The blueprint for accelerating growth of your entrepreneurial company at different stages

1. The blueprint for accelerating growth of your entrepreneurial company at different stages Developing Established Leading

2. Really understanding your Customer & Market at early stage • What is the market need or gap that your solution addresses? (don’t be a product looking for a market!) • Who are the Customers that most need your solution and what is important to them? (price/quality/timing) • How do you (co)develop the solution to really address the Customer needs? What is “MVP” and what does solution road-map look like? • How do you identify prospective customers and market to them? • How does the Customer want to “buy”? Do you have the experience to sell & deliver or do you need to hire or partner? (e.g. direct vs. channel, SAAS/Cloud etc.) • Do you have the People, Financing etc. to deliver?

3. Customer considerations for more established companies • What do your Customers like today? • How do you drive continuous innovation? What do your Customers wish you would “add” (new products and services) or do differently? • When you win new work – why? • When you lose an existing Customer – why? • How do you “segment” your Customers today? • What are the high growth – high margin opportunities that you are not in or not as big in as you would like? • What are the technologies/innovations that could most impact the services that your Customers need?

5. People • Are you attracting and retaining the best people to grow and sustain our business? • How are you as current leaders developing the next generation of leaders for your business? • Why would the best talent work at your company vs. a competitor or other industry player? • What are the biggest “gaps” in talent at your company? Why? • Does your company offer clear “career paths” for people or do they perceive they have to leave to progress? • If they do leave do they go to competitors, clients etc. – is a “lifelong” alumni relationship encouraged?

6. Culture • How would you describe your “culture”? • Does your company have a clear sense of “Purpose” that is appealing to current and prospective employees?

7. Operations

8. Transactions • Growth can come from “Organic or internal sources” or from “Inorganic or external transactions” • Transactions can include alliances, partnerships or joint ventures, investments or full acquisitions etc. • High-growth companies initiate transactions for a variety of reasons – Customer related, People (acquihires) and Technology • In what areas could your company accelerate growth by using “Transactions” • How do you ensure the right “fit” or alignment with potential partners?

9. Technology • Are you truly a “Digital enterprise”? • Are you maximizing the value that you can gain from “Data analytics”? • Do you have a process to ensure the security & privacy of company and stakeholder data that you hold and process?

10. Risk • Do you have a culture / tone at the top that strikes an appropriate balance between “risk-taking” and “risk-management”? Specifically do you have a process in place for effective: • Risk identification • Policies, procedures & compliance • Stakeholder management • Governance

11. Finance & accounting matters! • Entrepreneurs/Founders are often either technical (CTOs) or Commercial (CEOs) – most do NOT have a full appreciation/understanding of the importance of good finance and accounting practices which really let you know where you’re at! • Successful entrepreneurs know the value of a good CFO – part time initially then full time • Knowledge & contacts in financing ecosystem • Design & implement reliable accounting & controls • Streamline due diligence for financing or sale – avoid unnecessary delays which often lead to discounted valuation • Produce GAAP financial statements • Lead tax planning and filings • Model cash forecasting – budgeting • Keep legal and other documents current – virtual data room

12. How much should I raise & when? • What are the key accomplishments, “proof points” or milestones in the next 12-24 months which will increase the value of my business significantly? • How much money do I need to reach those milestones? • You want to raise enough, with a margin for delays, but not too much if valuation will be increasing

13. Illustration of milestones and timing of funding rounds Example “A” Example “B” Valuation Time

14. What about “Convertible Notes”? • Convertible notes are often used for early stage financing – seed rounds etc. These are initially “debt” which converts into “equity” at the time of a future equity financing round (e.g. Series A) • Typically converts debt (and accrued interest) to equity in one of three ways: • Subject to a “valuation cap” (which essentially provides a discount to Series A price) • At a discount to Series A • At the Series A price per share plus a warrant to buy (say 20%) additional shares at that same Series A price • Avoids problem of Angels, F&F etc. taking too much equity at beginning, leaving insufficient equity for later equity investors or to keep Founder/Management incented! • Advantages – defers “valuation” discussion until business is more established and provides better security to investor (though still not much in early stage)

15. What sources of capital should I consider? • Entrepreneurs often have many different sources of funding that they can consider, including: • Convertible note – from Angels, friends & family – early/seed stage • Equity – from Angels, Family offices, VCs, Growth Equity, PE etc. • Debt – banks, government loans, suppliers or partners etc. • Government grants • Corporate (venture, suppliers, customers/JDA, partners etc.) • Incubators & accelerators (including some that offer seed funding) • Each type of funding is relevant to a particular stage of development for the entrepreneurial company

16. What else should I look for from my investors? • The choice of funding sources should consider more than just their ability to provide cash • Value-add from Investors (and Board Members) could include: • Access to customers, distribution channels etc. • Access to talent – executives, board, staff • M&A expertise • Access to complementary funding sources • Knowledge of how to operate efficiently/scale • Governance/risk management • Connections to other CEOs – Peer Group • Market entry/access advice – especially if regional/international fund

17. Finance • Are you obtaining appropriate milestone-relevant funding? (right source, amount & timing) • Do you have an effective finance team and organizational structure? • Are your finance processes and controls effective? • Do you have the right data & technology to enable smooth operation of your finance processes & controls? • Are you doing a good job of “stakeholder management” – communicating the status of funding & finance to shareholders, lenders, customers, employees, government authorities etc.?

19. https://velocity.ey.com/