It was a triple treat last week with three Masterclasses in a row
Last Monday was the first ever University of Melbourne Compass Masterclass on Innovative Solutions to Poverty. Elliot Costello, the co-founder and CEO of YGAP gave some inspiring stories about his startup journey in the social entrepreneurial space. One of the things that really struck me was his comment on social enterprise and charity in Australia. Not only are people making money with their startups, but they are using the money towards social good. He comment on how our generation is “breaking the boundaries between profit and worth”.
This has become apparent working in the startup culture. As a generalisation, Australian startups usually look at solving problems and working towards the common good. Social entrepreneurship therefore has become a huge part of the Australian startup world. It’s about using business to make social changes and social differences. Elliot for example started Kinfolk (CBD) and Feast of Merit (Richmond), an alternative way to raise money for YGAP. This makes YGAP’s business model sustainable, and as Elliot pointed out none of the money raised has gone into fundraising or admin costs. Rather it is all invested into alleviating poverty.
One of the things Elliot really drove home is his passion. If you are passionate about your idea, take a risk, back yourself and believe in yourself! He recounted a compelling story how one of his investors didn’t believe his second restaurant, Feast of Merit, would work because “hospitality is hard” and although he succeeded once, his investor didn’t believe he could pull it off again. Elliot backed himself and built a prosperous enterprise with 100% of the profits going towards YGAP.
Elliot also posed this question – what is your purpose? What makes you really want to get out of bed every morning and go? Elliot realised his purpose is not the same as the organisational purpose. You need to find something you love, something that really makes you happy. If you find it, you are miles ahead of the pack and well on your way to a joyous working life.
The second and another first-timer was Wade Institute‘s Masterclass on Funding Your Startup. It was a top-class panel with Tom McLeod, the CTO and co-founder of Myagi and Stuart Richardson, Founder of Adventure Capital. So you have the idea for your business, now how do you get the money to build a company? These guys said it was all about being resourceful and building good relationships. They place a huge emphasis on this relationship building, pointing out it’s a key entrepreneurial trait. I can definitely testify to this! It’s not about what you know, but who you know. If you know the right people then the right things can happen. To know someone who can recommend you to a investor is much better than trying to find the investors yourself.
Some tips I’ve come to discover about building good relationships are being open, honest and transparent. More often than not I find people are trying to build a relationship to get something out of it. This is not going to work! The person you are networking with will pick this up and almost immediately palm you off. Building relationships for the sake of building relationships is one of the best ways to go about this. Talk to people, ask them about what they are interested in, what they are doing. If you want something from the relationship listening is key here. Don’t spend the whole time talking about what you are doing as the other person will get bored quickly. Allow them to speak first then ask questions. The more questions they ask, the more they are interested. Our panel commented on how Silicon Valley is successful mainly due to it’s mentality – people give without expecting anything in return. Try this and see how it goes. Things usually come full circle and land back in your lap without you realising it.
But when the time does come to ask for money, make sure you have a good reason! Raising adventure capital is hard work, so you need to be in it for the right reasons. As mentioned above in The Compass Masterclass, startups are generally there for the social good and willing to work the hard yards. They are passionate and really want to make a difference, so this bit is the easy part!
Third and final for the week of Masterclasses was MAP, with Anthony Glenning and The Art of Pitching. As the director of Starfish Ventures, Anthony sees hundreds of startup pitches a week and had a lot to say on the matter. I’ve covered a lot of pitching in my previous posts, so I’ll keep this one brief and focus on just two key points from Anthony’s talk.
Firstly, the initial investor pitch. Anthony said the number one objective of this initial pitch is to be interesting enough to get another meeting. Investors will rarely invest in an idea after one meeting. This is probably why MAP’s selection process is long with a diverse range of interview styles (written application, video, pitch, interview). The first pitch should be mainly marketing. You don’t need to convey everything about your startup. Investors will really only care about the problem and the solution. You don’t need to talk about what you’ll do with the money in the initial conversation. You just need to get across how you are solving a problem and why your team is the best for the job. Your idea probably has been thought of before but startups aren’t about the idea, they are about the execution. Anthony said it’s a good idea to talk about the uniqueness of your team members, what makes them special and what makes them tick. Make sure the team presents in a cohesive manner and never correct each other during the pitch.
The second key point I’d like to focus on is competition. Anthony laughs every time a team says “we have no competition”. Everyone has competition! Whether there is someone else out there doing what you are doing or not, you all have the same number one competitor – the status quo; why should people stop what they are currently doing and switch to you? Why would businesses chose to use your idea over doing something they already know? This was focused on during the ANZ Bank Ops Hackathon, where it was all about doing things differently, but importantly, more efficiently and effectively. Anthony says here it is vital to explain why you are ten times better than the current process and not just three times better. Investors and business people need to see a significant change before even thinking about investing in a new product or idea.
So before you think about pitching your idea to an investor, think about why are you different, unique, better and in a position to really make change happen!
Thanks for reading and there will be more awesome stuff to come soon.