JumpStart: IdeaExchange Blog

In this age of Twitter, Facebook, et al, you must be thinking it’s crazy to bring up the “old-school” approach of getting to a particular audience through participating in a trade show (presuming you have a B2B offering). While avoiding trade shows in these lean times can seem really smart, I’d like to propose a contrarian view.

It’s certainly true that trade shows can be frustratingly inefficient sometimes (and certainly time consuming), yet there are cases where attending and even exhibiting at certain events can make a lot of sense.

I have experienced several scenarios where spending the time, effort and money on attending or exhibiting at a trade show was worthwhile. The first scenario: conferences that offer the right audience, but no booth space. Sometimes these can be prohibitively expensive. However, let’s take an example where you are trying to meet with well-healed corporate buyers whom you KNOW will be there and reaching out to set up meeting times around the conference can be really efficient and could, in fact, be the ONLY way to get to them. You don’t have to be attending the $2,500 conference to meet in a coffee shop at a hotel where the conference is taking place - and in fact this might have been where you would be meeting with them even if you DID pay the fee!

A second scenario: you simply walk a trade show where you’ve secured a visitor’s badge (read = > cheap!), scouting out badges of likely prospects and looking over the competition. Again, not too expensive, and an efficient way of gaining some market knowledge really quickly. And, don’t forget to try and get into the press room to meet up with reporters that follow your business and see if you can gain any insights into the “buzz” in your industry.

The last one, which I have personally had a lot of luck with, are trade shows where the booth setup is reasonable (i.e. the cost of the booth plus the space cost is relatively inexpensive) and where you can get direct access to your key audience, including customers, press, analysts and investors. If you’ve never planned and executed a trade show firsthand - find a friend who has! Doing your homework ahead of time can make this experience incredibly more successful. Trade-Show-Advisor offers the basics, to get you started at least.

In addition, if the timing is right, consider using a show where you are an exhibitor to introduce your product to the press who follow your industry - many if not all of whom should be in attendance. Advatum offers some good advice on that front.

So, what does participation in these trade shows do for an emerging company?

• You are forced to plan, practice and deliver your “pitch”. You may find it doesn’t work quite as well in public as it did in the office. Perfect — simply adjust and try it a few more times – in the next 15 minutes at a show! The net is, by the time the show has ended, you will have practiced and delivered your value proposition to perfection. Use this knowledge afterwards to refine all of your marketing touch points.
• I used to have a goal of “paying for the show” by securing enough deals to cover all the costs, including travel. In almost all instances we were able to do more than this. In one case, we changed the entire direction a product was headed in and the company had an exit based on that new strategy. Without the knowledge gained at that show, we may have never chosen to take that very successful path. Now THAT’s a useful trade show!
• Trade shows can help “build your buzz” within a well-defined market. By networking with press, analysts, customers and others at these events, it will also greatly assist you in forming a better picture of your market and all the players.

Don’t get me wrong — I am not advocating this for everyone, nor am I suggesting huge investments in trade show booths and giveaways. I do, however, believe that when done properly, there can be great benefits derived from this kind of activity, for the short and long-term benefit of your company.

John Dearborn is the Chief Development Officer of JumpStart and brings experience as an entrepreneur, founder and CEO at companies across the US and Europe over the last 25 years to the pursuit of economic transformation in Northeast Ohio.

One of the many questions we get when we speak about venture capital financing is how it all works and how it affects a founder’s (and potentially other owners’) share of a business. You may have heard the terms “pre-money” and “post-money” thrown around and, beyond a basic understanding, wondered exactly what those terms meant.

Rather than trying to explain it here, I thought I would point to a great resource that I’ve run across and that does a good job of helping with this question in very real terms. The resource I am speaking about is one that I found through someone I met at the Kauffman Foundation - Bo Fishback, Vice President of Entrepreneurship. If you don’t know Kauffman, they’re the world’s largest foundation devoted to entrepreneurism.

Bo’s created a site that has a really cool simulator that allows you to put in your share of a business along with others’ shares of your venture and then see what the effect an investment has throughout the first and subsequent rounds of funding. It’s quite interesting and dramatic. Some might say it could scare you away from taking outside capital, but that really boils down to whether you feel you would be better off owning a smaller percentage of something with a greater chance for success or a greater percentage of something that has less of a chance because it is under-capitalized? I don’t mean to imply that taking outside capital is any guarantee of success, but it certainly can be a major factor.

Please note on this tool that there are small question marks next to things like “convertible debt” and “down-round” protection, so be sure to check those out, as they give very concise explanations that are worth understanding.

Have fun with this tool that’s easy to use and that I hope will be a great aid in helping you visualize what the effects of an investment might mean to your ownership position. If you like it, please pass it on!

John Dearborn is the Chief Development Officer of JumpStart and brings experience as an entrepreneur, founder and CEO at companies across the US and Europe over the last 25 years to the pursuit of economic transformation in Northeast Ohio.

One of the key attributes of many startups focused on an online offering is that you really can make it a long, long way towards your actual customer offering on very little money. This presumes you can either do the technical work yourself or have a close, understanding friend to help out. The other alternative is to get outside help (an individual contractor or firm) but this costs real $$ unless you can craft a way to do it in exchange for equity, presuming you have your company, cap tables thinking and documents far enough along to be able to do this formally. But that’s for a different post! My post today deals with the timing of seeking investment when you are developing this kind of startup.

So, you’ve been able to get your idea down on paper and have at least an outline of a project plan to work against. And, you’ve found that very understanding friend to help at night and during the weekend. Next stop — quit your job? Write a business plan? Fundraising? You’re excited enough about the idea, as are your friends and family — at least enough to convince you to “go for it”. Can that excitement and some mock-ups in PowerPoint get you in front of investors?

Maybe. But that would be a mistake, in my opinion. Given the stage the business is in (really still at the concept stage), most savvy investors outside of friends and family will see a lot of risk still inherent in your deal. My advice would be to keep your day job and get the product underway — as far along as you can while still garnering an income. By this I mean get your web offering developed and in front of real customers so you can both test its appeal as well as test your business model. Google analytics provides a great facility to better understand what visitors are doing as they come to your site. As you gain knowledge from this data and elsewhere (through things like focus groups), you will need to make iterations to your code and site and do it quickly. If you have the bandwidth from a development standpoint, you should be updating your site at least weekly.

These iterations should allow you to connect with your audience in such a way that you can either charge them, charge advertisers, or both in order to begin to see some revenue. If you’ve gained enough traffic to do either, then you may be at a point to be able to secure funding. As I stated earlier, since investors will want as little risk as possible, showing an increase in traffic and your vital metrics will give them hope. One thing that has drastically changed recently, for the negative, are advertising based models. Since the economics of these are such that HUGE traffic is needed to show viability, sites that count on advertising as their only source of revenue will take longer to gestate. I don’t say this to discourage anyone — just to get the point across that it may take more time for these kinds of sites to be ready for an investor to see the growth curve they want in order to be comfortable.

If you can stay lean while you iterate and find that growth curve (it took YouTube a while, after all, before they found their “hockey stick” of growth trajectory), you can make it in the long run. Any time you have an audience that is large, growing and enthusiastic about your idea, advertisers will come around eventually, as will revenue. Twitter is another great example of this, i.e. no real revenue yet but they still manage to garner great support from investors as they work out their revenue model.

It’s all about the product offering — make it compelling, prove it with metrics and with even a small amount of revenue that proves the model, you should be able to find an investor attracted to your “near-proven” idea. These basic statistics will help take a lot of risk out of the deal for them.

John Dearborn is the Chief Development Officer of JumpStart and brings experience as an entrepreneur, founder and CEO at companies across the US and Europe over the last 25 years to the pursuit of economic transformation in Northeast Ohio.

As the lead person looking to raise funds for JumpStart to both support its operations and to invest in promising companies throughout Northeast Ohio, I am in constant contact with our funding partners, as you would imagine. Lately, with all the press about the economy, I’ve been getting a fair share of questions related to “deal flow”. We can look at this from a macro perspective, where recent data from a Ewing Marion Kauffman Foundation-funded U.S. Census Bureau study suggests, among other things, that “…while business startups decline slightly in most of the cyclical downturns, startups remain robust even in the most severe recession over the sample period (in the early 1980s).” Click here for the full detail of this report.

This is overall encouraging news, but doesn’t answer the question for those of us involved in these activities locally. The questions I’ve been getting lately have focused on the rate (i.e. number of companies applying to JumpStart) and quality of what we’re seeing – right here in our own back yard. Since the beginning, we have kept detailed metrics on the activity that we are engaged in from the most open part of our “funnel” all the way down to the individual companies that we’ve invested in and everything in between (e.g. meetings held with entrepreneurs, business plans vetted, formal presentations, etc.).

These statistics inform us that we’re seeing a rate very similar to what we’ve seen during any period since inception. As an example, at the front-end of our process where entrepreneurs from the 21 county region that we serve first come in contact with JumpStart, our activity for the last 4 months ending in January is up nearly 10% over the same 4 month period last year. One could argue that the rate has increased since some people may have been laid off and now want to control their own destiny. I am sure part of that is true. While knowing what motivated someone to “take the plunge” might be interesting, I think the more salient insight from us would be “what is the quality of what you’re seeing during these times”? 

To that end, I informally polled each of our team members, who deal with our portfolio companies each day and are charged with finding the next best companies to invest in. This is a very thorough process, much like what a Venture Capital firm would go through (we refer to what we do as venture development), with a great deal of effort to try and take subjectivity out of the process.

They each described that the companies they have seen in the last 60 days (which are finalists for funding from JumpStart) are as good as any they have seen at any point in our history. Attributes such as management strength, well thought out business plans, protectable IP (such as patents) and other elements were all highly rated, through a fairly exhaustive set of vetting activities.

To me, this is very encouraging news and speaks highly to the people who want to start businesses not being daunted by what they read about the economy, where funding is going for startups and all of the other press that could persuade one to hold off on their dream. Understanding more of our quantitative aspects as well as the qualitative ones gives me great motivation to continue to believe we’re on the right course as an organization that plays a role in the overall “ecosystem” and that, if we stay the course, we’ll continue to see a vibrancy in entrepreneurism that we once only dreamed of.

John Dearborn is the Chief Development Officer of JumpStart and brings experience as an entrepreneur, founder and CEO at companies across the US and Europe over the last 25 years to the pursuit of economic transformation in Northeast Ohio.