1. Chasing Venture Capital Will Kill 99.78%* Of Games Companies
And App Startups www.thechocolatelabapps.com
2. Delusions Lets build a cool random social app, raise
millions of dollars, get tons of users, and sell within 3 years for
a bunch of money! When starting a games company or a new app
business, chasing investor capital can be life threatening for your
startup. Delusions of business grandeur can include signing up to
incubators, looking for Angel investment and spending months
(incorrectly) chasing venture capital. At a minimum will waste your
time and potential VC companies time, and miss out on opportunities
to grow your games business. At worst this strategy is likely to
kill your app business dead.
3. Delusions Remember for every Facebook, Instagram &
Pinterest they are millions of dead zombie startups, dying and
dead, strewn by a roadside littered with corpses of failed hopes
and dreams. And despite the hype in startup circles and the press
Venture Capital is the exception not the norm for companies looking
to raise funds. And there are good reasons why this is.
4. Here Are What VCs Are Looking For In High Potential
Companies
5. What VCs Are Looking For In High Potential Companies Great
street cred are you from Harvard, MIT or have you worked at Google
or Facebook? Do you look great on paper? Co-founders with
incredible backgrounds, skills and insights to make this company
happen yesterday. Have you put together a killer team including
developers so good at least 10 companies in the Valley want to hire
them right now? Do you inspire, and blow peoples minds when you
talk to them about your product?
6. What VCs Are Looking For In High Potential Companies Have
you got potential 1 billion dollar international market you want to
slay, in a hot & growing niche? VCs are NOT interested in a $10
million dollar exit. VCs want to invest in businesses that have
some unique advantage, whether its patented IP, trade secrets or
team members with unique abilities and knowledge that no one else
can easily replicate. They always ask what are the barriers to
entry. Have you got experienced mobile focused team members with
successful exits and companies under their belt already? Has your
business got traction? Has it started to take off already?
7. What VCs Are Looking For In High Potential Companies Are you
hungry and ambitious enough to slave away for a few years, with no
sleep and no family time, and sell your soul to create the next
killer company and world level IPO? Have you already got great
connections with Angel investors and VCs in the major tech hubs,
including San Francisco & London? - Do you plan to hire top AAA
players and scale aggressively? Are you the ultimate co-founder a
die hard, never give up, Ill do it if it kills me passionate gutsy
entreprenuer with grit who entertains no option but to make things
happen? Investors believe in betting on the horse, and not always
on the race.
8. Facing Reality Incubators usually take a % of your games
company and will also focus your attention towards the VC route.
But less than 1 percent of U.S. companies have raised capital from
VCs, and the VC industry is contracting. Here are 65 questions VCs
might ask you.
9. Have you got a sore head yet?
10. Figuring Things Out There are app business and there are
app businesses with SERIOUS BILLION DOLLAR POTENTIAL. Right from
the beginning one of the most important things you need to do for
your games startup is to figure out what category you fall into.
One of the worst mistakes you can make for your time, your
business, your money and your health, is to chase the VA dream or
incubator lifestyle with a startup that has no chance of
success.
11. Lifestyle Business VS High Potential Startup
12. Lifestyle Business VS High Potential Startup A lifestyle
business is generally a business with a turnover of approx.
$100,000 to $500,000 per annum. Depending on your costs, your take
home pay can be far higher that the average salary in most
countries. A lifestyle business is the startup equivalent of the
instant gratification. You sell something people want (apps or
games in this case), profitably (with mobile ads or IAPs) and you
try to start earn money as soon as you can. Its lean startup 101.
Get the first few paying customers on the app store, learn what
they want and make your product better. Hustle, and focus on
satisfying the people who are going to make your company profitable
your customers. Youre the boss. You have complete freedom to do as
you wish sink or swim.
13. Lifestyle Business VS High Potential Startup Many of my
friends are lifestyle app business owners, growing six figure
businesses, and are on track or have already hit seven figure
turnovers. All are bootstrapped, and all worked really hard to
understand their customers and the market demand, without a term
sheet in sight. You can bootstrap your games business and grow
organically slowly or quite quickly, thats up to you. But self
funded businesses dont have to stay small Laura Roeders Social
Media Marketing business turns over millions each year teaching
people how to use Facebook and Twitter.
14. Lifestyle Business VS High Potential Startup Github is used
by nearly a million people to store over two million code
repositories. Founded in 2008, Chris Wanstrath, PJ Hyett, and Tom
Preston-Werner started Github as a bootstrapped weekend project.
Instead of chasing VCs, they focused on growing their business. Tom
worked both at GitHub and at a full time job, while Chris and PJ
consulted on the side. Their salaries grew as profits increased. In
January 2009 they won a Crunchie for best bootstrapped startup.
Sara Blakely, inventor of Spanx, invested her life-savings of
$5,000 to create body shaping undergarments and bodysuit shapewear
intended to give the wearer a slim and shapely appearance. She came
up with the name, designed the logo on a friends computer and
taught herself how to file a trademark to save on lawyers fees. The
Spanx company and brand are now valued at more than $1 billion and
Sarah owns 100%.
15. Lifestyle Business VS High Potential Startup WooThemes
sells premium wordpress themes. In 2008 Adii Pienaar, Mark
Forrester, and Magnus Jepson founded WooThemes. With sales starting
nearly immediately, money from their customers meant they could
leave their jobs and focus on WooThemes fulltime. Weve been making
money from the very first minute we released our first themes,
which means that we didnt need to pay back loans or really invest
in any infrastructure when we started out, said Pienaar. WooThemes
has over 40,000 users and more than 1.8 million downloads,
generating over $2 million in revenue. Co-founder Pienaar gives
this advice for hopeful startups; stick it out and bootstrap for as
long as you can, seeking outside funding should be kept as a last
resort.
16. Why Youd Rather Not Have VC Funding
17. Why Youd Rather Not Have VC Funding 1. Having no money is a
bonus. It means you have less money to lose. It also will force you
to innovate, keep your costs really low, hustle, and get your hands
dirty and educate yourself on how to do some of the tasks required
in your business. 2. You have 4.5* times more time. You can spend
18 hours every day if you want working on figuring out how your
startup can earn more money. If you are chasing VC money, youll
probably be spending 18 hours trying to put together pitches,
proposals, networking, doing business plans, etc. None of these
things will earn you a penny from your potential customers. Time is
money.
18. Why Youd Rather Not Have VC Funding 3. You will have a
profitable business much sooner. Having money in the bank and
knowing your bills will be pay on time gives you peace of mind that
nothing can buy. VC backed startups are different and are usually
focused on one large payout at the end when the business is sold,
which may be years later. VCs want you to grow your company
aggressively, and then exit for big bucks when the time is right.
Monitisting what customers you have today is not the top priority.
4. You do stuff instead of talking about stuff. Business plans are
mostly bullsh*t. Last time I checked no one could predict the
future.
19. Why Youd Rather Not Have VC Funding 5. Dont give away your
equity. 100% of a lifestyle business is much better than 20% of a
soon to be doomed, VC backed, team mutunity, co-founder battling,
sleep deprived, sold my soul company you hate and cant escape from
due to the amount of debt you owe. 6. The VC industry is also under
going huge change at this time. With the advent of public
fundraising the whole industry is going to get a lot of favorable
for the startups in the next few months. Think what happened when
amazon launched the Kindle and book authors were able to publish
ebooks without having a literary agent.
20. Growing Without VCs & Incubators
21. Growing Without VCs & Incubators 1. Learn from people
who are already successful. This is the fastest way to get a truly
valuable education. 2. Make use of the existing free tools and app
related companies who exist to support your business. 3. Start
small and release a handful of small reskins to start to learn the
whole process. 4. Work on putting together a great team. Hire
slowly with the Haystack Method. if they dont perform well, fire
them so fast it makes you dizzy.
22. Growing Without VCs & Incubators 5. Study your market.
Live and breath the app store, find patterns in popular apps and
figure out why certain apps are successful. 6. Realize what's
really important in the app business cash flow, app theme choice,
ASO, a killer team, often outsourced, market research, monetization
methods, killer icons and screenshots and app store keyword
research. 7. Make money from your customers as soon as possible.
Aim to ship your first app in a week (like I did) and to start
earning money in 2 weeks, (allowing for the app review cycle). 8.
Never give up.