A substantial part of our investment philosophy is that we only do 1-3 investments a year in order to be able to provide our portfolio companies with a 360 degree support in all business areas. That way, we can apply the knowledge and experience we’ve gained from building up several tech companies over the past years. In addition to that, it allows us to gain new insights on a daily basis while working closely together with our startups in different industries from Regional Air Mobility, to Space, to B2B-SaaS and in different business areas like BizDev, Sales, Financials, HR and more.
We are not crazy about over-engineering processes because we believe that, especially at an early stage, you simply don’t have the capacity or need to do so. But there are some key pieces of advice we do give to all of our portfolio companies in order to implement the right structures and set the company up for success.
Strategy comes first
A lot of time can be saved chasing after the “wrong” customers when you sit down and define the right strategy for your business early on. Having a disruptive technology and a great product isn’t everything. You also need to find your product-market-fit and identify the right target customer for each stage of your product and business. Knowing what stage your product is in and which customers to address at what time has been a very important learning for us. You might envision your product or service to be used by big enterprises, but your current infrastructure is not running stable enough for their use cases. Therefore, a focus on smaller, more agile customers might make sense even if it is less profitable. Try to really understand the processes of your target customers. How the periphery needs to be set up, which workflows will have to change. Identify the people in an organization that benefit the most from your product and try to win them as Deal Champions, while keeping in mind who might fear the optimization your solution offers and how to mitigate these fears.
During your first sales, it is super important to keep an eye on the amount of work you put in vs. the commitment of the customer. We have often witnessed startups trying to please customers with ever-changing requirements, turning more and more into consultancies and thereby losing the focus on building a scalable product.
The hardest thing is to say NO to the first potential customer
In addition to that, the right strategy isn’t only dependent on the stage of your product or service, but also on the readiness of the market itself in combination with the validation of your target customer. For example, our portfolio company Kraftblock has the potential to become a cornerstone in the global energy transition. The first step however is to decarbonize the industry by addressing customers who can store waste heat with Kraftblock and use it as energy for their own production lines. The end goal is to decouple energy production from energy consumption, and to store solar and wind energy during peak times and release it into the network as it is needed. From an ecological perspective, this makes total sense. However, from an economical point of view and due to the current regulations, the industry is not ready for that shift just yet. We’ve learned that even if you have a disruptive technology that can solve a huge, global, pressing issue, a good way to start is by proving that your technology actually works on a smaller use case.
Another example is the Business Application Software platform Build.One. In theory, the unique blueprint technology approach can be transferred to any software application and some day can potentially enable citizen developers to develop applications without having to code. But for now, the startup focuses on software developers and ISVs that are already familiar with the structure of such applications and are looking for a solution to add complexity to their business applications and want to get rid of legacy cycles. This is where we see the highest product-market-fit at the moment.
Track your KPI’s
Once you have developed the right sales strategy and know your target customer, an important tool for driving up sales is a KPI’s dashboard. We firmly believe that you can only improve what you are measuring. Again, at an early stage, there’s no need to over-engineer and over-analyze, so we always suggest working with a so-called poor man’s dashboard, which features only the most important KPIs: Sales, Product and HR. That way, keeping up with your KPI’s is not very time-consuming, but still super effective.
Defining and measuring your KPI’s allows you to understand your main indicators for success and to tweak them accordingly. Let’s take sales as an example. For Smartlane, which is a B2B software for the logistics sector, we classify potential customers in 4 categories:
Opportunities, our longlist with pre-qualified leads where a first outreach has happened from our side
Marketing accepted leads, meaning that we are in dialogue with the customer and according to the answers to our questions the customer is likely to be a good fit
Sales accepted leads, meaning that our sales team has had a first call and exchanged additional information and is pushing the lead further down the pipeline
Pilots, meaning that the potential customer is currently using our software in a test environment and is close to becoming an actual customer.
For all of those stages, we track the sources our leads are coming from, as well as the time they spent in each phase. In our CRM, the stages are far more granular, but having this overview of KPIs is really helpful. We use Tableau in combination with Google Spreadsheet to generate our dashboards. We are using Pipedrive as our CRM, which is simple but effective to start with, or Hubspot which includes more marketing and sales functionalities as well as data analytics.
By tracking those 4 major indicators, we always have an overview of what area to invest more time and resources into and how to drive up sales. The areas of Strategy and BizDev are obviously closely linked to Finances and HR, two topics that we have briefly discussed in different articles.