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It's surprising how frequently entrepreneurs struggle when potential investors ask them a simple question: "What are you going to accomplish with this round of financing?"
At XSeed Capital we are introduced to over 500+ new startup opportunities every year, and we directly meet or talk to 150–200 of these companies. In this context, I am sometimes asked what is the “biggest mistake” that a CEO or management team makes when pitching venture capitalists. While there are several that come to mind, I remain surprised at how frequently even experienced entrepreneurs struggle with a simple question:
“What are you going to accomplish with this round of financing?”
In an unexpectedly large number of conversations and meetings, instead of hearing proposed measurable milestones, investors are given a “to do” list of activities from entrepreneurs: hire some engineers, launch the first product, get some revenue, do some marketing, etc.
In a world of staged funding rounds, an idea that my Stanford colleague, Robert Burgelman, and I wrote about in 2007 can provide entrepreneurs with a way to think about how they should contemplate what needs to be achieved with each infusion of capital and the size of the round they are raising: the Minimum Winning Game (MWG). Read more: click image or title.
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Via Marc Kneepkens
Exceptional advice not only for startups but also large corporations as well that have their own business building activities internal to their organizations. I have been long time supporter of MWG theory, along with the Porter 5 Plus model and the Strategic Inflection Point elements that make up the broader theory. In contrast to the MVP model of the Lean Start-Up as promoted by others in Silicon Valley and elsewhere, which I see from my p.o.v. as a much smaller subset of what MWG theory propositions, necessary perhaps but insufficient in the kind of analysis and forethought required. (In full disclosure I am ex-Intel, and specifically helped drive innovation across the enterprise and saw how MWG theory (when applied correctly) is a better than other approaches to what we've seen different managers, groups, organizations inside of Intel as well as in other high tech firms.)