Lacking the cash to launch a start-up, she finished school and took a job in the film and TV world as assistant to mega-producer Mark Gordon. By 2010, Senderoff was developing feature films and web series for The Mark Gordon Co.
But her idea for a website that would connect interns and employers still beckoned. In late 2010, she dusted off her old business plan and pitched her boss the idea.
Gordon gave her the green light to develop the site internally, on his company’s time, dime and payroll.
The initial plan was for Senderoff to split her Intern Sushi and film-production duties 50-50. But by September 2011, she says, her site had become “a machine of its own.” Senderoff left The Mark Gordon Co. to run Intern Sushi full time, and Gordon, who’s billed as a co-founder (along with Senderoff and ad man Richard Gelb), became one of the start-up’s earliest investors, sinking six figures into the venture.
Today 20 000 interns and 2 600 companies use Intern Sushi, which officially launched this fall and features 5 000 open positions in 11 industries. The company, which initially drew $800 000 in funding, is currently completing its second investment round.
For Senderoff, having the support of a boss who believed in her was windfall enough. “I was fortunate to be a salaried employee before I took the big risk of being a start-up,” she says. “It’s an incredible gift to be able to focus on getting your business off of the ground without having to worry about how you’ll pay your rent.”
You don’t have to work for a Hollywood mogul to sell your start-up idea to your employer. More companies, in a variety of sectors, are recognising that the key to competing in today’s warp-speed marketplace is encouraging entrepreneurial thinking from within – otherwise known as “intrapreneurship.”
“We are in a time that’s calling for a lot of innovation,” says Gifford Pinchot, a Fortune 100 consultant who has written several books on intrapreneurship. “Companies that are supportive of entrepreneurship are in more of a position to thrive.”
That’s why innovators like Google and 3M famously implemented policies to let employees spend a percentage of each week on their passion projects. It’s also why consulting firms such as Ernst & Young and PwC have begun holding in-house entrepreneur contests.
But it’s not just a matter of quashing the competition. It’s also about keeping employees happy. “Companies are kind of forced into it,” says Dan Schawbel, founder of Gen Y consulting and research firm Millennial Branding, because “retention rates are terrible.”
A recent study commissioned by Schawbel’s firm found that nearly one-third of employers look for entrepreneurial experience when recruiting entry-level candidates. “A decade ago that wouldn’t have happened,” he says.
Making Your Pitch
To use your employer’s hunger for innovation to support your own projects, start with ideas that feed the company business model.
“Those are the types of projects that are the easiest for anyone to talk about within the company and get funded,” says Ikhlaq Sidhu, founder of the University of California, Berkeley’s Fung Institute for Engineering Leadership, a fast-track entrepreneurial program for engineers.
That’s what Dr. Lisa Tseng did. In March 2011, while working as chief of staff for UnitedHealthcare’s public programs, she pitched the insurance company’s upper management on a way to make hearing aids – which often cost $6 000 to $8 000 per pair –more affordable. Because her idea fit with her employer’s mission of improving healthcare, it was a slam-dunk.
“We were told to move forward right after the presentation,” says Tseng, who immediately became CEO of hi HealthInnovations, the start-up she proposed. Today hi HealthInnovations sells high-tech hearing aids for a retail price of $749 per ear.
Researching the heck out of your idea is another must. “Know your market really, really broadly and your consumers really, really narrowly,” says Michael Kestenbaum, CEO of Crowded Room, a location-based mobile app that his employer, internet company IAC, funded and let him develop in 2010.
“If you’re creating a baseball app, know what the baseball fan looks like. Know how many times a year they go to the game. Know how they get to the game. What they eat when they’re at the game. But at the same time, know the sports and live events market.”
Even if it’s a long shot, your pitch needs to offer information with value. “If you’re going to sit in a meeting with the CEO of your company, make sure they get something out of it,” adds Kestenbaum, who was in mergers and acquisitions at IAC before running Crowded Room. They may shoot down your first idea, he says, but that’s how you get invited to pitch again.
Knowing what you’ll say in your pitch is only half the battle, because how you say it is just as important. “The last thing you want to do is start with a super-detailed slide presentation to a CEO who doesn’t like being presented to via PowerPoint,” Kestenbaum says.
Senderoff agrees. When she proposed Intern Sushi to her time-strapped boss, she knew the key would be getting to the point in the first 60 seconds – much like a Hollywood script pitch. Because Gordon is “a very visual guy,” Senderoff relied heavily on charts and graphics to illustrate her business concept, market and revenue model, rather than plonking a 30- to 50-page business plan on his desk.
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Juggling Two Jobs
It can be a balancing act to double as an entrepreneur and an employee. You want to pour your heart and soul into your baby and show management they were right to invest in you; at the same time, you have to do your day job justice.
Jamie Pritscher knows this juggle all too well. In 2009 she convinced her employer, Chicago-area business caterer Tasty Catering, to expand its modest corporate gifts division into a full-blown e-commerce company, with her at the helm.
The result was That’s Caring, which sells environmentally friendly gift baskets. Pritscher received $50 000 in seed money from her bosses, along with their blessing to work on That’s Caring during business hours if needed, as long as she could keep up with her duties as Tasty Catering’s full-time logistics director.
During the holiday season, when That’s Caring does 75% of its business, Pritscher regularly pulled 80-hour workweeks. “Your first year in business, you’re not really sure what to expect,” she says. “People wait last-minute to order. And I wasn’t used to that. The second year was much easier.”
On the plus side, birthing a start-up as an employee means that good mentors are in the cubicle next door. Having the ear of Tasty Catering’s sales team and executives was a boon for Pritscher, who’d never run her own operation before.
“Being able to walk up to the desk of someone who has been in business for 40 years and talk out business problems and walk away with a solution in 20 minutes instead of trying to figure it out on your own – it’s priceless,” says Pritscher, who left her gig as logistics director in 2010, when That’s Caring began making enough money to pay her salary.
Free access to on-site support services is another bonus of intrapreneurship, says Michael Paladino, director of technology activation at Rockfish, a digital agency based in Rogers, Arkansas.
“We don’t have to worry about some of the infrastructure that start-ups do,” explains Paladino, who as a newly hired web developer in 2009 spearheaded Rockfish’s development of TidyTweet, a Twitter application that filters out spam. “We have billing in place. We have hosting in place. I have access to our legal team. I have access to our creative team.”
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Shared risks, shared rewards
For the risk-averse or cash-strapped, having an employer incubate your start-up can be a happy medium. No, you won’t fully own your creation, but you won’t have to fork up the seed money, either.
Pete Balistreri was all too happy to make this trade-off. An executive chef at the San Diego location of Tender Greens, a California restaurant chain specialising in sustainable food, Balistreri taught himself to make cured meats on the job. Soon the menu began featuring his salami, and his bosses invested in a $5 000 professional curing chamber.
This August, with the help of Tender Greens’ owners, Balistreri launched his own line of packaged meats, P. Balistreri Salumi, which the restaurant will sell in its seven locations. Plans include distribution to other eateries and artisan food retailers. The company is a partnership between Balistreri and Tender Greens’ three owners, who footed all the start-up costs.
“It’s a big deal for me to have made a 35-pound batch of salami and then to see a 500-pound batch of it made,” Balistreri says. “I would never have been able to make this product and sell it on my own.”
But your intrapreneurial efforts don’t need to result in an eponymous product label, swanky new title or co-ownership to give your career a boost. Just pitching and attempting to start a new venture will earn you a reputation as a trailblazer, says innovation consultant Pinchot. “And in companies where that’s important, innovators move ahead of their peers,” he says.
What if, despite your best efforts, your baby falls flat on its face? If nothing else, it’s a learning experience, for you and your employer, says Crowded Room’s Kestenbaum. “The knowledge that you’re going to gain is tremendous,” he says.
“Getting to know a market, getting to know consumers, getting to know technologies – that stuff is valuable regardless of whether your start-up succeeds.”
Intern Sushi’s Senderoff concurs: “The experience that I’ve gained from taking a company that was just me to 25 employees – I would pay to have that experience.”
Sowing the seeds of autonomy
Want the keys to the entrepreneurial kingdom at work? Start laying the groundwork now.
Earn your boss’s trust. Before you polish your pitch, make sure your rapport with your manager is up to snuff. If your boss doesn’t have faith in your work, judgment or time-management skills, he or she is not going to let you launch a new product, service or company division.
Broaden your skill set. Don’t know diddly about marketing? Never met a spreadsheet you could decipher? As an employee, you have an entire company of people, projects and training resources at your fingertips. Use them to shine light on as many blind spots as you can.
Stay aboveboard. Going rogue is a bad idea, says Ikhlaq Sidhu, who teaches entrepreneurship to engineers at UC Berkeley. “You don’t want to do anything that your boss might be completely surprised about,” he says. Instead, win your manager’s support for your idea early on. You’ll get further with him or her on your side.
Build stakeholder support over time. Take the time to amass a network of influencers who are as invested in your idea as you are, Sidhu says. The more customers, partners, co-workers and managers you have on board, the more likely you’ll be to get your idea funded.
Want Funding? Finfindeasy.co.za Founder Says You Must Learn To Speak The Language
Darlene Menzies, founder of Finfindeasy.co.za and the successful recipient of multiple rounds of funding unpacks what she wished she knew the first time she pitched her business to investors.
I clearly remember my first large pitching opportunity over six years ago. It was an evening cocktail event organised by one of the legendary pioneers of South Africa’s venture capital (VC) community, Brett Commaille. It took place on or near the top floor of the Reserve Bank building in Cape Town. One of the reasons it’s so vividly etched in my memory is that I had to climb more than 30 flights of stairs to get to it because as a chronic claustrophobe I don’t do lifts.
After reaching the right floor and catching my breath I stepped into a room full of 30 or so high net worth individuals — my introduction into the new world of Angel and Venture Capital investors.
Looking back, I wasn’t as nervous as you might expect, partially, I thought, because I had prepared well and I whole-heartedly believed in the product I was pitching. But in hindsight, I realise it was mostly because I was wonderfully naïve. There are some benefits to being a greenhorn.
The pitch itself went well, I had been briefed to keep it simple and short. I described the solution we had developed, the problem it was addressing and what the size of the potential market was. I spoke briefly about the competitors and what our differentiators were, what the business model was and shared our go-to-market plan.
I covered the size and pedigree of our team, as well as my skills and experience as the founder (aka the jockey) and ended with details on how much money we were looking for and what we would use it for. I was relieved when it was over and felt confident about my delivery.
A bunch of hands shot up, which was positive. I felt encouraged; the hard part was behind me. Or so I thought. My nightmare began when I took the first question. “Great pitch, I love what you guys are doing. Please can you tell me a bit more about the traction you are getting, what your current burn rate is and how much runway you have.” My heart sank and I felt my cheeks start getting hot.
I didn’t have the foggiest idea what he was talking about. I could tell he wasn’t intentionally trying to embarrass me, but nonetheless his VC jargon made his questions sound like enquiries about cars and airplanes or something mechanical rather than anything I was working on. I put on a brave face and asked him if he would mind explaining to me what it was he wanted to know so that I could try and answer him. That was the start of a steep learning curve as I began to navigate the world of early stage capital raising.
Six years on, the South African start-up and venture capital community has matured and grown dramatically and there are many more entrepreneur events, training opportunities, start-up competitions and pitching coaching sessions, which has resulted in some of the lingo becoming more commonplace — even so, raising venture capital still largely remains a very foreign and intimidating world for novice entrants. Back then I wished I’d had access to a practical VC-made-easy glossary and step-by-step manual as a beginner’s guide. I’ve been threatening to write one ever since.
Terms you should know when looking for funding
After surviving my harrowing Q&A baptism of fire, I starting working my way through the world of term sheets and deal negotiating and came across many more acronyms and VC-specific terminology that I had to learn to interpret and understand. Below are just a few of the terms I would love to have known about and understood before my climb up those Reserve Bank building steps. There are many others.
Deck (or pitch deck) refers to the short presentation you will give to the investors. Guy Kawasaki, a well-known American investor, recommends his 10/20/30 rule as an easy guide for your deck. He says make sure your presentation consists of ten slides, take no more than twenty minutes to get through them and use a font that is no smaller than 30 points per slide.
See guykawasaki.com/the_102030_rule/ MVP (minimal viable product). This is a product developed with the minimum features to ensure it is sufficient to satisfy early adopters. The final, complete set of features is only designed and developed after considering feedback from these initial users.
Traction refers to the number of people who have already started using your product or service and provides a means of proof to the investor that people want/need what you are selling. Traction is best measured by the number of paying customers acquired over a defined period.
If you are running a business that sells products/services via subscription, then potential investors will want to know your churn rate. This refers to the number of customers who bought your product and never continued using it i.e. those you lost after acquiring them. This figure impacts your growth forecasts.
Tip: Make sure that you have built the churn rate into your forecasts so that your numbers are solid.
Burn rate refers to the amount of money the business requires monthly to cover operating expenses. You can definitely expect to be asked what your current and anticipated burn rate looks like should you receive growth funding.
Runway refers to the number of months that the business has sufficient cash to continue to operate before it runs out i.e. if you have R200 000 in the bank and your burn rate is R95 000 and you are not expecting any immediate income from sales then you have two months runway.
What investors want to know is how long the business can keep going until it has to close. Once again expect to be asked your current runway and your future runway in terms of the amount of money it will take to achieve the desired numbers.
This is a common term used to describe the kind of growth curve in a start-up that an investor is keen to see. It refers to the exponential growth of things like users or page views, but mostly to revenue, which is projected to occur once a particular inflection point is reached. Early stage investors like to invest before this point is reached and then to sell their shares once the hockey stick growth is achieved.
Related: How To Raise Working Capital Finance
Venture capitalists only plan to invest in your business for a limited time period, usually between five and seven years, before expecting to receive their returns. An exit strategy is a planned approach to them leaving in a way that will maximise their benefit and minimise damage. A typical exit strategy is a plan to sell the company once it has achieved its anticipated growth targets. In this case they may want to know who you foresee would be prepared to buy your company.
The term sheet is the document presented to the start-up by the venture capital investor once they have decided they would like to invest. It outlines the terms by which they are prepared to make the financial investment in your company. You are entitled to negotiate the terms with the investor before reaching agreement. The signed term sheet is not legally binding, unless stated, but rather it contains the final terms of the investment that will be used to draw up the legal documents for the deal. Always seek legal advice before signing a term sheet.
Do your research
My encouragement to entrepreneurs who are looking to raise venture capital is to have a coffee or two with a few seasoned founders who have already done deals in order to get firsthand insights about what to expect when you engage with VCs — from the time you land the pitching opportunity to when you sign a deal and get the money and everything in between.
The Investor Sourcing Guide
How to attract and obtain investors to your established, high-growth business.
As an established, high-growth company, you may find that you need to source capital, identify a mentor, or work closely with other affiliates to prosper. In this case, partnering with an investment holding company can be a valuable growth tool.
So, what should you do if you want to be acquired by a holding company?
1. Research everything
If you’re considering a long-term investment partnership, make sure you conduct substantial prior research. There may be many potential investment partners out there, but each has specific venture and industry directives. Get to grips with these.
Related: Is Venture Capital Right For You?
2. Be candid with yourself
The amount of capital that you need will affect which holding company you choose. In particular, you’ll need to understand what your risk profile looks like relative to the returns you expect to provide. This will also help you to source, entice, and keep the attention of the most appropriate partner.
3. Identify your must-haves
Any investment partner you choose is likely to be able to provide you with funding, a broader network, and economies of scale. Beyond these, however, you’ll need to decide on your most important benefits (must-haves), so you can target the companies that can offer you the best fit.
4. Spell out your funding plan
You’ll need to be very clear on how you plan to spend the funding you get from your investor. This plan should stipulate, in particular, how you plan to grow.
5. Scrutinise each investor
Make sure to analyse your potential investors’ investment history, so you can get a clear idea of where your interests are aligned. Look specifically at things like:
- Where investors’ get their funding
- What their investment track record looks like
- What their investment directives are
- Their appetite for risk
- The returns they usually aim for
The crux of the matter
Research is essential, no matter which holding company you hope to be acquired by. This will help you to find, attract and retain an investor who gives you the funding you need, and lends you the support to be innovative, productive, and profitable.
6 Great Tips For A Successful Shark Tank Pitch
Whilst most of us are unlikely to appear on television shows such as Dragons Den or Shark Tank there is a lot we can take out from watching these programmes.
Whilst most of us are unlikely to appear on television shows such as Dragons Den or Shark Tank there is a lot we can take out from watching these programmes. Entrepreneurs will often need to promote their businesses to prospective customers, lenders, investors, employees and even suppliers.
All stakeholders would like to know with what and whom they are dealing. They will need to assess risk and will try and evaluate the business against others who are competing for those same funds.
1Know Your Product
You should be able to describe your business within 60 seconds, in a confident and positive manner. Let the stakeholder know what particular problem your business solves which makes it viable and attractive.
Your brand and how you intend to develop it is important in determining whether they will invest or lend you money. Share critical information with them such as large customers, patents and trademarks and details of forward orders.
If you are looking for funding or investment, make sure you have the relevant paperwork to back up what you are saying.
You must have your numbers at your fingertips. A true and successful entrepreneur will know his numbers instinctively and be able to recollect and present them convincingly. Stakeholders want to know your turnover (sales) over the last couple of years, your gross profit and net profit.
Investors want to know what they are investing in and whether there is strong potential for their money to grow. Lenders will want to assess their risk — how are you going to repay the money? Moreover, you as the business owner, need to be sure that you will be able to make the required repayments.
You must know what your margin is, as this will largely determine your viability as a business. Margin or gross profit is the difference between the selling price of the goods and their cost and is usually expressed as a percentage.
3Know What You’re Asking For
Be clear as to the size of the investment you want to give away and how that determines the ‘valuation’ of the business. Therefore, if you wish to raise R200 000 for 10% of the business, that means you value the business at R2m — be sure you can back that up or you will get taken apart.
4Have a Business Plan
The best way to fully understand your business is by way of having a detailed business plan, which has been prepared whilst working through every facet of your business, from the original idea to the finished product.
As the business owner, you need to live this business plan and be able to use it as your daily guide to success. Develop it, change it where circumstances require it, but most importantly know it and understand it.
In this way, you will be able to deal with most of their questions, be they about marketing, research, international expansion etc. It is also a good idea to know your competition and what they are up to.
In most interactions, you the entrepreneur, are selling yourself. Whether it is an investor, lender, customer or prospective employee, it is their impression of you and your capabilities which ultimately determine whether they want to work with you.
Be confident, defend your position where required, as you will need to parry some blows but do not behave arrogantly.
6Learn From Your Mistakes
Many entrepreneurs who have presented to the Shark’s Den and not been able to garner investment have turned their business into great successes. You need to be able to learn from the experience, and if rejected, bounce back even stronger.
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