Redesigning Commerce: Fundraising to the Pitch

FUNDRAISING WORKSHOP AIGA 10 22 2014 @jenvandermeer

AIGA GAINREDESIGNING COMMERCE

Fundraising to the Pitch

AIGA Professional Development Workshop

October 22, 2014 @jenvandermeer


AGENDA FOR TODAY

2

2:30 – 2:45 Intros and business / org concepts

2:45 – 3:00 Business Model Canvas Intro

3:00 – 3:45 Fundraising

3:45 – 4:00 Break

4:00 – 5:00 Business Model Canvas Workshop

5:00 – 5:15 Art of the Pitch

5:15 – 6:00 Pitch Practice


FUNDRAISING PROFESSIONAL DEVELOPMENT WORKSHOP at AIGA’s GAIN CONFERENCE

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Is your idea best suited for seed and angel funding, or should you launch on Indiegogo first?

What about the values of bootstrapping?

What’s a social venture, and if you think you have one, are you better structured as a for-profit, or not-for-profit, or B-Corp?

Or, perhaps your freelance design practice is ready to scale—what kind of structure works best, and when is fundraising appropriate?

How you choose to launch will determine your destiny.

And if you’re founding an organization, you’ll spend much of your time fundraising—and fundraising can be fun.


About Jen

4

TECH ANALYST

MBA – HEC

MOM

ITP PITCHFEST

OPEN DATA

LUMINARY

LABS

DRILLTEAM

DACHIS

WEST VILLAGE

DESIGNERS ACCORD

SYSTEMS THINKING

SUBURBAN CHILDHOOD

FROG DESIGN

ORGANIC INC.

SUSTAINABILITY BA COMP RELIGION

REASON STREET

ECONOMIST


ABOUT YOU

5

YOU HAVE THE ENTHUSIASM, SKILLS AND WORLDVIEW TO MAKE THE CHANGE YOU WANT TO SEE IN THE WORLD.


WHAT WILL STOP YOU

6

Incumbent thinking.

Unquestioned heuristics about how the business world works.

Mindless observance of guidelines and measures.

Low expectations.

Pessimism.

Despair.


WHAT WE WILL GIVE YOU

7

Lean and Business Model Canvas

Collaborative support

Pitch Practice

FUNDRAISING WORKSHOP AIGA 10 22 2014 @jenvandermeer8

WHAT CAME BEFORE STEVE AND ERICFUNDRAISING


FOR PROFIT, NON PROFIT OR SOMETHING ELSE?

9

V.


YOU USED TO HAVE TO PICK A LANE

10

FOR PROFITMAKE MONEY

NON PROFITDO GOOD

V.

“The social responsibility of corporations is to increase profits.” – Milton Friedman, 1970


NOW IT’S A PARADOX OF CHOICE

11

501 (c) 3

501 (c) 4

501 (c) 7

501 (c) 9

Social Enterprise

Social Impact

Social Business

Sustainable Enterprise

S Corp

LLC

C Corp

B Corp

Coop


YOU NO LONGER HAVE TO CHOOSE

12

NON PROFITwith sustainable revenues

FOR PROFITout to change the world


KEY DIFFERENCES

13

NON PROFIT• Defined to fulfill a mission• Tax exempt• Does not retain profits• Does not distribute ownership• Assets belong to organization• Can’t use funds other than to

fulfill the mission for which it

was formed

FOR PROFIT• Pays taxes on profit• Can distribute ownership to

employees and investors• Assets belong to the owners• Can have a capital exit,

benefitting the owners of the

company


BOTH REQUIRE MONEY (& LOVE) TO SUSTAIN AND GROW

14

NON PROFITwith sustainable revenues

FOR PROFITout to change the world

FUNDRAISING WORKSHOP AIGA 10 22 2014 @jenvandermeer 15

FOR PROFIT


FOR PROFIT FUNDING SOURCES

16


FOR PROFIT FUNDING SOURCES

17


ARE YOU A STARTUP OR A SCALABLE STARTUP?

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• “A startup is a human institution designed to deliver a new product or service under

extreme uncertainty.” – Eric Ries

• “A startup is a company designed to grow fast.” – Paul Graham, Y Combinator

• For a company to grow bit, it has to make something a lot of people want. To reach

and serve all of those people.

• “A startup is a temporary organization formed to search for a scalable repeatable

business model.” – Steve Blank

• Most startups change their business model multiple times.

• A scalable startup is a special class of startup – world class team, large vision,

large target market, passionate belief and a reality distortion field.


STAGES OF INVESTMENT CAPITAL REQUIREMENTS

19


NOT ALL NEW COMPANIES ARE GROWTH STARTUPS

20

Consulting29%

Services: Other17%

Technology: Internet14%

Real Estate14%

Service: Business Service

13%

Retail Store13%

New companies formed in 2012

Source: Kaufman foundation, Legal Zoom Startup Environment Index 2012


NOT ALL COMPANIES ARE GROWTH STARTUPS

21

Consulting29%

Services: Other17%

Technology: Internet14%

Real Estate14%

Service: Business Service

13%

Retail Store13%

New companies formed in 2012

Source: Kaufman foundation, Legal Zoom Startup Environment Index 2012


FOR PROFIT HYBRIDS

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• SOCIAL ENTERPRISE: Social or environmental

purpose, may be willing to limit scale opportunities

to meet more local goals, or directly serve the

need.

• B-CORPS: A type of social enterprise that also

agrees to transparently share financial results.

• SOCIAL BUSINESSES (Yunnus): For profits that

reinvest to meet a social need.

• SOCIAL IMPACT GROWTH: Aiming for scale and

for social/environmental outcomes, and high

growth returns to investors.

Source: http://www.ssireview.org/articles/entry/in_search_of_the_hybrid_ideal

http://www.ssireview.org/articles/entry/in_search_of_the_hybrid_ideal






NON PROFIT


NON PROFIT FUNDING SOURCES

24


NON PROFIT FUNDING SOURCES

25


SCALE IS ALL THE RAGE IN NON PROFITS

26

• The average founding year of the 10 largest U.S.

non profits is 1903

• Not for profits are one of the U.S.’s fastest growing

sectors, which grew 60% to more than 1MM

organizations from 1999 to 2011

• How more recent organizations got big:

1. Developed funding in one concentrated source

rather than across diverse sources

2. Found a funding source that was a natural match

to their mission and beneficiaries

3. Built a professional organization and structure

around this funding model

“The jury is out on whether

scaling organizations will

translate into scaling impact.

There is an emerging set of

questions about how to scale

links to local community

engagement, which may be the

linchpin of lasting social

change.”

-Bridgespan Group

Source: http://www.bridgespan.org/Publications-and-Tools/Funding-Strategy/Why-More-Nonprofits-Are-Getting-Bigger.aspx#.U6RblY1dU7s

http://www.bridgespan.org/Publications-and-Tools/Funding-Strategy/Why-More-Nonprofits-Are-Getting-Bigger.aspx%23.U6RblY1dU7s

http://www.bridgespan.org/Publications-and-Tools/Funding-Strategy/Why-More-Nonprofits-Are-Getting-Bigger.aspx%23.U6RblY1dU7s


WHERE THE MONEY COMES FROM

27

Fees for Services & Goods from Private

Sources53%

Other2%

Government Grants9%

Private Contributions13%

Fees for Services & Goods from Gov-

ernment23%

Sources of Revenue for Reporting Public Chari-ties, 2009

Source: The Nonprofit Sector in Brief, 2011. National Center for Charitable Statistics, The Urban Institute


STILL DON’T KNOW WHICH WAY TO GO?

28

$NON PROFIT

with sustainable revenuesFOR PROFIT

out to change the world

V.$

WHAT DO I DO FIRST?


WHERE TO START? CUSTOMER DISCOVERY

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• Lean startup, lean

launchpad (the focus of the

next few classes, and the

approach in class)

• Form a hypothesis about

how you will grow

• Define your total

addressable market, or the

size of your total addressable

beneficiaries

• Business model canvas

• Validate your early

hypothesis

• Test and learn


WHAT CAME BEFORE STEVE AND ERICLEAN + VALUE PROPOSITIONS


THE FOUNDERS DEFINE THE PRODUCT VISION AND

THEN USE CUSTOMER DISCOVERY TO FIND

CUSTOMERS AND A MARKET FOR THAT VISION.

-Steve Blank, The Startup Owner’s Manual

STARTUPS AS THE ORGANISM OF CHANGE


LEAN LAUNCHPAD SIMULATES ENTREPRENEURSHIP

BY REQUIRING FOUNDERS TO GET OUT OF THE

BUILDING…AND INTO THEIR CUSTOMER’S WORLD.

Customer Discovery

Customer Creation

Customer Validation

CompanyBuilding

Pivot

LEAN LAUNCHPAD:

FLIPPED CLASSROOM


LEAN LAUNCHPAD: BUSINESS MODEL CANVAS


KEY PARTNERS KEY ACTIVITIES VALUE PROPOSITIONS CUSTOMER RELATIONSHIPS

KEY RESOURCES

COST STRUCTURE REVENUE STREAMS

CHANNELS

CUSTOMER SEGMENTS

Who are our key partners?

Who are our key suppliers?

Which key resources are we acquiring from our partners?

Which key activities do our partners perform?

What value do we deliver to the customer?

Which one of our customers’ problems are we helping to solve?

What bundles of products and services are we offering to each segment?

Which customer needs are we satisfying?

What is the minimum viable product?

For whom are we creating value?

Who are our most important customers?

What are the customer archetypes?

What key activities do our value propositions require?

Our distribution channels?

Customer relationships?

Revenue Streams?

What key resources do our value propositions require?



Revenue Streams?

How do we get, keep, and grow customers?

Which customer relationships have we established?

How are they integrated with the rest of our business model?

How costly are they?

Through which channels do our customer segments want to be reached?

How do other companies reach them now?

Which ones work best?

Which ones are most cost-effective

How are we integrating them with customer routines?

What are the most important costs inherent to our business model?

Which key resources are most expensive?

Which key activities are most expensive?

For what value are our customers really willing to pay?

For what do they currently play?

What is the revenue model?

What are the pricing tactics?

SOURCE: www.businessmodelgeneration.com//canvas | Canvas concepts developed by Alexander Osterwalder and Yves Pigneur.


http://www.businessmodelgeneration.com//canvas


CUSTOMER DISCOVERY

What is your product or service?

How does it differ from other concepts or businesses in the market?

Why will people want it?

Who is the competition and how does your customer view these competitive offerings?

Where’s the market?

What’s the minimum feature set?

What’s the market type?

What was your inspiration?

What assumptions drove you to this?

What unique insight do you have into the market dynamics or or new technology that makes this a fresh opportunity?


THE SHIFT: FROM PUSH AND MARKET TO CUSTOMER DEVELOPMENT

- The Four Steps to the Customer Epiphany by Steve Blank

Customer Discovery

Customer Creation

Customer Validation

CompanyBuilding

Pivot

THE CUSTOMER DEVELOPMENT MODEL

STOP STOP STOP

Concept/SeedProduct

DevelopmentAlpha/Beta

TestLaunch/ 1st

Ship

• Create marcom materials

• Create positioning

• Hire PR agency• Early buzz

• Create demand• Launch event• “Branding”

36

THE PUSH AND MARKET MODEL


The Customer Development

process changes the way startups

are built

Startups are not smaller versions of

large companies

A startup as a “temporary

organization designed to search for

a repeatable and scalable business

model”Co-founded 8 startups.

1996: E.piphany | 1998: $3.4 MM sales |

1999: IPO raised $72 MM

Author of Four Steps to the Epiphany, Startup Owner’s Manual

FIRST CAME STEVE

37


CONTINUOUS CUSTOMER

INTERACTION

A STARTUP IS AN

EXPERIMENT

A HYPOTHESIS TO BE

TESTED

ASSUME CUSTOMER AND

FEATURES ARE

UNKNOWNS

LOW BURN BY DESIGN

ARE WE ON THE PATH TO A

SUSTAINABLE BUSINESS

Founded IMVU

Parallels between Lean and Agile, caught fire in the

startup community for software businesses, particularly

mobile and SaaS models.

THEN CAME ERIC

38

http://www.youtube.com/watch?v=tNw4Ht75DvA

http://www.youtube.com/watch?v=tNw4Ht75DvA


LEAN

MANUFACTURING

TOTAL QUALITY

MANAGEMENT

KANBAN

CONTINUOUS

IMPROVEMENT

AGILE

WHAT CAME BEFORE STEVE AND ERIC

39

http://agilemanifesto.org/


DESIGN RESEARCH(Ethnography)

DESIGN THINKING(IDEO, Dschool)

AGILE AND LEAN INFLUENCES

40


The Kanban Method respects the human condition. People resist change for emotional

reasons. When change affects their self-image, self-esteem, or position with a social

group, people will resist and the resistance will be emotional.

The Kanban Method adopts the Zen Buddhism concept that "water goes around the rock."

Hence, it focuses on changes that can be made without invoking emotional

resistance, while visualization and limiting work-in-progress raise awareness of deeper

issues allowing for an emotional engagement that helps to overcome resistance.

KANBAN

41


Customer discovery translates a founding team’s vision for the company into a hypothesis about each component of the business model and creates a set of experiments to test each hypothesis.

Customer discovery is not about collecting features lists from prospective customers or running lots of focus groups.

STEP 1: CUSTOMER DISCOVERY

42


• Total addressable: how big is the universe?• Served available market: how many can I reach with my sales channel? • Target market: who will be the most likely buyers?

Total addressable market

Served available market

Target market

ESTIMATE YOUR TOTAL ADDRESSABLE MARKET

43


Customer Discovery

Customer Creation

Customer Validation

CompanyBuilding

Pivot

LEAN LAUNCHPAD: GET OUT OF THE BUILDING:



WHAT IS IT

Product?

Service?

Ecosystem?

All?


WHAT IS YOUR INTENTION?

Your team values

Your vision

Why do you want to do this?

Then find a segment, a market, and a value proposition that fulfills this vision.


VALUE PROPOSITION

Value Proposition Canvas – Osterwalder


VALUE PROPOSITION CANVAS


PAIN DRIVEN DESIGN

“Design is not art. Design should solve a problem for humans. We can find the problems that we’re causing for humans by looking for pain points. Usability testing helps us understand the very obvious pain that we’re causing for users, which is fantastic. But beyond discovering user pain in our products, we should be doing user research on various demographics and understanding what in their lives is causing them pain.”

Laura Klein, UX for Lean Startups


As a customer, it has to hurt enough that you would go out of your way to pay for it.

It has to feel way better than staying the course, stasis, or inertia (which make people sometimes feel warm, and comfortable, and your thing scary, and risky).

WHY PAIN????


THE PAIN IN PAIN-DRIVEN DESIGN

How do you move beyond superficial needs?

How do you know when someone is telling the truth?

How do you get to unspoken, deeper needs?


PAIN DRIVEN DESIGNArtifacts

Behavior

Expressed Needs

VISIBLE: IN AWARENESSIN CONSCIOUSNESS

HIDDEN, INVISIBLE: OUT OF CONSCIOUSNESS

Norms

Beliefs Assumptions

Values

Plans

TraditionsAttitudes


PAIN DRIVEN DESIGN What just happened?EVENTS

WAYS OF EXPLAINING REALITY: SYSTEMS THINKING

PATTERNS What’s been happening?

TRENDS What are the common forces at play?

STRUCTURES How do processes and organization impact?

MENTAL MODELSHow does our thinking allow this to persist


GET OUT OF THE BUILDING, AND

OBSERVE

FUNDRAISING WORKSHOP AIGA 10 22 2014 @jenvandermeer GO HERE

FUNDRAISING WORKSHOP AIGA 10 22 2014 @jenvandermeer GO HERE

AND HERE

FUNDRAISING WORKSHOP AIGA 10 22 2014 @jenvandermeer GO HEREAND HERE

AND HERE


GETTING READY FOR CUSTOMER DISCOVERY


AND, GO OUT AND TALK TO PEOPLE:PREPARING FOR AN INTERVIEW

Customer development IS different than ethnography or design research inquiry –

You are NOT a neutral observer. While you can practice the art of neutral observation, you, as a founder, are making contact with your first potential customers.

We’re going to start wide, and expansive, and go deep, getting to deeply unmet needs.

But we will be quickly moving to understand the business model that will feed your vision.


THE BRAIN DUMP

Convene a brain dump.

Get what’s in everyone’s heads out on the table.

Assumptions, expectations, closely held beliefs, perspectives, hypotheses.

Contradictions are inevitable, and become great fodder for hypotheses to test on your business model canvas.

“Think about it as a transitional ritual of unburdening, like men emptying their pockets of keys, change, and wallet as soon as they return home.”

– Adapted from Steve Portigal, Interviewing Users.


INTRODUCE, BE HONEST, ORIENT, GIVE CONTEXT

Introduce yourself and any associates (note takers, equipment operators, unseen observers)

Obtain consent / agreement to be interviewed, recorded, photographed

Discuss: use a note taker or an audio recorder. Be sure to tell participants about it. (Don’t conceal a recording devices). And know when to go off the record to get the backstory.

1. Why we're here: Introduce the purpose of the conversation

2. Explain freedoms (let’s stop at this time, ask questions, take a break, etc)

3. Explain time constraints (we have only 30 mins, 45 mins, an hour, today)

4. Provide an overview of what will happen (I will walk beside you, I will watch you do XYZ)

5. Explain briefly what you'd like to hear about (Tell me what you're thinking, doing, looking for, etc)

-Ajay Revels, Polite Machines


SHOW ME AROUND: OPEN ENDED TOUR

Who (who are we observing)

What (what are they doing)

How (how are they doing it)

Why (are they doing it)

When (are they doing it)From: Ajay Revels


HOW TO AVOID LEADING QUESTIONS

Agree with me: Leading questions

• Interviewer wants a specific agreement

• Question narrows the focus of the conversation

• Typically Yes / No or Agree/ Disagree or Choice #1 vs Choice #2

• Examples/ leading question:

– The city is doing a great job of managing the subway aren't they?

– Given that you're a stay-at-home-mom, you agree that women shouldn't work?

– This app has a high rating so you'd expect it to work well, correct?

-Ajay Revels, Polite Machines


WHAT CAME BEFORE STEVE AND ERICBUSINESS MODEL CANVAS


KEY PARTNERS KEY ACTIVITIES VALUE PROPOSITIONS CUSTOMER RELATIONSHIPS

KEY RESOURCES

COST STRUCTURE REVENUE STREAMS

CHANNELS

CUSTOMER SEGMENTS

Who are our key partners?

Who are our key suppliers?

Which key resources are we acquiring from our partners?

Which key activities do our partners perform?

What value do we deliver to the customer?

Which one of our customers’ problems are we helping to solve?

What bundles of products and services are we offering to each segment?

Which customer needs are we satisfying?

What is the minimum viable product?

For whom are we creating value?

Who are our most important customers?

What are the customer archetypes?

What key activities do our value propositions require?



Revenue Streams?

What key resources do our value propositions require?



Revenue Streams?

How do we get, keep, and grow customers?

Which customer relationships have we established?

How are they integrated with the rest of our business model?

How costly are they?

Through which channels do our customer segments want to be reached?

How do other companies reach them now?

Which ones work best?

Which ones are most cost-effective

How are we integrating them with customer routines?

What are the most important costs inherent to our business model?

Which key resources are most expensive?

Which key activities are most expensive?

For what value are our customers really willing to pay?

For what do they currently play?

What is the revenue model?

What are the pricing tactics?

SOURCE: www.businessmodelgeneration.com//canvas | Canvas concepts developed by Alexander Osterwalder and Yves Pigneur.


http://www.businessmodelgeneration.com//canvas


WHAT CAME BEFORE STEVE AND ERICTHE PITCH


YOUR INTRO AT A DINNER PARTY

What/who.

Why now?

Why you?


YOU GET A FULL 5 MINUTES

Vision?

Who are you?

Market Opportunity?

Pain you are solving for?

How you’ll get there?

The Ask.


YOU GET A FULL 10-20 MINUTES

Who are you?

What’s your quick description/pitch?

What pain are you solving for?

Who else is attempting to solve for this pain? (Market Opportunity?)

How will you kill the pain?

What special sauce do you have?

What’s your model?

How will you get, keep and grow customers?

What metrics will drive your business?

Who is the larger team?

How will you spend the money you are asking for?

What core hypotheses will you test?


WHAT CAME BEFORE STEVE AND ERIC

THANK YOU

Jen van der [email protected]