He came, he saw, he almost choked, but he still walked away with the big cash prize.
“I completely lost my way three minutes in to the pitch and left two minutes out,” he told the July Entrepreneurs Anonymous meet up.
Nevertheless, he beat the other 13 contestants to take first place and the €30,000 ($40,000) prize. The reason: He had customers and no one could argue with the validity of his business.
“Smoke and mirrors is all fine, but it was the numbers that won it for us,” Staunton told the group of entrepreneurs.
Just over a year ago, Staunton, a software developer, started building PropertyGate (@PropertyGateLtd), an online system to manage property porfolios.
This is his first venture and he now has customers, cash in the bank, and is bidding on contracts in Germany and the distressed Spanish market.
Staunton’s idea came from a bad experience he had as a tenant where he lost a deposit for allegedly damaging a cooker.
As Staunton noted, in a house with young male tenants, that particular appliance is unlikely to see any heavier action than as a resting place for pizza boxes.
But on his quest to build software for landlords and tenants, he learned a few lessons.
Validate your idea — now: Staunton based his first iteration of PropertyGate on a personal experience. “I assumed people would want this product, but they didn’t,” he said.
Even before a product is fully developed, entrepreneurs should be out talking to potential customers, Staunton said. “If you’re not selling it or you’re not validating it, then you’re wasting your time.”
- Read more on customer validation from Diane Roberts.
- Read even more on customer validation from Gary Leyden.
Make money cheap for yourself: At first, Staunton estimated a €450,000 (£393k / $597k) investment was required for expansion and hiring. After analysis, he calculated €250,000 was more realistic.
This cuts down on the amount of equity he has to surrender to investors, he said. They are also much more likely to invest on favorable terms when a start up has traction. “Nothing gets you investment like customers.” The terms offered are also likely to be better, he said.
And don’t take money until you need it. “The longer you can put off investment the better,” he said.
Be flexible: Staunton raised a number of points that went beyond the pivot buzzword. He had to change his conception of who his customers would be. At first, he thought it would be small landlords. But he quickly found out they would be fine with Excel.
He was reluctant initially to approach banks because he didn’t want to feel he was making money off repossessions, Staunton said. But his opposition softened after he found out they intended to use PropertyGate to engage with all their stakeholders.
The name of his company is likely to change, he said. It was chosen in a hurry when forms were being filled in but it is now for the chop.
In terms of equity, Staunton said to be prepared to give chunks away to co-founders. If investors are brought on, then the fundamental nature of the startup has changed, he warned.
Investors want to exit and cash in their investment after three years. That puts a finite life on the business. “That’s a sale, that’s the long and short of it,” he said.
Entrepreneurs need to be ready to step aside, Staunton advised. Investors reserve the right to hire on an experienced CEO that will grow the fledgling business. That loss of control can be tough for some entrepreneurs to handle, he noted.
Image from a Silicon Republic article on Staunton.