply a short description of your business idea. Note the word SUMMARY - the "sweet spot" length is by most standards around two pages.
Most of what's been written on executive summaries can be distilled down into these three *musts*:
1. The executive summary should answer the following questions: Why this? Why you? Why now? Or rather, why is your product special and different from what already exists? Why are you and your team qualified/able to execute? What is your market opportunity? Most investors respond to clarity of purpose over flowery language. Communicate almost immediately what your business does, what void it fills and how it will sustain itself (make money/survive).
2. Don't try to describe every detail in the executive summary - that's what the business plan is for. As Garage Technology Ventures Managing Director Bill Reichert points out "you do not need to explain the entire business plan...you need to convey its essence, and its energy." You'll get better at identifying the "punch" of your idea by pitching it to as many people as possible. See what your audience responds to, and you'll have a better idea of what might excite a potential investor.
3. Emphasize your competitive advantage. Your idea is not new. (Sorry). However, because of the skill set of a team member, a patented technology, privileged access of some sort, etc. you will have some competitive advantage. Highlight this in the executive summary - the readers of your business plan will want to know why your product/service is better positioned to compete than all the others like it they've seen.
Even if you are totally turned off by business jargon, writing a stellar executive summary is a great skill to develop if you plan on ever attempting to write a full business plan. Just sayin.
This is the second column in Amanda Peyton's "Bank It: Ca$h For Your Ideas" series about how to be successful in business plan competitions. Amanda is an MBA student at MIT Sloan and one of the lead organizers for the MIT $100K Business Plan Competition. She is also on the executive committee for Sloan Entrepreneurs for International Development (SEID).
BANK IT: Ca$h For Your Ideas – A Beginner's Guide to Business Plan Competitions
Published February 11, 2009 @ 07:26AM PT
I'm sick of reading depressing news about the economy. Seriously people, where's the hope?
Hope manifested: on Feb. 5 I watched the six winners of the MIT $100K Executive Summary Contest (ESC) deliver their 60-second elevator pitches to a large crowd of gripped onlookers at the kickoff of the 2009 MIT $100K Business Plan Contest. As one of the organizers of the competition, I get to help put together events that promote entrepreneurship in any economic climate.
The passion that often accompanies a new business idea is pretty powerful stuff. I started the MBA program at MIT Sloan in August 2008 with the intention of learning more about entrepreneurship, and in just under six months I have gone from "interested" to "completely obsessed" with learning how businesses go from some random idea to an actual, operational company.
This ongoing column will explore just that - how an idea for a business is developed into a business plan and how you can get funding for your ideas through business plan competitions. These competitions are more plentiful than you might think, and provide not just an opportunity to win money, but perhaps more importantly, a forum where you can receive feedback on your plan from experts with experience in your field. Finally, I will share some "insider tips" on what goes on behind the scenes of these competitions in order to give advice on what goes in to creating winning plans.
Step 1 - Idea Generation, or "Wouldn't it be cool if..."
Want to get involved? You can start by brainstorming ideas. I have found that some of the most successful entrepreneurs I have met never actually leave this phase - they just keep thinking of new ideas irrespective of they're working on. All it takes to start brainstorming is to finish this phrase: "wouldn't it be cool if..."
Wouldn't it be cool if you could use wave power to turn ocean water into potable water for developing countries? Enter WaveWater, the $100K Development Track ESC winner, who collected $2000 for their idea on how to make this happen in developing areas.
Wouldn't it be cool if you could diagnose illnesses in developing countries using technology that requires few supplies and little training to use? Enter Diagnostics For All, the $100,000 winner of the 2008 $100K Business Plan Contest, whose patent-pending technology uses a fingernail-sized paper-based microfluidic chip that changes color to diagnose illnesses.
Brainstorming is key - you'll probably come up with a whole lot of mediocre, unfeasible, or just-plain-bad ideas before you stumble upon something worth pursuing. Matt Flannery, founder of Kiva.org, said in an article for the journal Innovations: "I spent a good deal of my time dreaming up new business ideas. I'm the kind of person who always has a new idea, and is always talking about it. I started to have a new business idea every day; 365 ideas was my goal."
Once you do come up with something worth pursuing, put together a short (max 2 page) summary of your idea to distribute to friends, family and people you know and respect. Then, get ready for the onslaught of commentary that will follow (the fun part).
ANNOUNCEMENTS - UPCOMING BUSINESS PLAN COMPETITION DEADLINES
*Please send additions and updates to ap [at] amandapeyton.com
| HBS Social Enterprise Initiative B-Plan Contest | Cambridge, MA | $25,000 | March 30, 2009 | Each team must have one or more Harvard students | http://www.hbs.edu/socialenterprise/businessplan/index.html |
| Ignite Clean Energy | Cambridge, MA | $TBD | March 16, 2009 (students); June 5, 2009 (professionals) | Open to professional and student teams | http://www.ignitecleanenergy.com/ |
| MIT $100K | Cambridge, MA | $100,000 | Feb. 26, 2009 | Each team must have one or more MIT students | mit100k.org |
| MIT Clean Energy Prize | Cambridge, MA | $200,000 | Feb. 26, 2009 | Each team must have one full-time student from any university | mit100k.org/cep |
| Rice Business Plan Competition | Houston, TX | $125,000 investment + $20,000 cash | Feb. 13, 2009 | Each team must have one full-time or part-time graduate student | http://www.alliance.rice.edu/alliance/RBPC.asp?SnID=961337968 |
