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When we launched Markify a year ago we had been building our trademark similarity algorithm for more than two years. Why did it take so long? The simple answer is that our ambition was to build the world's best trademark search engine.
The more complex answer is that I was convinced that to launch with an inferior product would not give us a real test of Markify. It would not test if we had a "minimum viable product", to speak Eric Ries language.
But it was not an easy decision. We had a lot of discussion in the team on when to launch, and the term "good enough" was always challenging "the world's best trademark search engine".
So the feeling when we finally launched in December 2010 was one of great relief and anticipation. Since then everything has gone much faster, our learning curve has accelerated and we are having so much more fun!
Some of Markify's highlights 2011:
- Reaching more than 100.000 users every month, and rising, that are doing comprehensive trademark and domain name searches.
- Reaching 99% accuracy with our trademark search algorithm.
- Becoming number 1 in the US benchmark of trademark search services.
- Getting that amazing response from so many trademark attorneys at the INTA meeting in San Francisco in May.
- Lauch of the world's first free comprehensive trademark watch, together with the Pro watch for trademark attorneys.
What has been most challenging 2011?
I think Steve Blank put it best: "A startup is an organization formed to search for a repeatable and scalable business model."
We have been fortunate to have very good investors in the Nordic VC firm CNCP. But VC money is NOT a business model, even if you are sometimes lead to believe that.
To balance business development and product development. That has been and will be our greatest challenge going forward.
When Markify now moves into 2012, I can promise you some soon-to-come exciting new releases. And I believe these will have the right mix of a great product and a good business opportunity - for both you and us.
Some call a “No” the next best thing to a “Yes” when you are fundraising. Part cliché, part true, in my opinion. Because a “No” is only valuable if you understand it. Otherwise it can be a huge time waster. And getting a clear and fast “No” from angels and VC’s is not always that easy.
Before we got a firm “Yes” we got our share of “No’s”. Here is my personal guide to the land of “No” when you are raising seed capital.
I have found basically five kinds of “No’s” - and I have come to truly respect two of them
and found ways to deal with the others:
1. The “No” in advance. This kind of “No” you get on angels’ and VC’s websites, in interviews and other sources like Quora and Formspring. Here are some examples:
- “We never invest outside the US”
- “We only invest in B2C”
- “We have never invested in a company which hasn’t been referred to us by someone we trust.”
This is their strategy, and that must be their call. These people saved me a lot of time by stating their preferences. I respect that and will not bother them with my pitch if it doesn’t fit their criteria.
2. The silent “No”. At their website they encourage you to send your business plan. Then you never hear from them. There is a fundamental communication problem here:
- The angel/VC thinks that he is sending the signal: “We are flooded by deals and actually don’t have time to answer all, even if we would like to”.
- But the entrepreneur might think that the signal is: “Your idea/team/plan is so bad that it is not even worth an answer”.
Waste of time for the entrepreneur and bad marketing for the angel/VC.
3. The clear and fast “No”. The angel/VC has looked at your start-up, maybe met you and quickly gives their reason for saying no. This will save you a lot of time and sometimes you get valuable input from their answer. Both parties build respect and network.
4. The slow “No”. It can sound like this: “This looks very interesting but we would like to see this, this, this and that.” When you are raising seed capital you just don’t have the time or resources to do too much else than focus on your core development. Unfortunately not all investors understand and respect this. To understand when you are wasting your time is key in this process.
5. The “Yes” that is really a “No”. It can sound like: “Yes, we are very interested, but not right now because we are so busy.Can you come back in two months?” Keep you hopes down when you start hearing the phrase “not right now”.
So here is an appell to all angels and VC’s, who I know really care for entrepreneurs and start-ups:
A. State selection criteria - On your website or wherever a search engine can find it, state your true first selection criteria, typically: Location, Sectors, Referrals, Stages, or whatever selection model you are using. This will save you and the entrepreneur lots of time.
B. Deliver your “No” answers clear and fast - It will give you respect in the entrepreneur community and bring you valuable business in the long run.
Most advice when it comes to raising seed capital focuses on the pitch, the slides and the business plan. What to say and how to say it.
But fundraising is not only a pitch - it’s also a process.
"Secret" 1: Raising seed capital is a sales process.
Accept that raising capital is a sales process. You are selling yourself, the team, your idea, your vision, business concept and prototype. You are selling your stock in return for cash, network and advice. You are selling an option to future value. In short: You are selling.
If you approach it as a sales process - what are the consequences?
Sales is to an extent a numbers game. You should use the classic sales funnel when you are about to start raising seed capital: The more good "prospects" (potential investors) you put into the funnel, the more "sales" (investments) you get out in the other end.
- The cold prospect list. This is the key to success. Without it your reach will be too limited and you won’t get to dance with the investor of your dream.
- At the top you put your dream investors. Then you add another 20 angel or VC’s. Don’t write only their company names. You will have to identify the individual person and his or her email address.
- Craft and send the pitch email to the first ten. In Europe most of the potential angels and VC’s will read your email even if you are not referred.
- Don’t bother calling them before they have read your email.
- Existing contacts. Your existing contacts are your best shots, but they are probably very limited in the angel and VC community. So make the most out of these contacts:
- Walk through your list of contacts and ask yourself: “Who does he/she know in the angel/VC community?” (LinkedIn if possible)
- Take meetings with your contacts even when you think the chance is small that they can help you.
- Generate new contacts. Network as much as you can and as early as possible to gain more contacts.
- Attend start-up contests, conferences, international and local events for entrepreneurs.
- Ask every one you meet and talk to: “Who do you think I should talk to? Can you refer me?”
- With this sales approach you add a quantity focus, which I believe is important at least in Europe where the VC and angel market is less mature than in the US.
If this is your first professional "sales tour", there are another two positive consequences of regarding fundraising as a sales process:
- You demystify the topic. A lot of entrepreneurs get scared by the fundraising; they don’t think they understand it and they see it as a major obstacle. But selling is easier to relate to and feel confident about.
- You are about to get a crash course in high level sales. Fundraising takes a lot of time, so instead of “wasting” the time, look at it as some serious sales training.
Can a first time entrepreneur really give any advice regarding fundraising? Well, that’s just it: I believe raising money the first time is a very different experience than doing it a second time. The second time you have your own experience, you have a track record and you have more contacts. The first time you usually don’t have much. Since we just succeeded with our first round of financing, I thought I’d share some of my experiences.
There is so much good advice out there so instead of repeating what others have said much better, I will just point you to some very good sources:
Chris Dixon http://cdixon.org/contents/,
Fred Wilson http://www.avc.com/a_vc/archives.html
Steve Blank http://steveblank.com/.
Great link collection: http://tappen.posterous.com/nice-summary-stanleytang-256-must-read-conten#comment
And of course a lot of great answers on Quora.com
Benoit Fallenius Founder and CEO
In this blog I will mostly write about two subjects:
1. Trademarks, domain names, naming and branding - Four separate areas that often are not that separate.
2. Markify news - Features, markets, pricing, challenges etc.
Feedback and questions are always welcome. Email me at email@example.com.