A few weeks ago, we decided to launch the first edition of our Funded Family Forum. The concept behind the event? Bringing together experts and entrepreneurs who have successfully completed a campaign on our website and giving them keys to develop their business and raise funds.
For this first edition, we had the chance to have Peter de Decker (Inventures), Max d'Oreye (Resultance) and Etienne Van de Kerckhove (Es Sense) on our panel.
During the evening, our entrepreneurs had the opportunity to ask their questions and to talk about the challenges they have been or are currently facing in their business. Here are the key takeaways of these discussions…
According to Max d’Oreye, Belgian companies, and more specifically start-ups, have been putting aside the use of Marketing and focusing to much of their energy on growth without having a complete and clear understanding on what they are selling to whom. Depending on your own strategy, the value you want to offer and the sale channels you’ve been able to master, you have to create groups of clients with similar needs and behaviours in order to compare them and identify the best target for your business. It’s never a good idea to spread yourself on different segments at the same time.
What is easy in the B2C market, is that, as consumers ourselves, we can have a pretty good idea of what a client wants and needs. In many cases, the use of market research can be very beneficial for your company and many interesting data can be found within existing studies. However, the interaction you can create with your potential customers is the most valuable tool you have at your disposal. A problem with many engineers in that they believe that they’ve created the best product ever but fail to talk to potential clients. They soon realise that even though their product is perfectly designed, it doesn’t answer a single need. According to Etienne Van de Kerckhove, the companies who invest in Sales and Marketing grow faster than the companies who invest in the R&D of the product itself.
For Peter De Decker, senior associate at the Inventures fund, crowdfunding can also be a form of testing for a product. It’s an opportunity for entrepreneurs to sell their idea or product to people who haven’t even heard of it before and convert them.
But in the end, says Max d’Oreye, if you want to keep your clients from going somewhere else, you have to make sure that you have the right type of clients and identify what makes you different from your competitor. Three kinds of differentiators can be identified:
Product: you have unique products and are a leader in your field. Your clients are convinced in the added value of your product and you will keep these clients through the years by updating your portfolio of products as well as the products themselves. Great example: Apple.
Operational excellence: typically low cost actors. They offer a given quality at the lowest price. Example: Colruyt - everything is done to make you think that you are paying the lowest price. In some cases like Ryanair, you don’t even care if your client will be coming back or not.
Service: they want to retain their customers as long as possible because the long term revenue that each of them will bring to the company is the most important. By talking to them and understanding their needs they are making the customers think they are receiving a tailor-made product or service. You will generally sell the first product at a very low price just so that the client comes back.
According to Max d’Oreye, a big challenge during the development of the startup is the growing team. You often start with one or two associates and suddenly you add 5, 10, 15 employees. During this expansion you realise that your model doesn’t work anymore because the initial structure wasn’t able to support the amount of new people.
The more people you manage, the less time they can have with you and the less information is shared. So in order to manage the interactions, you have to rethink the structure.
For Etienne Van de Kerckhove, another important element in a team, whatever its size, is the energy. The company and its vision has to make sense to your employees, they have to believe that it is changing how the customers are seeing or interacting with the the world. To reach this, you need to establish clear and common values that will guide your employees. If the energy is bad, there’s no use in changing the strategy of your company.
According to Peter De Decker, the use of a Board is key. However, it is an element that is often neglected by Belgian startups. For entrepreneurs who need energy and a strategic vision, venture capitalists can be very valuable and will help them define their mission and values.
Another piece of advice from the Senior Associate of Inventures is to come alone to organise your fundraising. If you decide to come with an experimented mediator, keep in mind that this expert is often paid a percentage of the financing round and in some situations it’s better not to raise too much money. Moreover, the due diligence phase (3 to 4 months) is often delayed by the simple presence of this mediator.
Timing wise, it generally takes 6 months to raise funds. If you need cash for July 2019, you’ll need to start your search in December 2018. It is very easy for a VC to say no so make sure you contact more than one and that you come prepared. The more information you share with the VC, the easier it is for them to defend your project in front of their committee. Finally, the summary of your pitch deck must be concise, clear and convincing.