Posts tagged ‘revenue model’

Market product specifications and thought leadership strategy for semantic platform startup

February 7th, 2010 by Greg Boutin

Like other applications, ambitious multipurpose web platforms must start by solving a specific market problem, and find their ways into the heart of a passionate community of early adopters.

Those are the challenges I took on at the request of an intriguing multi-million stealth startup’s founders. (more…)

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Should you focus on revenue or on raising money? (and the case for a VC-management consultant hybrid)

September 26th, 2009 by Greg Boutin

Varun Mathur, the Techvibes Community Manager, who I just learnt is based in Toronto (I look forward to meeting you, Varun), made an excellent point yesterday in his Techvibes post on What Separates 37signals And Twitter ?

For all the talk about “getting to revenue” as fast as possible, VCs are still valuing companies based on hype and unproven potential for exponential revenues. You can build valuations based on traffic, but if you can’t attach a realistic average $ amount to a visitor, and if you are going to hemorrhage your traffic as soon as you offer ads, then your valuation is built on shaky grounds – which in finance means you should likely be extremely conservative or discount it.

I don’t say there is never a case for giving high valuation to companies that have great brand awareness and usage even if they haven’t made a buck yet, but my thesis is that the risk of this revenue never materializing should lead to discounting valuations more heavily than they currently are. VCs should put their valuation through a simple risk-based, probabilistic tree analysis, contemplating the likelihood of 3 basic scenarios: (more…)

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Slides of Communitech Presentation on Overcoming the Tech vs. Business Type Divide

July 2nd, 2009 by Greg Boutin

As previously announced, I was at Communitech last Friday to talk with their Product Management group about the key challenges to launching blockbuster tech products. I decided  to tackle the divide between Techies and Biz types, as this has consistently been one of the main hurdles I saw at the ventures I work with. I was a little worried as at first I expected possible controversies over some of the points I brought up, but to my surprise this resonated well and strongly with most people in the room. About half the room were techies and the other biz types, so the distribution was spread nicely in the middle. There were no punch exchanges, mud fights or even light food fights (or food light fights for that matter).

I posted my presentation on Slideshare, so you can find it below. I had two hours at Communitech so this is quite a long deck of 40 slides. It’s all there. For those who attended, note I revamped quite a bit of it and there are several slides I didn’t show during our discussion. So you  can take a fresh look at it.

Slideshare did a poor job with the graphics so, for example, the cover page I was so proud of is all scrambled. Time permitting, I am available to deliver this presentation at other forums and welcome invitations. Rest assured I have unscrambled slides to present.

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Focus on Customers Even When Seeking VC Dollars

March 3rd, 2009 by Greg Boutin
MaRS Discovery District, Toronto, Canada This ...
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I came across those two recent powerpoint presentations on venture capital and I thought they were nicely exposing some of the business inner workings.
The first one is by Jason Mendelson, a VC with the Foundry Group and Mobius Venture Capital, and was recommended to me by Hank Neyming. The second one is from Charles Plant of MaRS Discovery District, the innovation hub in Toronto. Charles communicates a rather negative view of venture capital, but it has the merit of presenting some of the important things to consider before seeking VC money. I especially like the call to focus on customers first. This is not always possible, but designing for a defined market certainly is, and anyone involved with tech commercialization will tell you it’s often the exception rather than the rule.
Overall, both presentations remind us that valuation is more of an art than a science, and a compelling business case is your best weapon to maximize it and obtain favorable conditions from VCs. A tangible business proposition and revenue model should be embedded in any venture early on, and refined as things evolve.
View more presentations from rosscarlson. (tags: vc venture)

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As Paths to Commercialization Narrow, Canadian Biotech Calls for Help

February 23rd, 2009 by Greg Boutin

My friend Fred Sweeney of VG Partners pointed me to this interesting call for help by the biotech industry in Canada, whose start-ups are finding it difficult to raise money to survive, let alone thrive. In these times of hardships, the ventures with the least obvious path to commercialization and revenue are the ones who suffer first and most. Given the lengthy development cycles and uncertain payout, biotech ventures evidently stand at the frontline of the crisis.

What all that shows is that a start-up should at all times be able to articulate the revenue model it is proposing to pursue. It should tie all its current efforts to this model, or “reverse-engineer revenue” as per the expression I coined at GrowthRoute. Doing just that provide three benefits: one, you stand in first row against competing start-ups when comes the time for VCs to hand out cash; two, keeping your eyes on the prize helps you identify where to focus your efforts today, and better allocate your current resources; three, spending some time thinking about how you will make money could point to nearer-term sources of revenue you may not have thought of.

Without a destination and a map to get there, you can have a tight ship and yet run it in circles. Better to never count on the government to get you back on track.

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