Ask The Navigator

You are likely going to have to do a lot more work than you think to get your money. You will have to talk to more people, attend more meetings, and answer more questions than you thought. You need to be prepared for that.

In this article we’re going to look at what is going on in an investor’s head when they consider the decision to give you their money in more depth.

You should always remember that opportunities to invest are pitched to potential investors constantly. There is almost no risk to them to pass on something. Understanding what might make them say yes is key to securing funding.

So an Angel investor has got some money. Probably not a vast Bill Gates like fortune, but certainly enough that they aren’t worried about paying the bills and so their decisions are not usually driven by a deep seated need to make money. They already have money. But they’re certainly open to the idea of having more. So if they aren’t in it for the money then what are they in it for?

The cost of starting a business will differ for every new start up. There’s a delicate balancing act at play here, given that over half of businesses established fail to survive past their first five years. You want to minimise startup costs to reduce the length of time it takes for you to break even and start being profitable, but, at the same time, you mustn’t underestimate the costs of starting a business

Anyone raising money for their startup quickly bumps into the SEIS (Seed Enterprise Investment Scheme) and it’s bigger sibling EIS (Enterprise Investment Scheme) which are schemes the UK government created in 2012 to help support developing businesses with a need for capital.

In 2013, Aileen Lee, the founder of a Venture Capital company by the name of “Cowboy Ventures” coined the term unicorn to refer to a privately held start-up with a value in excess of $1bn. The implication was, and still is pretty clear. That these companies are so rare as to be almost mythical. The term caught on, and is now in common usage.

But unlike actual unicorns: magical horses with horns, these tech start-ups known as unicorns actually do exist, and their numbers are growing.

When you come to raising money the concept of dilution becomes central. It refers to the dilution of ownership of the existing shareholders when new shares are issued. Why are new shares being issued? It’s because you raise money for the company by selling those new shares to investors. If you were selling existing shares the money would go to the shareholder, which benefits them, but doesn’t put money into the company.

Short of a lottery win or a benevolent elderly aunt who happens to be sitting on a fortune and just wants to make people happy, accepting money means both increased expectations and reduction of control.

What you are expected to deliver can vary hugely though, so let's take a look at the broad categories of investment and what they might mean for you.

Are you looking to build a company with the end goal of selling it for as big a lump sum as you can walk away with? Or are you looking to create an organisation that you are not only proud of, but want to stay as part of? Is it going to be a one off windfall, or a comfortable lifestyle business?

The answer to that question is going to play a fairly significant part in how you attempt to grow your company.

The sunk cost fallacy is one of the most damaging heuristics that we are all prone to falling victim to from time to time.

I’ve worked with a lot of businesses over the years, some of them were my own, and many others in my role as Navigator.

It is always the assumptions that you didn’t know about, that catch you out and cause problems.

You may well be wondering why this website, and indeed my business, is called The Art of Navigation. And let’s face it, if you weren’t earlier you almost certainly are now.

"It is more important to receive than to give."

Wait… I have that the wrong way around don't I?

You have to have a strategy, yes, but when doing something challenging, it is unit cohesion that allows armies, and businesses, to win. Even the most exceptional leader cannot do it alone. We can see it in the example of Athens above, as the Athenian right flank panic with victory in their grasp.

Unless you are also a fan of baseball, you may not be familiar with the notion of a depth chart.

This week I am going to be talking about customers again. While the C in COMPASS stands for 'Customer', it could just as easily be 'Context'. My dictionary defines context as "the circumstances that form the setting for an event, statement, or idea, and in terms of which it can be fully understood". What this means to me is that to understand customers, we must see them in their context.

The COMPASS system that I will begin publishing soon contains an overall approach that addresses the pillars, as well as a set of tools (some mine, some from many generous third parties such as Alex Osterwalder, Tony Ulwick, David Bland, and Gojko Adzic. The goal is to build a toolset that helps a CEO understand where they are in the process of building software and decide “What should I focus on next?”

I’m really pleased this week to offer a guest post from Anna Downey, co-founder & CEO of Buzzbar. It’s a particular pleasure because of how critical to building my own brand, The Art of Navigation, Anna & Buzzbar have been, and continue to be.

Thorny topic this week, can you measure progress in a software business?

Done well, the measurement of progress through Key Performance Indicators (KPIs) is essential for any growing business to know how it is doing. When it comes to software though it often seems to break down; it’s challenging to know what to measure and why.

I’m very pleased to be share another guest post, this time from my friend Ghilaine Chan. Ghilaine is a virtual COO who has spent her career helping technology based companies to be more effective by helping unblock people & processes. In that guise she’s spent a lot of time helping people learn to communicate better with their technology providers, a key problem in the industry. She’s kindly agreed to share some of her wisdom on this topic…

I have both been a CTO myself as well as helping advise a number of software businesses and been heavily involved in the hiring process. I’ve written this guide to help share what I’ve learned about how to make good choices with a wider audience. Read on.

Sasha Bilton is the Chief Technology Officer at My Tutor Limited. As a 20-year veteran of software engineering, Sasha has worked primarily in finance or media, on both web and desktop application development, in tiny start-ups and tier 1 investment banks. Today, I am delighted that he is sharing his insights with The Art of Navigation on how to grow and nurture your tech teams.

A conversation I often find myself in with founders and leaders is about hiring a CTO. Sometimes they already know that’s what they need and the difficulty is how to find one, sometimes they are facing technology challenges and the decision is about whether a CTO will help.

Let’s talk measurements. After the difficulty of getting your senior team to buy into a system of measurement, you also need to be aware that, once you are measuring things and setting consequences for the outputs, you have just created a game.

I can’t say that The Art of Navigation was planned, rather it has evolved over many years of practice working with SME software companies. Through my experience I have, admittedly, made made innumerable mistakes. The positive is that I have constantly fed back and “corrected my course” the more work I have done, turning these mishaps into valuable learnings.  

Welcome to Customer Personas Part 2 with Brand & Marketing Consultant, Di Wheatley. In last week’s post, Di defined what a Customer Persona is and why we use them as building blocks of marketing planning. This week, she is sharing tips on how to construct them.