STARTUP ACCELERATION GUIDE 2020 ACCELERATE aro N Dlosing eagles RaVesitolg Cot 0) >] ie * FUNDRAISING GUIDE & INVESTOR CHECKLIST * GROWTH HACKING TRACTION & SALES GUIDE * CO-FOUNDER BEST PRACTICES GUIDE * ULTIMATE ACCELERATOR & PRE-ACCEL GUIDE newchip"If people like you, they'll listen to you, but if they trust you, they'll do business with you. " - Zig Ziglareee FOREWORD “It's almost always harder to raise capital than you thought it would be, and it always takes longer. So plan for that.” - Richard Harroch When | first became an entrepreneur, | thought that everything was napkin valuations and IPO's. Guess what? | was dead wrong- real life isn't a movie. It's a long journey of 100's of no's, failures, and eventually a success. You absolutely need grit and most importantly knowledge- go in blind and YOU WILL FAIL. We created this guide to help you navigate the early stages of fundraising and understand what you need to know to raise pre-seed and seed funding, This guide includes the most basic knowledge that you need to know as a founder and is not intended to be a complete guide to fundraising or a substitute for great advisors, mentors, or an accelerator program We're always scouting for entrepreneurs with great ideas and grit for our accelerator, so if you think you have what it takes, keep reading and learn what it takes to get accepted. Ryn Rafcty Founder & CEO, Newchip AcceleratorTABLE OF CONTENTS Part One Preparing, Meeting, Pitching Investors 26 Startup Fundraising § Use Equity Crowdfunding to Reach Investors 28 Reason to Raise Money § My Recommendation to Any Startup Founder 29 Best Time to Raise Money 6 Financing Options 8 part two Funding Rounds 8 Growth Hacking Traction & Sales 30 Convertible Debt 8 Strategies to Drive Traction 31 SAFE Note 9 1. Have A Clearly Defined Goal 31 Equity 9 2. Leverage Your Pre-launch List 31 Angel Investors vs Venture Capitalists 10 3, Do Things That Dont Scale 32 Crowafunding 104, Build an Awesome Product 32 Accelerators & Pre-Accelerators 115. Get Your Analytics Right 32 How to Find Investors to Pitch Your Company 12 6, Build Email Lists 3 Cold Email Templates (For Investors) 137. Case Studies & Use Cases Are Amazing 33 Template #1 - Warm Intro Hack 14 8. Embrace Freemium 3 Template #2 - Advice 14 Sales Hacking for Traction Growth 33 Meeting Investors 15 Successful Cases of Growth Hacking 35 Valuation: How Much is Your Company Worth? 15. Use Stretch Goals with SMART Goals to Negotiating & Closing the Deal 15 Achieve Rapid Growth 36 The Bullseye Framework for Growth Negotiation 1 egotiations § Macking Traction 37 Funding Checklist 7 8 Customer Acquisition & Traction Channels 41 Documents You Need 17 Wnat You Can Do Today s Fundraising Checklist 18 More Resources 59 Fundraising Rules to Follow 19 What Not to Do While Communicating with hn Investors 19 Part Three {Brief Glossary of Key Terms 30 Founder/Co-Founder Best Practices Guide 60 startup Fundraising sa Sales Process 91 Building from 1 to 2: Setting the Foundation to Build Upon 61 Closing the First Investor 23 rere to Start? a1 The Pitch Deck 23 Dont Settle, But 80% is Pretty Darn Perfect 62 Term Sheets (What to Offer Investors) 24 pai Trust 6 Build Your Target Investor *Hit List” 25 eT 4Complimentary Skills 63 10. An Accelerator for Everyone 83 Have Similar Work Habits 63 11. Motivation and Morale 84 Check Financial and Emotional Stability 64 12. Continued Support Long After the Program Choose Character sa Ends ad Have a Prenup ga The Right Time to Join 84 Check for Sel-Suficiency 65 How Do You Know When itis the Right Time to Join an Accelerator 84 Founder / Co-Founder Best Practices 65 Here's the Real Problem 85 Divide R iit 65 twice Responsipilties Signs of a Funding Bubble 86 Show Empathy 65 Why Some Startups Receive Funding & Others Have a Plan to Handle Disagreements 66 Don't 88 ‘Agree to Honesty 67 Building the RIGHT Network to Succeed 89 Exercise: Finding & Vetting Cofounders 68 Know Your Buckets 89 ‘Ask People for Opinions and Insights 89 Part Four Provide Value 89 Accelerator & Pre-Accelerator 6 7° Consider Event-To-Event Relationships 89 Accelerator Intro n Communicate Clearly 90 Is an Accelerator Right for YOU 72 Newchip Accelerator FAQ 31 What is Involved ina Startup Accelerator? 72 Ready to Accelerator Your Startup? 95 ‘Are Accelerators Right for You? B Meet the Founders 97 Accelerator Advant m4 ccelerator Advantages our Programs oe The Disadvantages 74 8 Program Benefits 99 Key Takeaway m4 The Newchip Accelerator 75 What We Look For in Applicants 75 Choosing an Accelerator: 10 Questions to Ask 76 How to 10X Your Business in an Accelerator 81 1. Comprehensive Support 81 2. AFull Roster of Activities 82 3. Investor Access 82 4, Accelerated Knowledge 82 5. A Gateway to Future Customers 82 6. Skills Development 83 7. Risk Management 83 8. A Bigger-Picture, Long-Term View 83 9. A Springboard 83 eT 5FUNDRAISING INTRO Reason to Raise Capital You may have funded your company to date, but to live up to the definition of a startup - a company that is designed to grow rapidly - you need to raise significant capital and spend it at a high burn-rate for high growth before reaching profitability. While a few rare companies can self-fund, and some need very little funding to reach profitability, the majority of startups require outside funding from investors to grow and succeed. Fundraising may be the most challenging thing you ever do as a startup founder. The process is complex, long, meticulous, confusing, as well as humbling. Virtually all startup founders travel this path. But once a startup raises money, it is not only an exhilarating feeling to be able to survive, the funds become a competitive advantage, enabling deeper pockets for more aggressive, impactful marketing, as well as hiring more staff to support growth But when is the right time to raise money? Can you raise too early? What is the proper valuation to set? How do you compensate co-founders? Best Time to Raise Money You need to start fundraising when you are ready to tell your story. When investors hear a story that resonates with them and believe the team of founders can grow the company to capture a large market opportunity, they will invest. In addition to a compelling and credible story, you must be focused on developing a differentiated product and demonstrate market traction (i.e. customer adoption) to win the funding game. The entire field of software development has slowly become commoditized - making right now the best time and most affordable time in history to start a new company. It's also the most competitive. However, an idea and product alone is usually not enough for investors to invest in your startup. It has to fit the target market, and they are looking to see that the company is already experiencing growth. It also has to be the right lunar cycle, and right time for their portfolio. Literally anything and everything can affect an investment.You need to learn how to impress and persuade investors. Showing a rapid customer adoption rate at double digits is impressive, whereas showing a sketch on a Powerpoint of what might happen this quarter is risky. Therefore, it's smart for you to have a realistic grasp of the market opportunity, listen to your customers and continuously improve to ensure that the product is not only meeting but also exceeding customer expectations to grow with double digits- building toward impactful KPI's (Key Performance Indicators) will give you a great story to tell investors. The following chapters are a guide to help you identify your funding options, help you initiate investor conversations and close your first investor as well as growth hack your way to revenue! -The Newchip Accelerator TeamFINANCING OPTIONS Financing Options Understanding your financing options - including their pros and cons — is important for startup founders. The following is a summary, but far from all you need to know to succeed. Funding Rounds Typically, venture financing happens in what is called “rounds." A seed or pre-seed funding round comes first (often a convertible round). After that comes a Series A (often an equity round), then a Series B and, subsequently, a Series C. It continues until either an initial public offering (IPO) or an acquisition. Pro-Tip: None of these rounds are requirements and you can actually have multiple seed or A rounds. If you learn anything in Startups, it's that there are no definite rules. In fact, the entire game is about breaking them. In fact, most seed rounds are now structured as either convertible debt or simple agreements for future equity (SAFE Notes). Some early rounds are still done with equity, they are now the exception even in Silicon Valley. While one investor may want one type of note or just equity, it may not be a fit for every investor after them- making it so important to have a strong foundation before you raise. Convertible Debt When an investor makes a loan to a company utilizing an instrument called a convertible note, it is convertible debt. This note converts to equity when the company does equity financing. This loan has a principal amount, an interest rate and a maturity date when the principal loan and interest need to be repaid. These notes will also usually have a "Cap" or “Target Valuation” and / or a discount. The maximum effective valuation that the owner of the note will pay is the Cap, regardless of the valuation of the round in which the note converts. Convertible note investors, as a result, usually pay a lower price per share compared to other investors in the equity round A discount defines a lower effective valuation via a percentage off the round valuation. Investors see it as their seed “premium.” It's negotiable. Convertible debt may be called at maturity - the time when principal and interest must be repaidPro-Tip: Often, investors extend the maturity dates on notes and rarely accept cash back to pay them off if you can raise the cash to buy them out, you can use it to your advantage to get back more equity. SAFE Note Convertible debt has been almost completely replaced by the SAFE at some accelerator programs around the world. Acting like convertible debt, yet without the interest rate, maturity, and repayment requirements, a SAFE has the negotiable terms that will almost always be the amount, the cap, and, if appropriate, the discount. These types of notes are simple, affordable and largely free, however not all investors are familiar with them and it may confuse them. Equity ‘An equity round involves setting a valuation for your company and a per-share price, and then issuing and selling new shares of the company to investors. This type of financing is more complex, as well as time-consuming and costly, compared to SAFE or convertible notes. Equity rounds are more uncommon for seed financing. When planning to issue equity, you'll want to hire a qualified lawyer. For Example: If you raise $1,000,000 on a $5,000,000 pre-money valuation. if you also have 10,000,000 shares outstanding, then you are selling the shares at: $5,000,000 / 10,000,000 = 50 cents per share and you will therefore sell. 2,000,000 shares resulting in a new share total of 10,000,000 + 2,000,000 = 12,000,000 shares and a post-money valuation of... $0.50 * 12,000,000 = $6,000,000 and dilution of. 2,000,000 / 12,000,00 Which is Under 20%! 16.7% Pro-Tip: Before your company does an equity round you will want to learn about equity incentive plans (option pools), liquidation preferences, anti-dilution rights, and protective provisions, among other things. No matter how you raise, be sure to use the proper financing documents and proper legal counsel. I've seencompanies use "cheap" counsel and pay 10x what they would have paid if they went to a real corporate attorney with experience in capital raises. Good legal counsel ranges between $250-$350 for this kind of work. Anything above that and they are "too experienced." Angel Investors vs Venture Capitalist Investors Angel investors in a nutshell invest their own money. They are often friends or family of the founders of a startup. They tend to allow emotion to play more in their decision-making, such as believing in you as a leader of the company and they may love your product or just be interested in your industry, they also might just be investing because they know and believe in you and that you can figure it out no matter what. You are the investment. Venture capitalists are professional investors who invest the money of other people. Their decision-making is usually much slower than angels. VCs take more time, have more meetings with you and will involve other associates in the evaluation and decision, Startup companies are pitching to VCs all the time, and VCs usually only do a few deals a year, so it’s important to do intensive preparation to get an edge. New investor types called “super-angels" and “micro-VCs" have emerged, seeking to invest in new, early stage startups. Other options include FundersClub, which invests selectively like a traditional VC, but lets angels become LPs in their VC funds to expand connections available to its founders. Also, AngelList Syndicates lets angels pool their resources and follow a single lead angel. Our own Newchip platform is a great source of funding with over 100,000 active investors. A“warm introduction" is the best way to meet a VC or angel investor. Someone you know could introduce you. If you don’t have any contacts, you can learn how to do research and create a summary that covers both your company and the market opportunity. Crowdfunding Kickstarter, Newchip, Angellist and Seedinvest are among the newer vehicles to raise money. These are part of the evolving investing ecosystem. Your success of raising through more traditional means knowing when and how to use these new platforms to raise funds. You can find funding, manage a pre-sales campaign or launch a eT 10product on these crowdfunding sites. They can also help founders prove demand. Although a few founders have used crowdfunding as the primary source of funding, these platforms are usually used to fill in rounds. Or they may be used to rejuvenate a sluggish round with fresh capital more quickly. Pro-Tip: Contracts and funding negotiations are not just the "job" of the attorney at the end of the day- you need to become a collector of hats and chief among them is head of fundraising and negotiatons. Ifyou don't know the terms or have the knowledge then check out Venture Deals for Brad Feld & Jason Mendelson. Accelerators & Pre-Accelerators There are over 100 accelerators worldwide and with over 25 million entrepreneurs in the U.S. alone, there are new ones popping up every month, Accelerators are the fastest route to funding for most entrepreneurs with many offering up an initial investment to help build an MVP for 5-10% of the company. Accelerators largely focus on teams with great vision, capability, and traction in funding and revenue, and they literally "accelerate" them to millions in revenue and funding. Examples of these are Y-Combinator, Techstars, and 500 Startups. The challenge is that the top 100 programs only take an aggregate total of 1000 startups per year, which means they typically focus on startups in Silicon Valley, leaving the 99.999% of entrepreneurs in the cold. Pre-accelerators focus on helping companies with great vision, develop their capabilities, build an MVP, and generate enough revenue and traction, to get into an accelerator. Recently, several hybrid models have been in development, and the Newchip Accelerator model is one of these- offering a mix of options from the full accelerator to pre-accelerator. If you've already been in an accelerator you know that 95% of the focus is only product versus fundraising. Same goes with 99% of the books out there. That's why we launched our accelerator and pre-accelerator programs and are offering this edition of our book free to founders like yourself. eT "FINDING INVESTORS How to Find Investors to Pitch Your Company Raising capital is a numbers game. When it comes to landing investor commitments to fund your company, you have to initially go after as many leads possible before you narrow it down to a group of investors who will write you a check The general rule of thumb is that for every 100 leads, you will probably get 3-4 commitments. Of course, this number can vary depending on your solution, market, industry, and a whole other array of nuances. 1, Build your investor funnel by scraping AngelList, Linkedin, FounderSuite and Crunchbase 2. Filter & Qualify Your Leads By: A. Location B. Industry & Stage C. Competitive Deals 3. Map Your Contacts with Linkedin A. 1st or 2nd Degree connections B. Make friends with founders of their portfolio companies C. Ask for introductions and First Meetings D. Write a short, actionable email that is easy to forward . fall else fails, send cold emails (see some examples below!) 4. Create a tracking system, preferably using a CRM system m Mapping your Connections with LinkedIn Linkedin is a great resource for finding intros to investors. + Look up investor's profile. Do you have any 1st or 2nd degree connections who would do an intro? + Ifyou can't find a connection, look through the investor's company portfolio on AngelList. Ifyou are directly connected to any of the founders, ask them for an introduction. This works well as founders tend to like to help other founders.i ee COLD OUTREACH Cold Email Templates (For Investors) Sending out cold emails is often a daunting task since the message you craft may go ignored or immediately deleted before it even gets a moment of attention. This is the reality, but it does not mean that sending cold emails is a waste of time. What most entrepreneurs often need to do to make cold emailing work for their fundraising efforts is change their approach by crafting messages that will yield results. This means that you want to capture the attention of an investor by performing targeted research on what they value, how you will provide it to them, and why they should even care enough to respond to your message, let alone offer you a first meeting. The following are a great cold templates that you could use for your outreach efforts to build an investor funnel via social media or email. Make sure to personalize these and add your own spin to the emails (not too long, not too short) to have the greatest effect. Nobody likes spam. You also will want to have a great subject line beyond "Give me money" to get people to open your emails. Though honestly that subject line might get someone to at least click your email if it's a joke. However, sometimes while you might have a great open rate, depending on the subject line, it still might not be effective in converting. What you want though is to get eyeballs and pique interest ENOUGH to get a call Pro Tip: Remember that cold emails still have a lower response rate, but your chances of getting a response will go up if you put in the time and effort to craft a compelling, personalized messaged that entices the prospect to consider you as a viable investment. eT 3TEMPLATE EXAMPLES Template #1 - Warm intro Hack Subject: “I found you through <> <> from <>” Hi <>, | stumbled onto your Linkedin page today. It appears we both know <> from <>. | found your email address and decided to reach out. | work for a company called NAME. Since launch in mid __, we've changed the game for thousands of image buyers and photographers worldwide. With over and an avid community of supporters, we want to offer you the opportunity to invest and help us change the entire commercial photography industry. Are you open to discuss whether you might want to invest in_? If so, reply directly or schedule atime to have a call on my Calendly link: Thank you for your time, Hope to hear from you soon. Best, NAME Template #2 - Advice Why: “Seek money, and youl get advice. Seek advice, and youll get money.” Subject: "Seeking advice” Hi <>, | saw your profile on AngelList and noticed you have experience investing in startups in the space, so I wanted to reach out for advice. | work for a company called NAME. We are a marketplace for and with over # worldwide. | would like your advice on (user acquisition, fundraising, scaling, - angels expertise). Also, do you know anyone who may be interested in our current round of fundraising?* Ifyou are open to having a brief call to discuss, reply directly or schedule a time to have a call on my Calendly link Thank you for your time, Hope to hear from you soon. Best, NAME eT 14i ee MEETING INVESTORS Meeting Investors When you meet an investor, your objective is to get the next meeting. No matter how good you are, rarely will investors make a commitment on the first day that you pitch them. This means you need to schedule many meetings. Acquiring your first round of funding may be the toughest, so try to focus on those most likely to invest. The sooner you get money, the better. Rul K Investors in Mind When Meetin + Know your audience + Simplify your pitch + Let the investor talk more than you + Listen to the investor Connect with the investor + Tell your story and share documented evidence + Balance confidence and humility Valuation: How Much Your Company is Worth? It is common to allow the market to set the price of your company. An investor can set the price or the cap. Basically, the more interest that your company gets from a major investor, the more your company will increase in perceived value Is it easy to find an investor to price out your company? Not always. What you do in that case is look at the comparable companies in your space and base your own valuation off of their valuations. Don't be overly optimistic. You want to determine a valuation that will allow you to actually fundraise, enabling you to achieve the amount you want, along with dilution that is acceptable. You want investors to see it as high enough that they will want to invest but not so high that they can't make a return. A high valuation does not necessarily guarantee you investment money. You want to be credible. As a benchmark, valuations of companies at the seed funding round are usually between $2 million and $10 million Negotiating & Closing Deals Aseed investment can usually be closed rapidly. As noted above, it is an advantage to use standard documents with consistent terms, such as a SAFE Note or Convertible Note. Negotiation, and often there is none at all, can then proceed on one eT 15or two variables, such as the valuation/cap and possibly a discount. Deals need momentum and the recipe to build momentum behind your deal is to tell a great story, persistence, and putting in the legwork. You'll need to meet with dozens of investors before you get that close. But to start you just need to convince one of them. Once the first check is in, each subsequent close will get faster and easier. Once an investor says that they are in, you're almost done. This is where you should rapidly close using a handshake protocol. If you fail at negotiating from this point on, it is probably your fault. Negotiations When you enter into a negotiation with a VC or an angel, remember that they are usually more experienced at it than you are, so it is almost always better not to try to negotiate in real-time. Tell them you appreciate their request and that you need to think it over. Take requests away with you but also remember that although certain requested terms can be egregious, the majority of things credible VCs and angels will ask for tend to be reasonable and hesitating can lose a deal. Do not hesitate to ask them to explain precisely what they are asking for and why. If the negotiation is around valuation (or cap), there are, naturally, plenty of considerations, e.g, other deals you have already closed. It is important to remember that the valuation you choose at this early round will seldom matter to the success or failure of the company. Get the best deal you can get-but get the deal! Finally, once you get to yes, don't wait around. Get the investor's signature and cash as soon as possible. One reason SAFE Notes are popular is because the closing mechanics are as simple as signing a document and then transferring funds. Once an investor has decided to invest, it should take no longer than a day to exchange signed documents online (for example via Docusign) and execute a wire or send a check. Here are a few free investment document resources: https://www.ycombinator.com/documents/ https://www.cooleygo.com/documents/ eT 16ee FUNDING CHECKLIST Documents Needed 1, Do not spend too much time developing diligence documents. for a seed round. If an investor is asking for too much due diligence or financials, they are almost certainly someone to avoid. You will probably want an executive summary and a slide deck you can walk investors through and, potentially, leave behind so VCs can show to other partners. 2. The executive summary should be one or two pages (one is better) and should include vision, product, team (location, contact info), traction, market size, and minimum financials (revenue, if any, and fundraising prior and current). 3. Make sure the sli ki coherent leave-behind. Graphics, charts, screenshots are more powerful than lots of words. Consider it a framework around which you will hang a more detailed version of your story. There is no fixed format or order, but the following parts are usually present. 4, Create the pitch that matches you, how you present, and how you want to represent your company. Also note that like the executive summary, there are lots of similar templates online if you don't like this one below: Your company / Logo / Tagline Your Vision - Your best take on why your new company exists. The Problem - What are you solving for the customer-where is their pain? The Customer - Who are they and perhaps how will you reach them? The Solution - What you have created and why nowis the right time. The (huge) Market you are addressing - Total Available Market (TAM) >$1B if possible, including best evidence you have that this is real Market Landscape - including competition, macro trends, etc. Is there any insight you have that others do not? Current Traction - list key stats / plans for scaling and future customer acquisition. Business model - how users translate to revenue. Actuals, plans, hopes. Team - who you are, where you come from and why you have eT v7what it takes to succeed. Pics and bios okay. Specify roles. + Summary - 3-5 key takeaways (market size, key product insight, traction) + Fundraising - Include what you have already raised and what you are planning to raise now. Any financial projections may go here as well. You can optionally include a summary product roadmap (6 quarters max) indicating what an investment buys. It is worth pointing out that startup investing is rapidly evolving and itis likely that certain elements of this guide will at some point become obsolete, so make sure to check for updates or future posts. There is now an extraordinary amount of information available on raising venture money. Several sources are referenced and more are listed at the end of this document. A founder's goal should always be to raise as quickly as possible and this guide will hopefully help founders successfully raise their first round of venture financing. Often that will seem like a nearly impossible task and when it is complete, it will feel as though you have climbed a very steep mountain But you have been distracted by the brutality of fundraising and once you turn your attention back to the future, you will realize it was only a small foothill on the real climb in front of you. It is time to get back to work building your company. Fundraising Checklist Written Documents: + 2.3 paragraph email templates + 23 page executive summary + 10 slide Investor pitch deck + Business plan (optional) Live Presentation Preparation: + 30 second elevator pitch + 2-5 minute quick pitch + 15-20 minute angel pitch Online Presence: + Website audit (special fundraising checklist) + AngelList Profile + Ashort video pitch Summary of Financials + Cap table + Revenue model audit + Financial Projections eT 18Fundraising Rules to Follow + Get fundraising over as soon as possible, and get back to building your product and company, but also. + Don't stop raising money too soon. You have to raise the funds you need! + When raising, be “greedy.” Talk to as many people as you can, prioritizing those most likely to close. + Once someone says yes, don’t delay. Get docs signed and the money in the bank as soon as possible. + Always hustle for leads. If you're the hottest deal of the hour, that's great, but everyone else needs to work like crazy to get angels and other VCs interested. + Never screw anyone over. Hold yourself and others on your team to the highest ethical standards. Bad reputation is difficult to repair. Play it straight and you will never regret it. Youll feel better for it, too. + Investors have a lot of different ways to say no. The hardest thing for an entrepreneur is understanding when they are being turned down and being okay with it. PG likes to say, "If the soda is empty, stop making that awful sucking sound with the straw.” But remember that they might be a “yes” another time, so part on the best possible terms. Develop a style that fits you and your company. Stay organized. Co-founders should split tasks where possible. If necessary, use software like Asana to keep track of deals, Have a thick skin but strike the right balance between confidence and humility. And never be arrogant! What Not to Do While Communicating with Investors NEVER: Be dishonest in any way Be arrogant or unfriendly Be overly aggressive Seem indecisive - although it is okay to say you don't know yet. Talk so much they cannot get a word in edgewise Be slow to follow-up or close a deal Break an agreement, verbal or written Create detailed financials Use ridiculous / silly market size numbers without clear justification Claim you know something that you don't or be afraid to say you don't know eT 19Spend time on the obvious Get caught up in unimportant minutiae - don't let the meeting get away from you Ask for an NDA Try to play investors off each other when you are not a fundraising ninja Try to negotiate in real-time Over-optimize your valuation or worry too much about dilution Take a "No" personally A Brief Glossary of Key Terms Angel Investor - Usually a wealthy private investor in startup companies. Cap / Target Valuation - The maximum effective valuation for an investor in a convertible note. Convertible Note - A debt instrument that will convert into stock; usually preferred stock but sometimes common stock. Common Stock - Capital stock typically issued to founders and employees, having the fewest, or no, rights, privileges and preferences. Dilution - The percentage ownership share is decreased via the issuance of new shares. Discount - A percentage discount from the pre-money valuation to give safe or note holders an effectively lower price. Equity Round - A financing round in which the investor purchases equity (stock) in the company. Fully Diluted Shares - The total number of issued and outstanding shares of capital stock in the company, including outstanding warrants, option grants and other convertible securities. IPO - Initial Public Offering - first sale of stock by a private company to the public. Lead Investor - Usually the first and largest investor in a round who brings others into the round. Liquidation Preference - A legal provision in a company's charter that allows stockholders with preferred stock to get their money out of a company before the holders of common stock in the event of an exit. Maturity Date - The date at which a promissory note becomes due (or at which it will automatically convert to stock in the case of a convertible note) Equity Incentive Plan / Option Pool ~The shares allocated and set aside for grants to employees and consultants. Preferred Stock - Capital stock issued in a company that have specific rights and privileges and preferences compared to the common stock. Convertible into common stock, either automatically (e.g., in an IPO) or at the option of the preferred stockholder (e.g., an acquisition). Pre-money Valuation - Value of a company prior to when investor money is added. eT 20ee FUNDRAISING IS SALES Startup Fundraising is a Here is a breakdown of the typical fundraising investor sales funnel: Sales Process 1. Source qualified investor leads 2. Nurture warm leads with personalized introductions and emails Fundraising for a startup is a type of sales, and the sales process in any company is known as a “funnel.” The 3. Schedule first meeting with definition of a sales funnel is the prospective investors buying process that companies guide 4, Respond to any data, reference, customers / potential customers or due diligence requests . Drive each lead towards a YES or NO through on the way to buy products. 5. The sales process has different stages, ranging from awareness-building to her Hacks to Help Fundrai customer purchase. In between are usually the interest phase, evaluation, 1. Always push for a clear CTA and close the deal. Always be closing the decision point, purchase and then (ABQ)! re-evaluation and re-purchase. It's linear, with a clear end-goal. 2. Use Facebook Retargeting to plug your targets’ email addresses into ads . Follow-up frequently. Lean on your advisors to schedule important meetings and win new deals. Companies try to optimize each stage 3. of this funnel to advance customers 4 onto spending money to buy the company's products. Each time they “touch” a customer (i.e. email, social media interaction, phone calls, in-person meeting), the customer either moves forward along the funnel or gets stuck - or leaves the funnel eT aiTEMPLATES Template #1 - Warm intro Hack Subject found you through < <écontact last_name>> from >" Hi >, | stumbled onto your Linkedin page today. It appears we both know <> from <>. | found your email address ang decided to reach out, | work for a company called NAME, Since launch in mid YEAR, ‘we've changed the game for With over of, and an avid community of Supporters/custemers/ambassadors/etc, we want to offer you the opportunity to invest and helo us change the entire industry ‘Are you open to discuss whether you right want te invest in ? Ifo, reply directly or scheciule a time to have a allen my Calendly lnk ‘Thank you for your time, Hope to hear from you soon, Best, NAME Template #2 - Advice ‘Why: “Seek money, and youll get advice, Seek advice, Subject “Seeking advice” Hi >, | saw your profile on AngelList and notices you have experience investing in startups in the space, sol toreach out for advice, | work for a company called for and worldwide, ‘We are a matketplace with over # | would like your advice on (user acquisition, fundraising, scaling, - angels expertise). Do you know anyone who may be interested in our curren round of fundraising?* you are open to having a brief call to discuss, reply directly or schedule atime to have acallon my Calendly ink ‘Thank you for your time. Hope to hear from you soon. Best, NAME eT 22i ee CLOSING INVESTORS Closing the First Investor The Pitch Deck There is a proven process to Every great startup begins with an successfully raising startup funding. idea, And even with the best startups, over time that idea is deeply refined I've learned about the process over the years by getting to know afew of Creating your Pitch Deck is one of the the world's most successful serial best processes for getting your idea entrepreneurs, by raising millions and business out of your head, on myself from angels & VCs, by investing paper, and to enable continual as an angel, and as CEO of Newchip. ——_ questioning and refinement of your thinking and approach. Across all this investment and fundraising activity, 've seen thatthe High-level takeaways on pitch decks: most successful fundraises have + Follow the formula investors several key elements in common look for, which I show you in my Below are five parts to successful post fundraising for your startup—with + Investors don't write checks for specific examples, templates, and P P P decks—the goal is to get a resources. meeting/call Go deep on your “meta” narrative—why this, why now, eT 23why you, how + Give basic product/traction points but less information, more story Also, go see successful fundraising pitch decks live in the wild, For this, | recommend you go to Newchip and look at several of the VC-backed companies we have helped raise. Some of these companies are fundraising publicly so you can flip through their decks. Term Sheets - (What To Offer Investors) Ifyou haven't raised angel or venture capital funding before, there's likely a lot you don't know about it from a legal, structural, and process standpoint. The high level fundraising process with investors goes like this: The founder shapes terms of the financing (e.g. $500,000 in priced equity at a $5M pre-money valuation) The founder discusses these with investors, and investors consider and respond A first investor decides they will invest at specific terms (not always at the terms shaped by founder) If founder accepts, this can be formally or informally a “lead investor” (someone credible who priced the round) All the detailed legal documents get created or updated, and the investment is finalized The founder goes out to raise the remainder of the round at same terms from other investors Term sheets are used in this process to help founders and investors come eT 24to an initial agreement. After terms are agreed to and the term sheet signed, long form documents are drafted by legal counsel, signed, then money is wired. Build Your Target Investor “Hit List” Every great fundraiser aims high by first finding out who the best companies and investors are in their space, and then learning about them and setting goals to to meet with them and capture their interest and investment. To this end, you want to build a deep and ambitious investor “hit list” for yourself. This is a list on an excel spreadsheet of at least 40-50 active investors—notable angels, VCs, and high net worth people who have created, sold, invested in companies in your space. Great fundraisers do great research to find these investors and are creative and resourceful in the ways they find to contact them directly. Your first step is to search Google for the leading investors in your space/industry. Google “top ___ angels" and “top _investors.” As a FinTech company | might search for “top fintech investors" and I would find hundreds of companies and even list in the search results which | would add to my hit list. This will help you build up your hit list of 40-50 investors or more across both individual angel investors and VC firms. In your excel spreadsheet write down the names of the investors or firms, and partners in those VC firms, and what city they're in. Then use the online lists of investors to deepen and flesh out your list info at places like 25Crunchbase, LinkedIn, and Newchip. Also, leverage the success of companies that have come before you and raised money in your space. Search for the names of companies you know have been very successful in related markets to yours, and use these online investment sources and platforms to identify who the investors are who invested in those deals. These are also your target investors. With your hit list in hand, you're ready for the next step in meeting and pitching investors... Preparing, Meeting, Pitching Investors Getting in front of investors takes several steps in preparation before you can expect to find and reach the right investors, meet with these investors, and close any funding. Successful fundraisers put the following process into place before they go out to investors, to make sure their time is well spent. Ifyou don’t have a live product, get as close to a working demo as possible (wireframes, designs, etc.) Ive seen this be a simply a mock up of an entire app, or screen shots, CAD designs, etc.. Just don't expect slides ona deck alone to do the trick and trigger interest. Ideas are not what investors fund but detailed product plans, progress, teams, and rollout strategy can be. 1. Get friends & family (or yourself) to put first money into the company/round 2. Bring on an advisor or two with eT 26experience in a related space, expect them to add value & make intros 3, Structure & timing are critical - they are your friends. Set a specific time frame for your fundraise to include an outreach period, terms period, closing periods. Tell investors exactly what the time frame and process is. Often times I see great fundraising set the timing up as roughly two weeks for outreach & scheduling, four weeks of meetings where they meet with investors and discuss and negotiate terms, and then four weeks of closing to follow where they get everyone in (or not) in a timely manner and with a final close deadline. The more you stick to your timing and your guns here, the more that both you and your investors will respect your time, and the more often investors respond more positively, 4, Send a short pitch deck ahead of the meeting, set expectations that you are asking for funding (qualify) 5, Have an “ask” and suggested terms for the investment when you meet (see Term Sheet section below) 6. Plan to hear “No” from all of your early meetings. Knowing this, go to the lower pressure and less significant investors first. Use these meetings to get feedback and become more comfortable on your pitch. Pay attention to what they question, where they get hung up, what they are excited by, how you did well and where you were weaker. eT 277. Expect a lot of No’s and failure. Everyone fails most of the time at fundraising, until they don't. 8. Celebrate the process of getting good investors to say No. | know this sounds odd, but hear me out. Every successful founder knows how hard fundraising is, myself included. To feel better about myself in the fundraising process, | developed a strange and unusual “ritual” that | took up in order to not feel as deflated at difficult points in the fundraising process. My ritual? | make a point of it to celebrate how many “No's" I received. | actually look over the long list of all the investors who have passed in one long spreadsheet. Looking at this, | positively acknowledge myself for the hard work, time, and toughness it has taken to get this many meetings and hear this many “No’s.” | also remind myself that this is part of what success looks like—getting in front of lots of great investors while knowing that | will likely hear 15-30 No's for every one “Yes” early on Use Equity Crowdfunding To Reach Investors Early stage funding across angel and venture capital is moving online. As little as two to three years ago, it was against the law to raise funding for your startup online. But today there are new opportunities and new laws that allow you to raise money online from angels, VCs, and even everyday smaller investors. In short, new equity crowdfunding platforms are aggregating investors 28and can help you get in front of hundreds or thousands of investors in a short period of time. My recommendation to any startup founder is this—first start by raising funding more traditionally offline and aim as high as you can to build great direct investor relationships. Get a strong investor or two in if you can first —as they bring strong follow-on interest once you're on an equity crowdfunding platform. Then... look to leverage what you're already doing with an equity crowdfunding platform- in the Newchip Accelerator program we provide access to our investors and a platform to raise on from both retail and accredited investors. Accelerator Invitation We hope you found this guide helpfull Remember, this guide is meant to be an intro resource to fundraising as that average funding rounds take between 12-14 months to close. If you are interested in accelerating your funding and traction, be sure to apply for our accelerator programs and shave up to 9 months off your raise! You can learn more below at: Attp://www.newchip.com/accelerate 29GROWTH HACKING TRACTION & SALESi ee GROWTH HACKING Launching a startup is only the beginning of the journey for any entrepreneur. Actually, driving growth through user adoption is a whole other story. How much traction your, startup is able to gain, as well as how quickly, will impact the growth trajectory and outlook of your business. If you aren't gaining traction early on, you may have to reconsider your product strategy or even business model all together. Needless to say, hacking growth is a particularly challenging stage for most startups because this is when you begin to learn the reality of your value proposition. Do people actually want what you offer and, if they do, at what price point? Fortunately, there are several hacks you can use to help drive traction across your product and business. Strategies to Drive Traction 1. Have A Clearly Defined Goal Having a clear, unique goal allows you to break things down into achievable goals, like: + Ifyou add x feature, how many more customers could you generate? + How many customers per week do you need? + How many people could you get exposure to if you partner with x? + How many emails do you need to send? 2. Leverage Your Pre-launch List The first thing you need to kick-start your momentum is to leverage the list you built in the months before launch. You should already have an idea of what you want to do here; it might be a simple announcement email with a call to action. + Give pre-launch users a special offer they can't refuse + Build a campaign to get users to refer friends + Send swag to users if they eT 3mention you on their blogs or social media Send actionable emails to your list on how to use your product 3. Do Things That Don’t Scale You should be laser focused on getting those first people using your product, or those first customers paying you money. Things usually don't take off alone, which is why you, the founder, need to do things that don't scale to give your product the best odds. You should also consider if you are chasing the dream of becoming a unicorn or a forever company. This is extremely hard work when you have no presence. If you've put effort into your pre-launch, then this first step will be easier, but if you haven't, then you need to do things that don't scale, things that founders will need to do again and again that can’t be automated. + Give people free access to your product in exchange for promotion + Meet investors or potential partners + Organize launch or milestone parties + Do user testing with real people + Giveaway swag to get your customers talking about you 4. Build an Awesome Product Having a great product or thinking about how you present that product to the world can have a huge impact on your growth. The better your product is, the more you will be able to align all of your business functions to drive toward growth. If your product is in the “not-so-good” category, then you end up overplaying marketing to make up for the fact your product isn't so good - which can be done; it’s just harder. 5. Get Your Analytics Right You need to understand various data points about your business to facilitate growth and understand the effectiveness of campaigns. Some questions you need to ask yourself: + Which paid traffic sources are most efficient from an ROI perspective? + Which landing pages are converting the best for us? + Do mobile users convert? + Is there a particular subset of users that convert high? + How do we identify that so we can find more of them? + How can | use analytics to track errors? Are there any conversion issues with specific browsers? eT 226. Build Email Lists You only really realize the power of a good email list when you have one at your disposal. Consider a medium that goes straight to someone's inbox with the message you want, in exactly the format that you want it. Email is still probably the best one to one communication a business can use. It can be used to: + Communicate with your customers personally + Send out reminders or regular product updates + Let customers know about events + Highlight product launches + Drive sales from smart product positioning 7. Case Studies & Use Cases Are Amazing Case studies are crucial to the growth of your business. They give you credibility in the marketplace and show potential customers how others are using your product successfully. Focus on using case studies to sell certain features of your product that you want to draw attention to and equip your sales team with these stories to drive growth. Case studies can also open doors into new market opportunities and might even act as tutorials to help existing customers get more from your product. 8. Embrace Freemium If your target market has a lot of incumbent players, then you may need to consider introducing a “freemium" plan to gain traction. This lowers the barrier to entry for adoption and helps you acquire users faster, ultimately driving product growth. Freemium also attracts beta users faster! Freemium is also a model that many venture-backed companies adopt, but there are some downsides to consider this approach to operating your startup: + Potentially lowers the overall value of your paid product Requires bandwidth to support higher volume of free users + Leaves you vulnerable to abuse of non-paying users + Requires you to consider carefully how to introduce paid features Sales Hacking for Traction Growth Akey component of the “hacking for growth” mentality is experimentation. Without a willingness to try new things and change your sales efforts, it will be very challenging for you to hack your sales to a level that drives 33your sustainable growth over the long term. Some of the easiest ways to hack your sales to success are listed below: Use video to tell your brand story in compelling ways You should connect emotionally with your customers by producing and sharing your brand story in a video that blends powerful imagery and your “why” as a company (your company’s bigger purpose in the world). Did you know that 72% of B2B buyers watch videos throughout their entire path to purchase? Engage on social media channels The best use of social media is to build relationships with people and have two-way conversations with your customers, partners and investors online. Actively post updates about your company, follow key players and invite people to engage with your content on all major social media channels. You can establish your thought leadership and credibility. You can also do effective lead generation on social media with targeted, paid ads. Boost lead generation through content marketing Content marketing is basically producing a lot of content that educates customers and prospective customers. It's not about hyping your products. It's more about thought leadership and educating your stakeholders about relevant topics, themes, issues, challenges and opportunities - ultimately, related to your business. As you educate your customers, they will make better decisions to buy your products and feel more strongly about them in positive ways. Send out cold emails You can buy lists of target customers and send out email blasts to them. You can also have a more personal touch one-on-one, sending emails to people you do not know, capturing their attention with a strong hook (story angle) Leverage the power of influencers Influencers include journalists, market analysts, bloggers, investors, tech gurus, policymakers and other startup leaders. You should build relationships with them and leverage their influence to benefit your startup. Journalists can write positive articles. Analysts can recommend you to clients. Bloggers can tell their eT 34followers about you. Identify all the influencers you know or should know. Recruit an affiliate to drive traffic Affiliate marketing is when an online retailer pays commission to an external website for traffic or sales generated from its referrals Growth hackers don't have to be marketers; in fact, they often have no marketing experience. Many are engineers, salespeople, designers, or product managers. Successful growth hackers are always in high demand. They start their own companies or work at venture capital firms. They're irreplaceable and don’t often think about the issue of job security, For example, Chamath Palihapitiya growth hacked at Facebook for several years as the leader of its International User Growth team. His strategies and leadership helped grow Facebook to nearly a billion users. He is now worth close to a billion dollars and runs Social Capital, one of the world’s best venture capital firms (invested in Box, CommonBond, Slack, & more). Successful Cases of Growth Hacking Without growth hacking, Dropbox, Airbnb, Uber, and many more companies would not be household names. Dropbox gained tens of thousands of users in just days by releasing its famous explainer video. Airbnb’s early growth happened thanks to its licity stunts at the 2 Republican National Convention. This growth hack gave Airbnb the early traction it needed to stay in business. Uber built up its supply of drivers early on by partnering with black car companies in each new launch city. Black car companies made extra money and Uber got tons of drivers with relatively little effort. With this comprehensive guide on growth hacking and digital marketing, you'll learn how to get the traction your startup needs. 35Use Stretch Goals with SMART Goals to Achieve Rapid Growth In Charles Duhigg’s book Smarter Faster Better: The Secrets of Being Productive in Life and Business, he teaches people and teams how to get more work done using the SMART goals strategy. Stretch goals are the objectives that seem difficult or downright impossible to achieve. How can we safely send a colony of people to live on Mars in the next 20 years? What needs to happen to reduce fossil fuel usage by 50% in the next 30 years and how can we make it happen? These aren't goals with clear trajectories. Yet, the importance of achieving these goals is profound. Stretch goals can be daunting to work on because people usually don't have any idea where to start with them. In contrast to stretch goals, companies should also implement SMART goals, which are “Specific,” “Measurable,” “Attainable,” “Realistic,” and “Timely.” Because stretch goals seem so difficult to achieve, you need to have SMART sub-goals for them. If you don't break a stretch goal down into manageable parts, you'll get overwhelmed and do no work. You should have an overarching growth goal for your company. Make the overarching growth goal a stretch goal that seems impossible to meet. Does having $200,000 in revenue at the end of your business's first year seem achievable? Great! Make that revenue goal $1,000,000 and actually challenge yourself to get to it. Once you have a growth stretch goal in mind, come up with a series of SMART goals you'll need to achieve it. eT 36You don't have to know every SMART goal right away. But, write down several SMART goals at the start so you can immediately start working on growth. By pairing stretch goals with SMART goals, you'll be forced to create and use growth hacks to distribute your product. This is why pairing stretch and SMART goals is so effective when growth hacking. The audacity of your stretch goal will force you to innovate when it comes to marketing and achieve faster growth than you ever thought possible. The Bullseye Framework for Growth Hacking Traction There are a lot of traction channels you can use to grow your business rapidly according to the book Iraction Traction channels are a distinct bundle of related strategies and tactics for growing a startup. Examples of traction channels include email marketing, SEO, and PR. According to Gabriel Weinberg and Justin Mares, the creators of the traction channel concept, you should mainly invest in one traction channel at a time. With 19 traction channels to choose from, you might be wondering how to pick the best one for your business. After all, if you should only invest in one channel, it better be the one that drives the biggest results. Use Gabe Weinberg and Justin Mare’s Bullseye Framework to find the best traction channel for your business. The 3 Components of the Bullseye Framework: First, brainstorming every traction channel with “The Outer Ring” Brainstorm a few ideas you can use eT 7for each of the 19 traction channels. In this step of the Bullseye Framework you should think of a few ideas to use with each traction channel. Offline ads are an example of a traction channel. Ads on TNT, billboard ads in Illinois, or advertising across the country’s rock radio stations are specific growth ideas within the offline ad traction channel. Write your ideas for each traction channel out on paper. Try to make these ideas as useful and realistic as possible for your business. Circle the best growth strategy for each traction channel. Research which traction channels your competitors have used successfully. Look at what successful and failed companies in your industry did to grow. This sort of research will become very helpful at the next stage of the Bullseye Framework. Test your most promising traction channels in “The Middle Ring” Choose four or five of the traction channels that you think have the best shot at moving the needle for your business. Then, take the best traction idea for each of these channels and run a low-cost test for it. Here is a list of ideas you can use to run traction tests for every traction channel. You want to answer these questions with your traction channel tests: What is the cost of customer acquisition with this channel? How many potential customers can | reach with this channel? Will this channel give you the type of customers you want for your business right now? eT 38Run your tests for each traction channel at the same time. Don’t spend more than a hundred to two hundred bucks when testing each channel. Also, don't go all in on one traction channel before testing at least a few different ones. Get enough data to prove which strategy will best grow your company and then scale up your spending on that strategy. “The Inner Ring”— Focusing on the traction channel that works best in testing After testing different traction channels, focus on the best-performing one. Assuming you did your homework, one of the traction channels you tested in step two of this framework hopefully produced some traction Once you know which traction channel and strategy perform best, you should invest nearly all of your resources into them. You try to maximize what your main traction channel does for your company at each of its different growth stages. You maximize results by going all in on a particular traction channel. As your startup grows and changes, the primary traction channel you use to grow will change too. You'll know it's time to switch traction strategies when your current channel starts to become less effective. If none of your traction tests produce traction during step two of the framework, you should repeat the process until you find an effective channel. Please don’t make the mistake of using a traction channel that was ineffective during testing. Besides that, avoid the pitfall of not investing most of your growth eT 39resources into your best-performing traction channel. With the Bullseye Framework you will find a traction channel to grow your business. Now, let's take a look at the 19 different traction channels and how they work, eT 40i ee CUSTOMER ACQUISITION Customer Acquisition & Traction Channels In their famous book Iraction, Gabe Weinberg and Justin Mares laid out the 19 different traction channels businesses use for growth, tried and true ways to grow any business. Below is a brief description of each traction channel along with an example of a business that growth hacked each channel to success. 1. Targeting blogs —Bloggers want to write about startups and services that will help their readers live better lives. Find blogs in your market, pitch them on how your business will help their readers, and ask for them to write about you. Noah Kagan used this strategy at Mint.com to help the company get more than 1 million users in six months. 2. Sales —Consumer products generally don't need salespeople or sales teams to convince consumers to buy them. That said, many 82B products (especially ones being sold to large, enterprise customers) need a sales team and process to close deals. Sales is tricky and expensive, So, make sure your product absolutely needs a sales team before going out and building one. Startups that have used sales as. their main growth channel are Zuora, Qualtrics, Tanium, Docker, ConvertKit, and more. To learn more about sales, read The Ultimate Sales Machine, Jason Lemkin’s blog, and SPIN Selling. Content marketing is one of the best ways to grow B2B businesses in the eT along run 3. Content marketing —Your potential customers want to earn more money, be better at their jobs, and know more about their industries. With content marketing, you provide free education to potential customers about your industry and build a valuable audience over time (like this eBook). As your audience begins to trust your brand thanks to the free and valuable content you release, they (you) become your customers. Companies like Buffer and Groove have used content marketing as the backbone of their startup growth strategies to. great success. 4. Public relations —The media loves to talk about exciting companies that are changing the world. When online media companies cover your business, you're doing them a favor because you're giving them fodder for more page views. Startups that have used PR to ignite huge growth include DuckDuckGo, Tinder, and Snapchat. To learn more about PR read this book by Ryan Holiday and this book by Jason Kincaid, 5. Email marketing —Social media doesn’t have very good conversion rates. Email marketing has the best conversion rates. People buy stuff in droves over email. Building up an engaged and loyal email list is a great way to grow your product and increase sales. Companies and startups that got traction using email marketing include Jackthreads, Groupon, and AppSumo. 6. Existing platforms—There are a few enormous platforms like the App Store, Facebook, Google Play, Stripe, eT 42and more that you can build your business on. If your business gets featured and promoted by one of these platforms, it will grow fast and furiously. Evernote used the App Store as a platform when it launched to quickly get millions of users. Baremetrics used Stripe as a platform to grow to $25,000 in MRR in just a few months. 7. Unconventional PR —Startups have used publicity stunts, viral videos, and acts of customer appreciation to fuel rocket ship growth for decades. Richard Branson is famous for using publicity stunts to launch new lines of business at Virgin Group. Josh Kopelman persuaded a town to rename itself as his company, Half.com, which helped propel him and the business to huge heights. Blendtec used viral videos to increase the sales of its blenders many times over. Companies like Grasshopper and Hipmunk have used customer appreciation to increase word of mouth marketing for their products. 8, Engineering as marketing —Releasing free tools that help your customers do their jobs better is an excellent way to grow your business. These tools should be valuable, well-designed, and easy-to-use. ‘HubSpot released its Marketing Grader too! for free early on and it has generated more than a million leads. More recently, companies like Crew and Runscope have used engineering as marketing in the form of free tools to turbocharge their growth. 9. Trade shows— Companies can network and promote their products in person at trade shows. Startups like RJ Metrics have successfully gotten big sales and started relationships with important partners at trade shows. To eT 43use trade shows as an effective growth tool read the chapter about them in Traction 10. SEO (Search Engine Optimization) —Websites, articles, and videos that get to the top of Google, Bing, Youtube, and other big search engines receive tons of traffic and customers. Often, companies need to use another traction channel like content marketing, publicity, or an unconventional PR strategy in order for SEO to work. Companies that have used SEO to grow and become successful are Moz, RetailMeNot, and Wikipedia. To learn more about SEO check out Backlinko and The Moz Blog. 11. SEM (Search Engine Marketing) Using paid ads in Google, Bing, DuckDuckGo, and other search engines to promote your product are all examples of SEM. If you need to scale up sales of your product, SEM can be a good way to do it. Using SEM effectively and profitably takes time and thousands of dollars of test ads. But, once you get it right it can lead to huge profits. Startups and companies like Constant Contact, Bigcommerce, and Groupon have used SEM to grow in leaps and bounds. 12. Business development Partnerships have been used by companies of all sizes for years to increase growth. In Traction, Gabe Weinberg and Justin Mares lay out five different types of partnerships, which are standard partnerships, joint ventures, licensing, distribution deals, and supply partners. It's very hard for companies to close partnership deals, but they can be invaluable. Google got its initial burst of traction by 44partnering with Yahoo to power their search engine. Delicious used a partnership with The Washington Post to increase its traffic and land lots of other key partners, Throwing a conference or a different type of offline event can propel your startup’s growth. 13. Offline events —People love to attend conferences and get-togethers where they can network, learn, and have fun. As the host of an offline event, your company will have countless opportunities to grow its brand, talk with customers, and close key deals. HubSpot's annual INBOUND conference brings 10,000 marketers together with HubSpot and its various products at the center of it. Other companies like Product Hunt sponsor or host smaller meetups cities all over the world to grow its community. Finally, you can throw a party as a way to schmooze with leads and promote your business. Uber is famous for throwing big parties in all of their launch cities. 14. Social and display advertisements. Advertising on blogs, Facebook, Twitter, and other large social networks can be very effective at getting cost-effective leads and customers. Wordstream, Intercom, Tipsy Elves, and Chubbies have all used social and display advertising as effective traction channel. To learn more about how to effectively use social and display ads, read the AdEspresso blog, the MixRank blog, and Coelevate. eT 4515. Affi te programs When someone receives money or some other compensation in exchange for promoting the successful sale of a product, an affiliate program is at work. With affiliate marketing you can have tens to thousands of influential bloggers and people promoting your product in exchange for a cut of each sale. Startups like WP Engine, Bench, Olark, AWeber, and more have used affiliate programs as an important traction channel. To make your affiliate program more successful, considering joining an affiliate network like ShareASale, CJ, and ClickBank. 16. Speaking engagements Speaking at conferences and other live events can be a great way to build business relationships with future customers, partners, and friends. That said, most of the time conference talks won't lead to any tangible business results in the short term. Be mindful of this fact when looking for speaking gigs. Speaking at conferences is often a product of success, not a cause of it. 17. Viral marketing (customer invites and viral loops) Any successful social network or company that allows users to join for free most likely used viral marketing. Gmail, Facebook, Linkedin, Twitter, Pinterest, and other sites used viral marketing to create explosive growth, With effective viral marketing you create a system where each new user invites at least one more user after they sign up. The average number of users each new user refers to a product is its viral coefficient. If you use the viral marketing traction channel, your goal should be to have a viral coefficient greater than one. eT 46Viral marketing is much tougher than it looks, which means you should be careful when using this traction channel. 18. Community building Some products like Stack Overflow, Product Hunt, and Reddit have communities at their core. Ryan Hoover wrote an excellent article on how to start and grow an effective community-based product. If you want to build a community-based product, use Ryan's article and the chapter about community-building in Traction as your starting points. Communities can be built and fostered to grow other products too. Y Combinator’s brand has grown directly in line with the growth of its Hacker News community. Another example is Qualaroo's customer base and revenue growing as its GrowthHackers.com community has grown. 19. Offline ads—TV, magazine, newspaper, radio, billboard, yellow pages, infomercials and direct mail ads fall under the offline ad umbrella. Some offline advertisements can be extremely expensive and don't make sense to use when trying to growth hack your company, That said, purchasing remnant advertising can be an inexpensive way to show your business to lots of people. Startups like Uber, Jet.com, Squarespace, SeatGeek, and Sofi have used offline ads successfully. 47ee HACK IT RIGHT NOW What You Can Do Today Individual growth hacks to grow your business immediately 1. Keep your signup experience extremely simple Limit the number of fields users have to fill out when signing up for your product. First, get users to sign up with minimal information like their name, email address, and password Then, once they're in, have them fill out the other information you need from them. When users see signup flows that are too long, they often abandon the signup process before finishing it. 2. The Website Launch Checklist Your product's website doesn't have to be perfect when it launches, but it should be professional, SEO-ready, well-designed, usable, and secure. Use this website launch checklist from HubSpot before launching your product to make sure its website is up to par. With a launch-ready website, you'll get more press, traffic, and customers from the start. 3. Test your site for UX issues with UsersThink If your product isn't usable, people won't USE it frequently and it won't grow. You should try to improve your product's UX every day. One way to improve your product's UX is to ask people for feedback on its usability. UsersThink gives you an army of users that provide professional UX feedback. Pricing starts at $39 on UsersThink, but the feedback you receive from it will be invaluable. eT 484. Improve your site’s speed Faster websites get more customers, have lower bounced traffic. and receive better usability ratings. If you make your product and website faster, it will grow faster. Having a fast website should be a top priority for growth and UX. Use this article as a guide for decreasing page load time and increasing site speed 5. Add social proof to your landing pages Did a press outlet cover your product? Have high-profile customers vetted your product with an outstanding review? Put them on your website! Social proof provide security to potential customers. 6. Keep your homepage as minimal as possible If your homepage has too much content, visitors will get distracted and leave. Write persuasive copy with compelling visuals on your homepage, but don't overdo it. The old adage “Less is more" works well for homepage design and most other design projects too. Check out this article for inspiration and guidance when it comes to creating simple, effective home pages. 7. Use integration marketing to fuel product growth Your product would likely benefit from integrating with other products that have public APIs. Aim to create ‘one product integration every month. After finishing each integration reach out to the team that runs the other product and ask them if they'd like to do a co-marketing campaign. Some percentage of the products you integrate with will want to do a big eT 49