Weekly Accelerator Updates

Week 5: Midpoint Retrospective

Week 5 Recap

This week marks the midpoint of our program. Following are some topics to reflect on.

  • Business Fundamentals Review
  • The Due Diligence Package
  • Proforma Deep Dive
  • Midpoint Retrospective

Business Fundamentals Review

With 4 weeks of full time focus teams know much more about their market and customer, and several teams are either ready to test their MVP with customers or are already running a pilot. This is a good time to review every aspect of your venture.

The Disciplined Entrepreneurship Framework’s high level themes are a good framework to force the conversation about where you have good data, and where you need to work on validating your hypotheses. Read these prompts, and think about where your venture stands. In particular, stress the details on your financial projections. Layer in any market data that can help you iterate your models.

  • Who is your customer? Does your market segmentation and selection still make sense? Do you have data on end users? Did your paying customers and other stakeholders change – and if so, did you redo your primary market research to understand the needs and goals of all personas?
  • What can you do for your customer? Do you have a clear idea of your solution? Do you know how to build your solution? Do you have a working prototype you can test with? Is your solution differentiated in the marketplace? Are you clear on the value proposition and benefit statements to all of your stakeholders?
  • How does your customer acquire your product? Do you have actual test data on your go to market strategy to validate your approach? Do you understand how your paying customers, champions, and end users come aware of your product and go through the due diligence process to acquire your product? Do you have the start of a viable sales process with data collection in each tier of your sales funnel?
  • How do you make money off your product? Do you have any data on your pricing architecture and price levels? Do you have data on customers’ willingness to pay? Do you see your way clear towards a steady state Life Time Value (LTV) that is more than three times your Cost of Customer Acquisition (COCA) or Customer Acquisition Cost (CAC)? Do you understand your unit and overall economics and have a bottom up model for your 5 year pro-forma income statement with bottom-up, testable assumptions backing up your revenue projections as well as your operating expenses?
  • How do you design and build your product? Do you know how to build a testable version of your MVP where applicable? Do you know the steps to building real product knowing your MVP is likely a throwaway prototype? Have you designed and run lean experiments to test your riskiest assumptions?
  • How do you sale your business? Do you have a go to market strategy beyond working with friends and family? Do you have a strategy towards a larger market segment that opens up the opportunity for greater reach and impact for your venture? What is your “path to greatness” in the next 5 years?

The Due Diligence Package

The midpoint of the accelerator is a very good time to start thinking about assembling a due diligence package for your venture, starting with revising your venture’s Executive Summary.

The due diligence package forces entrepreneurs to look at their own venture through the eyes of an external appraiser as if they are raising money or pursuing a merger-and-acquisitions deal. It is largely a process of data curation and data presentation. More importantly, in the process of preparing the package, it is almost guaranteed that entrepreneurs will find things they need that they don’t have. It might be market validation they don’t have. It might be documentation about a clear path to the necessary intellectual property they are trying to license. It might be documentation about noncompetes and non-solicitation agreements that protects the business from leaching company secrets and talent to the competition. Putting together a first-pass due diligence package will help entrepreneurs prioritize their activities to fill in the gaps.

Docsend’s Due Diligence Checklist

Due diligence packages vary in level of detail and content based on company stage, maturity, and purpose of the due diligence. For new venture builders, we recommend that you consult Docsend’s Due Diligence Checklist regarding what goes into an early stage growth-style startup’s due diligence package. Here is a top level summary of the components of this checklist.

  • References (personal and professional). This covers references for the venture’s product, services, and people.
  • Corporate records and documents. This includes any organizational documents, meeting notes, organization charts and the like.
  • Business plans and financials. This describes the business case for your venture and explains how it is a financial sustainable enterprise.
  • Market research. This includes primary and secondary market research data that supports your hypotheses.
  • Intellectual Property. If you are licensing a patent OR you have a new invention that is patent pending or patented, be sure to include that. this also includes IP protection on trademarks.
  • Shareholder information and agreements. This is very important – have you raised equity capital? Have you issued stock options or grants to employees? This determines ownership of your company.
  • Material agreements. Do you have letters of intent or contracts proving purchase intent from your paying customers? Do you owe money? Do you have license deals to use technology from another company?
  • Risks and potential litigations. Is there any potential lawsuits or regulatory investigations?
  • Employment relations and benefits. What is the full list of employees with their compensation packages? What do the templates for the offer letter, benefits etc look like? Is there an employee handbook?
  • Equity grants. What percentage of common stock are you holding back for employees and how much equity have you granted?

Tufts Venture Accelerator’s Minimalist version

Most very early stage ventures will not have all of the above. We have created a streamlined, minimalistic Due Diligence Package Checklist for our accelerator cohort. This includes:

For this week, the absolute must-have is the 5-minute Venture Pitch Deck. This is the lingua franca for new ventures. It is difficult to create a credible pitch deck if you don’t also have the executive summary (which lays out the business fundamentals in concise prose), or the 5-year pro-forma income statement (which lays out your assumptions about the next 5 years and gives you a window into what type of business you are planning to build) so we do recommend you also work on the other two items in this due diligence checklist.

Midpoint Retrospective

We encourage you to ask yourselves the following questions based on the past few weeks of work.

  • What went well regarding your progress compared with your expectations?
  • What could have gone better – and what did you learn from the process?
  • What might you do differently in the next 5 weeks to accelerate your progress?

Are you on track to achieve your summer goals? Reflect on that – and reflect on whether your original goals are the right ones. Then take what you have learned and course adjust as needed.

You might find that the halfway point is a tough time for you. The novelty has worn off, you may not have achieved as much as you had hoped to achieve, and you may be feeling a little tired. Or you may be mid-pivot –  and the future looks murky. Don’t get discouraged. Instead, think about all that you have accomplished thus far – and celebrate all that you have learned. Apply the learnings to accelerate your progress in the second half of the summer.

You might also find yourself dealing with team conflict, since this may be the first time you all have worked together at a high level of intensity. This is a good time to read “50 Questions to Ask Your Cofounder” by Gloria Lin, Cofounder of SitelineHQ, and “Founder’s Dilemmas” by Noam Wasserman.

All this is normal. Take the time and space to think strategically about how you, your team and your venture are doing. Reflect on the knowledge you have built. Then make decisions about whether to persevere, pivot or otherwise shake up your approach to not only achieve your goals, but to exceed them beyond your own expectations.