At January’s free NWEN ThinkTank, a standing room audience of 60+ entrepreneurs packing the Spitfire’s back room heard Brian Glaister of Empowering Engineering Technologies talk about how his company got a $250,000 term sheet from an investor he met at the Spring 2010 First Look Forum (FLF).

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We can’t resist the opportunity to give another shout out to the twelve companies who presented at our third First Look Forum event yesterday, and the whole community of folks who made it possible! Both John Cook of TechFlash and Greg Huang of xconomy did some incredibly thorough write-ups of the afternoon showcase, so we’ll just chime in with some context around the program itself.

What is this event anyway? The forum itself is the end of a two-month application, screening and coaching program, but we hope just the beginning of a new path for these diverse companies!

You already know the elevator pitch is critical to your business, not just for pitching but to crystallize the goals of the company in your own mind.

You might also have developed a one-line positioning statement — a single sentence that defines the company in a simple, clear, sentence.

What if tomorrow I forced you to double your price?

If you sell software, your prices just doubled. If you’re an hourly consultant, your rate just doubled. If you’re a salaried employee, you’re now demanding double your salary.

Ignoring the (understandable) backlash from your existing customers/employer, what would you have to do to justify the new price tag?

• If you’re selling software, would it be best to add new features, or would people perceive more value if it were beautifully designed? Does it need more functionality or fewer bugs? If a customer emails tech support, what response would impress the customer? If a customer comes to you with twenty feature requests, do they get lost in the shuffle or do you proactively contact them quarterly with updates?
• If you’re a consultant, could you command a higher rate if you got certified in some technology, or would you earn more authority writing a quality blog? Should you charge for every email or provide some advice gratis? Should you charge a low rate but milk projects for extra hours or should you be expensive but brutally honest with your time reporting? To maintain contact with your past customers, is it enough to send automated holiday e-cards or should you write a quarterly newsletter with useful tips and ideas?
• If you’re an employee, how could you make yourself indispensable? Is there a project lying around that no one else is taking the initiative on? Is there a way to save money? Is there something you could do above and beyond your job description that would undeniably improve the company?
• If you’re looking for work, should your r

A business plan, an elevator pitch, a pitch deck — the number of different things you have to have to successfully pitch your company is amazing. Now add in the one pager. Whether you call it that or an executive summary or a company overview, it’s an essential part of the whole story. Like the one-page resume, you want a single, concise one-page document that you can hand to potential investors and business partners. There are lots of advantages to having it be a single page, but I’m only going to mention the most important one — investors expect it.

To create my one pager, I started with my five-page business plan. I went through and highlighted all the most important stuff, then consolidated that in a new document which ended up about two pages long. Then I started looking for things to trim. I was pretty close to finished when I decided that I should make sure what I was doing was consistent with what I needed to submit to another competition, the Willamette Angel Conference (although I’ll be at a disadvantage because Groupthink isn’t an Oregon company, I figure the extra connections will be worth it). It was at that point that I realized I’d made a mistake. The Willamette Angel Conference uses Angelsoft, and the whole way it works is different — your one pager gets created by filling in a form on the site. Here are the items you’re asked for:

• One line pitch
• Summarize your business
• What specifically makes your management team most qualified to build this business?
• Define customer problem
• Describe the solution you sell
• Define your market
• List your current or potential customers
• Sales and marketing strategy
• Describe your business model
• Describe the competitive landscape and list your competitors
• Define your competitive advantage and list barriers to entry

Each of these items also has a longer explanation you see as you’re filling out the form. For example, the explanation for “Define customer problem” reads: Investors fund pain killers, not vitamin pills. What critical customer need does your company address? If you are a web company, you may need to make a hard decision here on whether to talk about your audience or the people who will ultimately pay you (like your advertisers). You only get 210 characters to answer that one. When you’re done, Angelsoft turns your information into a one page summary that looks like this sample:

At first, I was thrown for a loop, but then I realized that this was a much better way to do it. After all, investors looking at your one pager have a bunch of questions in their head that the’ll use to decide if they want to read anymore. If you don’t answer those questions, it’s over. So the number one task really should be to make sure you answer those questions!

In the process of answering the questions, I managed to get in every one of my key points and pretty much nothing extraneous, but the document wasn’t exactly what I wanted to best represent the company. For Angelsoft applications, I have to take what I get, but that’s not true for NWEN or other investors. So, after I finished up the Angelsoft process, I took all the information and created a new document that I could edit. Then I made a few changes:

• Combined the one line pitch, business summary, and customer problem into a new opening section which read better than the three individual sections.
• Combined target market and customers sections.
• Combined competitors and competitive advantage sections.
• Added a little bit of additional detail in a few places where I’d been constrained by Angelsoft’s character limits.
• Added a (small) illustration to help explain the product.

In each of the cases, I made the change to improve readability or punch. But, overall, it’s a lot like the one pager from Angelsoft.

I’ve gotten a lot of advice on my slide deck for the NWEN First

Who is more likely to produce long-term shareholder value — the entrepreneur who raises too much investment capital, or the entrepreneur who funds growth through profits alone?

First time entrepreneurs often have skewed visions of “how it all works”. Their perceptions are often shaped by the numerous successes that get touted about the media, rather than by the 1000-fold number of failures. It makes the “accidental success” of YouTube appear reachable, or at least “just as likely” as any other startup.

One of the things that entrepreneurs usually believe is that once they have an idea, they need investment — that’s just how it works, right? Once they start to talk to investors though, as well as advisors and other folks in the startup community, the questions usually come up … is this a lifestyle business or a “swing for the fences” big market opportunity? A “lifestyle business” is one which you intend to keep running for a decade or two — like my Dad’s optometry practice, for instance, or my brother’s event audio/visual recording business — typically an owner-managed business in which the profits are used solely to support the ongoing lifestyle of the proprietor.

Then there are the “swing for the fences” big market opportunities. These are the startups with big goals, where the entrepreneurs focus on a market opportunity >$100M. To get there, most companies on this track sell ownership in their company at some stage of their business to raise the capital necessary to build their company. Some companies even raise huge amounts of venture capital, at a hefty dilution mind you, before they even arguably HAVE a business. (Twitter comes to mind …) Investors are compelled by visions of a healthy return on their investment, and in the latter case also by extremely savvy entrepreneurs.

For whatever reason, I’m NOT a “lifestyle business” kinda guy. I’m only interested in building a company with a compelling market value and resulting shareholder ROI, but as a founder I’m ALSO uninterested in immediate dilution down to single digit % ownership. I want as much equity in the company as possible.

I learned long ago that the best way to build personal wealth and shareholder value is through “bootstrapping”. Bootstrapping is the art of building companies with very little outside capital/investment. I’m proud of my bootstrapping skills actually, which I’ve developed over four startups now, yet I’ve also realized that outside capital is also essential to developing/realizing a substantial market opportunity.

The reality is that there is a middle ground. Bootstrapping your way 100% to IPO, while honorable, is very difficult and uncommon. If the market opportunity is truly there, being under-capitalized will usually result in missing the market window of opportunity. Conversely, raising too much capital too early rarely results in long-term shareholder value. In other words, given a large market opportunity — a startup that raises too much investment capital is just as likely to fail (to generate shareholder value) as a startup that doesn’t take any investment capital.

I’ve been building Others Online based on what I thought to be an appropriate balance of equity financing and bootstrapping (”sweat equity” financing). Unfortunately we’re still not profitable and thus reliant on investment capital at a time when the market opportunity is large and we’re landing large customers, but market conditions are unstable and investment capital has dried up. And the other day I was talking to one of my investors, who literally wrote the book on bootstrapping, about our status as a company. He insisted that there “has to be a way” to generate more cash from our pipeline immediately. The only way I can see to do that is to shift our business model in the short-term, and I worry that doing so may negatively impact our ability to achieve the “big market opportunity”.

I keep thinking about this. Is it possible to “swing for the fences” (big market opportunity) at the same time as focusing on 1st base (getting to cash flow breakeven)? Or are the two incompatible? I suppose it depends on the market opportunity, but I’d argue most high-value windows of opportunity in the market are open for a limited period of time. Rarely do you not have competition eyeballing the same opportunity, and sufficient funding is generally a prerequisite to nailing these windows of opportunity.

Market leadership positions are always attained as a result of execution. Financing is not execution. However, financing provides the means to develop the necessary components to execution: team, timing, marketing, and product development. Since paths to success are rarely a straight line, financing also helps recovery from bad decisions (on any of the above). Under-capitalized companies are therefore at greater risk. That said, bootstrapping is also essential. It teaches you to make your mistakes quickly and therefore least costly. Bootstrapping is good execution.

2009 is going to be a difficult time for companies who are “swinging for the fences” but aren’t financed for the next 12-18 months.

After a fun-filled, beer-fueled, internet-disabled afternoon topped off with thai food and a test-drive of Danielle’s techkaraoke concept, I put together the following Stephen Colbert-style takeaways from Seattle Startup Weekend part Deux. Hats off to the event organizers for gathering such a committed and talented group of people for a marathon of a weekend.

It’s 4AM and I just sent out copies of my 5-page business plan for the Northwest Entrepreneurs’ Network’s First Look Forum to a bunch of advisors, plus a few extra people who I haven’t previously solicited advice from. It’s so easy to wait to finish something until right before the deadline, so I deliberately set my own deadline three days early so I’d be able to get some feedback before I have to submit it.

If you’re still working on your own plan, here are some thoughts from my process:

• I’ve been pitching my business concept and long-term vision to people for months now, but where does that go? Strictly speaking, it’s not an answer to any of the five questions they’re asking. I ended up putting parts of it in each of the first three sections (Market/Opportunity, Novelty/Concept, and Scalability of the Business Model).
• Similarly, in discussions with people, a decent amount of technology has been discussed — what I’m using, why, what’s good about it, what were the alternatives, etc. Almost none of that made it into the document. Investors want confidence that you’ll make the right technical decisions. They don’t need details on those decisions.
• The addressable market, funding needs, sales projections — if I was a business person, these probably would have been trivial. I think I did a reasonable job and, in this document, a lot of detail isn’t required.
• Competitors — there’s an often discussed trap of saying you have no competitors. It’s like a catch-22, though. If you have exact competitors, you probably don’t have a viable business. I pointed out competitors and how none of them are doing exactly what Groupthink is. I did not have room for one of those market charts, but, when I do one, I’m thinking of putting Groupthink in the middle — Papa Bear’s on one side, Mama Bear’s on the other side, and Groupthink is in the middle, just right.
• Scalability — don’t confuse scalable technology with a scalable business. I wrote about both.
• The Team — gee, it’s just me right now. I wrote about both my own skills and experience as well as my search for a CEO.
• Even if you’re not applying to the First Look Forum, this is a great exercise. I put a lot of stuff down on paper that I’ve been saying over and over again. Now I have the opportunity to really refine it.

All in all, I’m pretty happy with the version I sent out, but I also fully expect that I’ll be making major surgery on it once I get some feedback. And, of course, when I wake up, I’ll have at least half a dozen things I’ve realized on my own while I slept. I predict I’ll be busy until Friday.

Roy Leban is a serial entrepreneur who is currently CTO of Groupthink. He blogs about his startup experiences at thisDev, where this post is syndicated from, and about user experience at thisUser.