This is the 4th part of a series of posts where Elliott shares his inside track on his experience of going through an incubator program.
- Part I (Great Expectations)
- Part II (Back To School)
- Part III (Design Thinking)
- Part V (Marketing & Networking)
- Part VI (Pitching, Decks & Financials)
- Part VII (Demo Day & Last Days)
- Part VIII (The Round Up)
If you’re just joining us, my name is Elliott.
I’m the co-founder and CEO of abroaden: the first wealth-building platform made for people living abroad.
We’re currently participating in the inaugural Barcelona batch of the F10 FinTech incubator.
Our friend Clemens from Barcinno is kindly letting us guest-blog our experience.
That way, you can get a first-hand look into what it’s like transforming a dream into a lean early-stage startup.
(Catch up on our earlier posts here).
How our incubator works
An incubation program’s goal is to help budding entrepreneurs develop a business idea into a viable startup.
While most startups fail, an incubator’s job is to help minimize those chances.
To do so, participants go through a cycle of masterclasses and sprints.
During each turn, startups will focus on different verticals of the business.
We focused on product and development in the last session, honing in on the best way to get our MVP built and out the door.
This month, we dove into the (not so sexy, but completely necessary) legal world.
Why getting the legal formula right from the start matters
While all the startups in the program are working on different aims, we have one common constraint: whatever it is we do, we want (and need) to respect the law.
Financial services, particularly at the retail level, are highly regulated.
This regulation makes sense. There are a lot of greedy, unethical, and flat-out bad people out there.
Money is central to our lives.
Not only do we use it to assign value to everything around us, but it has deep-rooted impacts on our psyche.
Throw in that finance is complicated by design, and it’s all too clear why governments work to keep predators out.
Oh, and in addition to the financial rules, there’s the omnipresent GDPR to deal with, too.
As FinTech specialists, F10 knows all too well the importance for startups in the industry to be compliant from day one.
To that end, the organizers brought in some of Spain’s most foremost financial lawyers to give presentations.
I won’t dive into the details (as I’m trying to keep you reading and not falling asleep), but the sessions were thorough.
In short, whatever you want to do, if it involves money, you must respect the laws.
Luckily here in Europe, the EU and UK have set a robust framework for us, covering PSD2 for banking and MiFID II for investments.
That said, applying the rules to the disruptive sector that is fintech isn’t always straightforward.
The lawyers covered both pieces of legislation and how they apply to us in a session worthy of a scholarly lecture.
The overriding advice was clear: seek a legal opinion, and regulatory greenlight before even thinking of launching.
Fortunately, F10 also organized a one-on-one session with some legal experts for each startup.
In the end, it helped us get clarity on some pressing questions.
In turn, it enabled us to adjust our product, financial projections, and trajectory.
Legal week wasn’t just about legal.
While each masterclass has its theme, sessions aren’t exclusive to one topic.
Here’s what else we covered.
Unless you’re fortunate to self-fund your startup, at one point, you’ll need to raise money.
Raising money is a full-time job.
If you want to maximize your success, you’ll need to get your numbers right.
(Good) startup investors are analytical by nature.
Suppose you’re able to get a sit-down conversation with one (or even get your deck in front of them). In that case, they’ll immediately start by dissecting your numbers.
Bullshitting here isn’t advised; they’ll see right through it.
F10 organized a couple of sessions to get our numbers right and maximize our chance to speak with investors.
If you’re not aware, F10 is a part of the Swiss SIX group.
In addition to running the Alpine nation’s financial backend, it also has a venture capital arm.
One morning, the head analyst of the fund held a class and Q&A with us, going over metrics and numbers investors like.
From his insights, they tend to hone in on marketing costs and revenue streams.
In other words, they want to know how much it will cost you to acquire your customers and how much you’ll make from them once they’re yours.
If you’re playing with a business idea, I’d recommend focusing on those numbers before reaching out to investors.
Additionally, we each received a 1-2-1 session with a financial analyst who poured through our spreadsheets and showed us where we could make improvements or even present our data better.
All-in-all, talking about finances is challenging for an entrepreneur, at least at our stage.
While you might have the most incredible idea in the world, if the numbers don’t line up, your chances of turning a dream into reality are slim, at best.
One morning, we had an insightful presentation from the team at Board Owl.
This startup helps match entrepreneurs with advisors and build a subsequent board with them.
Why is this step important?
For one, entrepreneurs don’t know it all – far from it (and if you meet one who claims that he does? Run).
There are so many moving pieces and pitfalls when starting a company.
At the incubation stage, making one wrong move could prove fatal.
Advisors are there to help you make more informed decisions and avoid shooting yourself in the foot.
Ideally, you’d pull in advisors from different walks of life and industries, getting diverse input to make more holistic decisions.
In the real world, that might not be feasible, especially if you lack a broad network.
Board Owl helps to connect entrepreneurs with advisors.
I think it’s a valuable service and recommend checking it out if you’re looking for an advisory panel.
In any case, getting feedback from people is vital for any startup.
If you’re going down that route, never hesitate to ask for an expert’s opinion.
Why you should tell stories to angels
Similarly to the previous masterclass, we had another afternoon to chat with investors.
We spoke to the gamut of startup investors during the first session – from local angels to venture capitalists and even a bank.
This time, we’d focus exclusively on business angels.
Business angels play a vital role in early-stage startups. These (usually local) investors will be the first serious financiers.
Angels have some unique characteristics that separate them from Venture Capitalists and other professional investors.
For one, they almost exclusively focus on their local market.
They’re well-networked and tied into the city or region’s startup ecosystem.
More importantly, they’re not experts in any particular tech vertical.
Where VCs might focus on a specific theme like FinTech or EduTech, angels are more generalists.
They’re likely unfamiliar with the problem you’re trying to solve or your industry.
Therefore, telling a compelling story is so important.
How do I know this?
Because during our sessions, the angels told us.
During our sitdowns, our entrepreneurial reflexes kicked in. So we did what any founder does in front of a potential investor: pitch.
That was all well and good, except for one detail.
F10 invited the angels to speak to us not to raise money but to learn how to talk to them.
My last installment in a few months will talk about the benefits of going through an incubator.
Undoubtedly, the ability to speak and learn from investors without the pressure of selling to them will be near the top of that list.
The angels we spoke to started breaking down the semantics of our pitch, value proposition, and presentation fundamentals.
We explored the pain point we’re trying to solve and how we could efficiently explain it to them.
Here, story-telling is key.
It doesn’t have to be complex, but it does need to follow a traditional story arch.
Generally, you need to follow the format of:
- You have a protagonist (your typical target customer)
- He has a problem that he can’t solve, which causes him pain
- Your solution is the hero that comes to his rescue
- Now, thanks to your product, his life is better because you solved his problem.
It doesn’t have to be complex.
You’ll generally have only a few minutes tops to pitch.
What it does need to be is relatable.
If you can describe a complex problem in layman’s terms to a business angel, then you’ll likely get that private conversation you so covet.
For us, I don’t want to give away our story, other than it might make you hungry.
F10 is streaming our demo day on July 22nd.
You can register for free here to watch us all tell our stories here.
Friday came too fast.
Just like the first two sessions, this masterclass was both amazingly enlightening and utterly exhausting.
In addition to the topics I wrote about above, we also had some other workshops going on.
Since the second week of the program, we’ve worked with a public speaking guru to turbocharge our pitching skills.
On Friday morning, we had extended Q&As with some of that week’s speakers and alumni from F10.
By lunchtime, everyone is beat.
Thankfully, here in Spain, Friday afternoons mean a great meal, a refreshing Copa, and a well-earned siesta.
Next up: sales and marketing!
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