OODIENCE.com | Media Channel and Marketplace Business Sales, Acquisitions, Blockchain Advisory, Funding, ICOs
EnglishForward.com | Co-Founder and Director of Growth
Naturally 1001 variables play into this that I'm blind to but here are some assumption laced thinking points:
You're profitable, upwards trending, business, in a very competitive vertical. Yes?
You guaranteed have a Buyer, unless:
1. Your asking price is outrageous. Not likely as we've closed strategic sales that were 12x revenues. It doesn't get much more aggressive than that.
2. There aren't enough strategic or institutional buyers. Nope. The buyer market is wide with creative outreach. We've rarely tapped let's say 20% of our pool before successfully securing multiple qualified offers. (And we hold a 100% close rate).
3. You're so big ($1B+) that only a few have an opportunity to buy you AND they don't like you or your brand. Unlikely?
4. The outreach effort is nominal. Most brokers and M&A intermediaries boast a sub 40% closing ratio and far too many of them are "listing agents" -- whereby they list a property, announce it to a pool of buyers in their database and then "wait". We've seen deals that we normally turn around in 60-days with all-cash offers, take 18-months for "payment plan" deals closed by other firms. The results based on the experience and model employed is indeed apples to oranges.
5. How your business is presented (packaged) is not producing conversions. This too would then be a fault on your banker's side. We "spy on" the competition - it's business as usual on our end - and the typical prospectus and marketing collateral and followup materials are, well, embarassingly slim from, well, everybody.
I've never encountered a problem with "the market" (the strategic buyers) and we've sold very niche and distressed properties.
We have declined taking on deals where the asking price was a number picked out of la-la-land (in which case we offer complimentary guidance, feedback and let them pursue other avenues for closing the deal - which basically never happens at that asking price)... but that's a sensible discussion and likely one that was already had.
If your exit is sub-$100M, your asking price is reasonable (even if aggressive), your business is indeed strong on its metrics, growth and brand value -- then any lack of offers sits with your banker.
You're likely looking to play professional basketball but you brought in a kid from a high-school team. Skills mismatch. Upgrade your "player" and you'll move towards a win quite rapidly.
The actual outreach and "pitching" to distributors (retail, wholesale, online, whatever) all comes back to the value proposition of the product and its value or perceived value in the marketplace.
If you're walking in cold (a product, in a jar, with a fancy label), without any history of sales, interest, features, testimonials, endorsements, results and sales (yes I included that twice)... you'll have a mostly unpleasant experience in your pitches.
While small retailers may give it a test, the entire setup of that process, sending them product and the paper trail will likely prove less fruitful than any in-store sales it generates (let alone the profits you take from that).
My recommend is get out to all of the beauty tradeshows and events. Network online and offline. With not just distributors but also influencers, bloggers and media.
That's assuming you don't have the budget for a few founds of creative blitz marketing and PR... if you can fund your own popularity, then that should be your first step.
The best way to get a product into major retailers........ is to have the retailers calling you. Which means you need to get the buzz and sales engine started on your own.
Are you wanting a "real product" or a business?
Idea < product < app business
Developing the "product" itself will come with financial costs. Hire a team (hopefully the right team). Pay their fees. And you'll end up with the product (with varying degrees of quality, compatibility, user experience, value all depending on how successfully you selected the team and how they executed on your idea).
You have an app.
You are in the mix with 2.2million apps in the world (january 2017, total apps in app stores) that someone can find, download, install.
What's your marketing plan?
How will you increase downloads? Usage?
How will you later monetize?
And how much will all THAT cost you? In team, time, energy?
What an interesting concept (and I'm being polite with the word "interesting').
Your customers, who pay for your service, should do the leg work to be your cheerleaders for your business so that you can lock in your Biggest customer (the end business buyer)?
There is absolutely no reason your customers should be talking to the "potential suitor" in a cold call (they make the outreach) scenario.
If it's a "suitor" (they are pursuing you), then they already have interest.
Your focus instead should be on how to turn "interest" (which is about as a common as bad ideas) into "motivated interest". The subtle difference being that they have a specific, motivating reason to pursue the deal with some margin of urgency and seriousness.
An agency is an instant cashflow model business.
Ugly to scale due to logistics of a team and the mess of being in a client-service business model.
But easy to rapidly monetize.
Make a phone call. Close a client. Collect the cash. (Yes, that's a bit over simplified).
Your girlfriend shouldn't grab a dime from anyone before locking in her first client.
An agency can be entirely self-funded and there's little reason to pursue funding.
After she had generated her first $50,000 in clients (for example), she can supplement growth with debt financing.
And, in no way, is the idea of your generous, retiring parents investing $70,000 into a first time business owner, when statistically most businesses fail ... a good idea.
Fair rate is a flexible concept.
If I was lending out $70k, I'd want to see 3x $210k back as a minimum. Irregardless of whether that is "fair"... it would be the minimum (for illustrative purposes) where the process of the due diligence and contracts and parting with $70k liquid in trade for a "maybe" $140k gain would be of interest.
It seems as if you're already biased towards not picking up an employment income stream (and being your own "investor").
You mention you don't have a family to support and you don't mind living on bare minimums and you have access to enough funds to build the product...
If life was a Hollywood movie where "it all works out", then staying focused on the startup would make you look dedicated and make for a possibly more appealing storyline.
But you do need an income stream.
And you need to not be operating (now or at a negotiation table) from a position of need.
If you end up so far down the no-cash rabbit hole that even an investment deal with terrible terms sound enticing... then you may find yourself eventually locked into another job: your own startup where you'd no longer have controlling interest.
Also, one does not negate the other.
Building anything worthwhile is intense work. But you can work and then, since you don't have a family to feed at home, your evenings are spent on your business.
(Except for one evening per week... which will be spent on nothing but promoting your business concept and vision to investors, media, strategic alliances, industry influencers and whoever may have an introduction or resource that accelerates your path forward).
I recommend viewing AngelList as a source of intel. A place of research.
Your inbound enquiries will be low.
But it's not Angel's strong point either way.
Find investors who are active in your business model or industry.
Connect with them.
Add them to a "target" list if you think they may be a fit.
Research them (LinkedIn and similar).
Possibly build rapport (not always necessary).
But approach them with a message that would be relevant to them. And pull their attention back to your AngelList company page.
Having the company page is great for reference ... but it, in itself, is not a "lead generation" method of any sort. Including for Angels.
You're looking for funding but it's not VC money you want.
Look into Private Equity and Family Office opportunities instead.
A lot of PE (Private Equity) still prefer to work with physical, tangible and otherwise "traditional" businesses.
You can seek out a list with searches such as:
private equity nova scotia
private equity firm canada
Send some emails. Make some calls.
Another route is to seek out independent investors as business partners, preferably from those who built their wealth in comparable industries.
Best wishes with finding your funding source.
I agree with @Yoash Dvir.
If your app isn't even launched, you not only have a tough climb to get a VC interested ... but any terms you'd be offered would be likely more aggressive than you should want to pursue.
If your app concept genuinely has legs, then simply launch it.
If you're short on funding to accomplish that, pursue angel investments and loans (debt financing) and alternate solutions to close that gap.
Then with a live version ready, push content marketing and PR.
This will grow the app's userbase and the exposure.
The PR need not be "front page" of VentureBeat.
Dig up case studies on "how we got our first X app downloads" (use variations of that). That will give you direction on how to build up a userbase.
That's a much more strategic next step.
First off, always good to see more and more tech companies in Europe. Berlin is producing a lot of great startups.
Your geo-location isn't nearly as relevant as:
- Your stage (Seed round)
- Age (1 year?)
- Pre-revenue or post (post)
- Business model (B2B SaaS)
- Vertical (Hardware)
While plenty of VC firms will deal specifically within their own or select territories, it's more common that they have focused on the stage of the company or the business model.
You'll need an effective deck and an outreach plan.
Assuming that's in place, VCs are easy to find and at minimum a junior will be happy to receive your slide deck.
Use Angel, Pitchbook, Crunchbase, DealStream and similar to sort based on the criteria mentioned here.
Find multiple contacts at those firms via LI if needed.
You can use platforms like Crunchbase to better identify which VCs are investing for your target investment level, or in your industry and use that as a filter to short-list.
SaaS is, of course hot. More so B2C but certainly B2B has very strong interest and high activity levels.
It won't take much effort to find yourself in "interesting" dialogue.
More important than who to contact and gaining their interest though, is ensuring you walk away with a good deal.
You're not dealing with amateurs.
And their proposed term sheets won't be generous in your favor to say the least.
Get yourself an accountant with M&A experience or a third-party VC on retainer for the advisory.