This week’s guest blog post is by Norm Snyder, partner at Aronson, LLC. Snyder is also chair of NVTC’s Small Business and Entrepreneur Committee. Snyder shares highlights and lessons learned from the Committee’s recent Lean Startup panel.


Small Biz Committee LogoCurious about Lean Startup? What it really means and why the D.C. tech community is talking about it?

Lean is a disruptive way of thinking that can shorten cycles for developing products, business startups and help ensure entrepreneurial success. Late last month, the Small Business and Entrepreneur Committee explored Lean Startup methodology with an expert panel led by Bob Smith, director of the George Mason University Small Business Development Center, serial entrepreneur, and venture and angel investor. The panel also included experienced Lean Startup entrepreneur practitioners Steph Hay from Capital One, Abhishek Motayed from N5 Sensors, Patrick Smith from Power Supply and B.J. Wiley Williams from Sohooked.

Bob Smith started with an overview of the Lean Startup methodology. Lean methodology stems from the father of the “Customer Discovery Method,” Steve Blank, Alexander Osterwalder, who invented the “Business Model Canvas,” and the work of Eric Ries, author of the widely read book The Lean Startup. According to Smith, the number one startup mistake is building something nobody wants; therefore, more startups flounder from a lack of customers than from product or technology failures. Do companies build product(s) that no one wants? Of course, we have all seen it.

Smith used the example of Segway, which spent over $100 million developing its personal transporter. Segway expected to sell 10,000 Segways per week by the end of 2002. According to Forbes, Segway sold 30,000 total units by 2008. What was supposed to become the mainstay of urban commuting is predominately used by mall security guards and tour groups. Segway’s failure wasn’t technical – they failed to solve a real world problem.

As discussed, Lean teaches us that startups are not smaller versions of larger companies. A good product, business plan, financial model and market research do not guarantee success. It’s easy to build a sound technical product and a financial model with the necessary hockey stick revenue/EBITDA chart. According to Smith, “No business plan survives first contact with customers.” Everyone has a plan… until they get punched in the face! So what’s an entrepreneur to do? Get out of the building! Realize the idea is only the starting point. A business model is how a company creates, delivers and captures value.

In other words, a business model is how a company makes money! Smith’s tool of choice is the Business Model Canvas. Discovering the “value propositions” is the center of the Canvas. The goal is to find the right solution to the right customer problem with strong enough demand to warrant launching a business. Who is the customer? What problem do they want solved? What value do they derive from the solution? Customer discovery is not an exact science. It is an iterative process of evaluating guesses. Get out there and interview potential customers, perhaps 100 to 200 people. Engage in a love story with your potential customers. Look for patterns and apply judgment when validating or invalidating your hypotheses. Refine, pivot, repeat as needed until you have uncovered the value. Keep focused on the benefits customers derive from the product. Remember value propositions or benefits are NOT the same as product features. Use this process to develop a minimum viable product (MVP) and not a product with all of the cool features possible. For an MVP, who is the customer? What is the specific problem the MVP addresses? How does it add value or help customers that will result in making money from selling the product?

After his helpful overview, Smith led the panel in a discussion with the following questions.

  1. How has your organization used Lean Startup? Why did this method work?
  2. What was the best and worst customer hypothesis you ever wrote?
  3. What are some best practices in customer discovery you recommend?
  4. What is the hardest interview you have conducted? What did you learn from it?

Among others, panelists shared these insights. In value proposition testing interviews, watch for body language shifts. For example, in their testing, a bank learned that moms hated touching ATMs by watching them. Radical specificity is your friend in conducting interviews. Meeting customers helps validate (or invalidate) the channel. Ask for forgiveness, not permission, in getting the difficult interviews. Be creative in getting customer interviews. A story was told about one entrepreneur getting multiple flu shots in order to secure interviews with medical professionals they wanted to talk to. Solve the market problem before you focus on the technical product development. Make sure you speak to the right customers, including those who have the power and ability to buy. The Lean Startup process allows the entrepreneur to be free to fail since you will be continuously innovating in response to customer feedback.

Remember, the customer is first, not the product. Constant innovation leads to entrepreneurial success.

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This week’s guest blog post is by Norm Snyder, partner at Aronson, LLC. Snyder is also chair of NVTC’s Small Business and Entrepreneur Committee. Snyder shares highlights and lessons learned from the Committee’s All Star Seed/Early Stage Investor Panel that took place on Nov. 15.

aronson-llc1 v2Can seed, early stage and angel investment capital be found in the D.C. metro area? This question and others were discussed by NVTC’s Small Business and Entrepreneur Committee’s engaging All Star Seed/Early Stage Investor Panel on Nov. 15, with some of the area’s most active early stage investors.

Moderated by Aronson Partner Norm Snyder, the panelists included Ed Barrientos, “super-angel” investor and entrepreneur CEO of Brazen, Steve Graubart, CFO of 1776, John May, founding partner of New Dominion Angels, Liz Sara, angel investor and entrepreneur and chair of the Dingman Center, and Tom Weithman, managing director of CIT GAP Funds and CIO of Mach37.

During the event, panelists discussed their recent experiences, desired investee profiles and offered practical advice to an audience of start-up entrepreneurs engaged in navigating the challenging early stage investment world. While the general consensus is that early stage capital is available in the D.C. metro area, it takes persistence and hard work for entrepreneurs to successfully attract sufficient investment from the right investors.

According to Weithman, over 100 companies have been funded in Virginia by CIT with a focus on tech, fin-tech, cyber and life sciences. However, he stated there is a dearth of seed funds generally available for cyber. Sara stated that approximately 15 deals were funded in the last year by her Dingman Angel group. Barrientos has made significant angel investments in a number of companies and has raised venture capital funds for Brazen. May stated that almost every deal that should be funded is funded, but it is rare for one angel to fund the entire deal. Graubart said 1776 has made 30 investments to-date with a focus on regulated industries such as ed-tech, health IT, fintech, smart cities and transportation.

So how does an investor stand out in the crowd of early stage companies?

Panelists offered a range of suggestions. Research potential investors – plenty of information is available to find out what they are interested in. Don’t waste your time and theirs chasing investors not interested in your company’s profile. For early stage, investors are betting first on the entrepreneur and their team and not on a single idea or concept, which is likely to evolve several times before it goes to market. Put together a passionate team with strong domain experience and the ability to sell themselves to attract investors, customers and future team members. Remember, the team should include an experienced advisory board with strengths and experiences that compliment and extend the abilities of the entrepreneurs. Put together well thought out and concise pitches and applications.

Be persistent – get in front of groups of investors. Warm referrals tend to get looked at first, so use your advisors to help you get noticed and invest time building relationships. Be able to demonstrate market acceptance and traction. Be coachable; you may be the “master” of your technology, but each successful start-up faces different challenges and there’s a lot to learn. Early stage entrepreneurs shouldn’t focus on trying to get the “highest” valuation – high valuations can scare away very qualified investors and may lead to future disastrous down rounds. Convertible debt, instead of preferred stock, can help take the focus off the subjective valuation issue for early stage companies.

Most importantly, the closing advice to attendees: be passionate and persistent and make sure you enjoy what you do!

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This week on NVTC’s blog, Alex Castelli, CPA, is partner and Technology and Life Sciences Industry Practice Leader at NVTC member company CohnReznick, explains how crowdfunding has become such an attractive financing vehicle for technology companies.


7K0A0597[1]The technology industry stands out as a major beneficiary of this promising method of capital raising. In 2014, technology was a leading sector in terms of capital commitments – at around $98.5 million – and led the number of raises that have been offered since inception, according to Crowdnetic’s Quarterly Private Companies Publicly Raising Data Analysis.2 Capital commitments in the technology industry trailed only behind the services industry.

So why has crowdfunding become such an attractive financing vehicle for technology companies? And what is required to launch a successful crowdfunding campaign?

Proving legitimacy and demand

Obtaining financing from traditional lenders such as banks, angel investors, and venture capital firms can be difficult for some early-stage technology companies. Crowdfunding offers an additional source for raising capital. Many investors are eager to support innovative ideas or services, and the growing legitimacy among accredited investors to provide financial backing through the internet has contributed to the popularity of crowdfunding. For tech startups, crowdfunding is an effective way to demonstrate to lenders the demand for a product or service and also to justify the company’s financial projections. Technology companies that have successfully secured accredited investors via the web are especially attractive to traditional lenders as their ideas have reached a level of legitimacy and approval.

Testing the markets and building brand awareness

In addition to raising capital, crowdfunding provides a platform for technology entrepreneurs to test the success of their product or service once it is officially on the market. Through this process, an entrepreneur can determine whether to continue investing time and money in a particular product or service based on feedback from potential customers. Doing so avoids involvement in a venture that may ultimately prove to be futile. The exposure of a product or service through crowdfunding offers the ability to build brand awareness and develop a loyal community of customers right from the start. Developing a loyal following can generate word-of-mouth advertising that can boost a startup business to success.

Finding success

There is a commonality among crowdfunding success stories. Deals receiving funding typically have outside sponsors who advocate on behalf of the deal. These are usually prominent investors who are willing to put their names on the deal and endorse them personally. This signals to other investors that it is a quality opportunity. “This is not so different from the way investments have always been done,” said Steven Dresner, CEO of Dealflow. “In the past, one prominent venture capitalist would put a million dollars in a deal, and then the startup could use that as leverage to attract more VC money. Now it is just taking place in a whole new forum.”

What does the future of crowdfunding hold?

Notwithstanding its popularity within the technology industry, to date, equity crowdfunding may be best characterized as a “growing” source of capital formation available to private companies. Entrepreneurs continue to test the market in determining how best to utilize crowdfunding as an alternative strategy for obtaining financing, gaining exposure, validating their products or services, and ultimately, expanding their businesses. The influence of crowdfunding on the middle market sector has yet to be fully realized. However, crowdfunding is on track to not only transform how privately held companies raise capital and interact with investors, but to also influence how businesses formulate and implement their go-to-market strategies.

1 https://www.fundable.com/infographics/economic-value-crowdfunding
2 http://www.crowdnetic.com/reports/jan-2015-report


Alex Castelli, CPA, is a partner and CohnReznick’s Technology and Life Sciences Industry Practice Leader. He can be contacted at 703-744-6708 or alex.castelli@cohnreznick.com. To learn more about CohnReznick’s Technology Industry Practice, visit the company’s webpage and follow CohnReznick on Twitter @CR_TechInd.

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NVTC is inviting members and industry leaders to serve as guest bloggers, sharing insights and information on trends or business issues relevant to other members. This week, John Beveridge of Rapidan Inbound shares insights both on closing deals as well as developing a business that you want to close from the Nov. 20 Small Business and Entrepreneur and Business Development, Marketing & Sales joint committee event.


One of the most difficult things for tech companies, or any company, for that matter, is creating revenue from your technology. Unfortunately, it’s not a matter of build it and they will come.On Thursday, November 20, the Small Business and Entrepreneur and the Business Development, Marketing & Sales Committees hosted a joint event titled, “The Art of the Deal – How Successful High-Growth Companies Close Deals.”

Hosted by Samantha Smith of Etail Eye, the event featured 3 executives from high-growth companies who shared their experiences on how to best generate revenue. Panelists included:

Marty Kaufman, VP of Operations, WeddingWire

Chris Marentis, CEO, Surefire Social

Carolyn Parent, Chief Experience Officer, Gravy

The panelists shared insights both on closing deals as well as doing the things you need to develop business that you want to close. Here are some of the tips the panelists shared.

  • A good way to start developing business is to develop your personal brand as well as your company brand. Creating good content is a great way to develop your personal brand and anyone can do it. Chris Marentis started Surefire Social with an eBook.
  • Economic down times create opportunities for new businesses. Carolyn Parent recommended that new businesses take what they can get and show results quickly. You may want to land that Fortune 500 account, but if a good SMB opportunity arises, take advantage of it. To close business, find some way to show them value quickly, even if it’s just a needs analysis.
  • New businesses can take advantage of sales technology to qualify new business opportunities. Marty Kaufman shared how WeddingWire’s data scientists use predictive analytics to help them target their business development resources to maximize revenue. Don’t overlook the affordable SaaS sales technology resources available to you.
  • Depending on which market you serve, your sales strategies will vary. B2C companies should look to create viral buzz around their products and services while B2B companies should position themselves as valued business partners to their customers. The B2G market moves at a glacial pace and sellers need to be early to the party.

These were just a few of the insights the panelists shared at the event. Want to learn more about business development, sales and marketing? Come to the next committee meeting on December 16.

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