Kansas City Angel Investor Roadmap | BetaBlox
One of our entrepreneurs asked us one time, is there a “Kansas City angel investor roadmap?” We replied with “no, but there should be!” So here it is! The document that will help you find your way around the angel investment scene in Kansas and Missouri.
Startup success isn’t something that is going to come overnight. The average successfully liquidated company does so in year 6.5. In other words there is a lot of time between having the idea and selling the business. In-order to accomplish this feat an entrepreneur should break-up the marathon up into major milestones. Trying to understand the recommended partners and strategies all at once would be like eating your dinner in one bite. It’s the founder’s job to customize our suggested timeline for their own needs and strategies. That being said, every startup at least pokes their heads into each of these stages along the journey to a successful exit.
Kansas City is ripe with mentors, consultants, investors, incubators, etc. that are setup to help entrepreneurs get to these milestones. The best-of-the-best are experts in a particular vertical, meaning they’re niched within an industry and a stage of business. It’s crucial to know who is setup to help you at the stage that your actually at. We’ve described each of the stages below and suggested corollary Kansas and Missouri partners that are designed to help at that particular stage. Seeking out these partners before you’re ready will be a shot in the foot to your credibility and time. Own your stage.
Stage One – Idea
You just had an idea that you’re debating turning into a company. You haven’t necessarily decided to take the leap into entrepreneurship yet. Start with some basic research regarding the idea. Head to Google and search to see if others are doing it, how well they’re doing, and if your concept is different. Competition shouldn’t scare you off at this step, but instead provide a roadmap as to which directions have already been taken so you can do something differently.
UMKC Entrepreneurship Programs
Stage Two – Assemble The First Puzzle Pieces
At this stage you should be assembling the pieces that will be necessary to build the first iteration of your product. This means people like programmers, lawyers, co-founders, designers, etc. You also might need to raise a small amount of money from your friends or family. Let it be noted that some startups can get off the ground with zero capital or partners. If this is an option, take it. Otherwise, this is the time that you’re supposed to be figuring out what resources you have at your disposal. You shouldn’t assemble these things for too long, but decisions will be impossible unless you know what you have – or don’t have – to work with.
Stage Three – Prototypes and Minimum Viable Product
We use gold mining metaphors often at BetaBlox, so stick with me for a second. There are two types of gold miners. First, the teams that show up to a plot of land and dig up the entire thing using nothing other than prayer. The second type follow famous advice from Tony Beats, the most prolific miner in North American history – “Drill before you dig.” In gold mining this means to go to several plots of land and drill extremely deep, but not wide. What you’re doing is taking samples from those holes and then extrapolating which plots of land would be best to dig up. This is essentially saying not to waste your time and resources until you know where the gold is. It’s a series of tests that will lead you to the most efficient land to spend the next several months or years at.
This is a perfect metaphor for what a lot of founders go through at this stage. They have two choices. They can either build some gigantic product, with perfect design, and lots of features – and pray that their customers love it. Or, they can build something small and quick that. Then put it into the market as soon as possible so real customers can tell the founder if they’re on to something. The market’s feedback will dictate what to do next, and where resources should be utilized.
Obviously we’re suggesting the “drill before you dig” method of a product’s first iteration. Don’t spend any money or time on assumptions. Build the quickest, smallest, most simple version of your vision that allows you to take it to a real marketplace and get feedback. If it’s too grandiose you risk wasting time and money; if it’s too crappy you will get incomplete feedback that make it hard to tell what to do next. There is a fine line between these two paths, so if you don’t which one to take: go with the one that gets you “live,” fastest. You can always go back and build more.
Examples: Pizza parlors might cook samples and sell them at local high school football games. Taxi services could put a single vehicle on the road before launching a fleet. This is called the minimum viable product and is a lean test that will help you indicate what’s what. Don’t worry about perfection or additional features. Just put something out there that allows us to test the waters before we dive-in face first.
Stage Four – Launch
A good launch should concentrate on a particular subset of an ultimately bigger market. An example would be a phone app that only worries about getting users in Kansas City, or a business incubator that only helps females. Debatably the most successful implementation of this strategy would be Facebook first launching exclusively for Harvard students. Once they had conquered that hill, they moved to a second school, and then a third, and so on. Instead of attacking the whole world at launch, the strategy was to build a critical mass of users at various milestones along the way. Once there is sufficient customers to sustain and perpetuate that segment, grow the target size, adjust parameters, and move on.
By segmenting your target market or geographic reach you make it possible to launch earlier. That’s the whole point of this exercise. Make your business “live” as soon as possible.
Step Five – Tweak, Fix, Iterate, Tinker
Okay, so you’re live. This is the stage for which you need to be seeking consumer feedback like a mad man. What is the market telling you? What do they like the best? What benefit, of the probably several, do they find the most valuable? What stuff don’t they like? What aspects of your business makes it hardest to adopt? Ask these questions, seek out the answers, and tinker with your offering. Seek a hybrid of qualitative and quantitative data. Your aiming for information that outlines a map of many small tweaks. Every once in awhile a gigantic tweak is necessary, commonly referred to as a pivot, but ideally you’ll have hundreds of small ones.
Test, test, test. Not sure if they love the price? Make it super expensive for a month, and then super cheap the next month. Which one worked best? Not sure which color your website should be. Make it red for a month and then blue for a month. Which one had a worse bounce rate? Which one had a higher conversion to sales? Double down on the color that worked best and move on to the next test.
Step Six – Product/Market Fit & Appropriate Time To Source A Kansas City Angel Investor
After enough intelligent tweaks your offering should start to fit into the market like a glove. You’ve learned how to get repeatable sales. You’ve learned what your cost of customer acquisition is. You’ve identified the single most important benefit for which customers love your product. It’s evident that your business is starting to be talked about organically and diffuse through the market. This is the stage of business we call product/market fit. This is the stage of that you become angel investment ready.
You don’t have to go after angel investors if you don’t want to. The idea is to add gasoline to the fire – but a good fire technically doesn’t need gas to spread.
BetaBlox – Kansas City, MO
Stage Seven – Venture Capitalists & Scale
The angel step paid for you to cross a lot of your T’s and dot your I’s. It paid to create the bridge that turned you from a startup into a real business. How you act, talk, dress, sell – virtually everything, is starting to go from a startup founder to a business leader. It’s time to scale, meaning you need to add scaffolding to your structure and team that makes it possible to take on millions of new customers. This means more servers. Cleaner code. More employees. Better technology. New software. It’s time to take your product from that small test market and blow it up to its mass market potential.
I think it’s important to note that at this stage you are geographically agnostic. Meaning your heart should stay in Kansas City, but you’re body very well might have to move or be other places often. There are big boy partners all over the United States and Midwest alike that can help you. This means the next stage of financing – venture capital. These are raises in the $1-10 million range. Here are somewhat local players that either specialize in growth stage ventures, or finance them. Despite what this list implies – you can seek out thousands of other partners in areas outside of Kansas City. Capitalists are capitalists – a good opportunity is a good opportunity – they don’t care where the company started, they care where it’s going.
Five Elms Capital – Prairie Village, KS- $2-10 million VCs
Open Air Equity Partners – Kansas City, MO – Mobile/enterprise facing VC
Konza Valley Capital – Leawood, KS – Midwest focused venture capital partners
Open Prairie – Olathe, KS – Midwest focused private equity
Mariner Wealth Advisors – Leawood, KS – Private equity, mutual funds, & alternative investments
Great Range Capital – Leawood, KS – Midwest private equity
Archer Foundation – Leawood, KS – Growth stage investors and advisors
Think Big – Kansas City, MO – Growth stage accelerator
The Enterprise Center Of Johnson County – Lenexa, KS – Growth stage business incubator
Pipeline – Kansas City, MO – Growth-oriented support system and network
Stage Eight – Liquidation/Exit
You are now rockin’ an awesome, powerful, and sustainable business that has a reach far and wide. It’s time to start eyeing exit plans. This means one of two routes – acquisition or IPO. An acquisition is when a bigger company purchases your entire business. This happens for many reasons, but it typically means that the bigger company wants your employees, your cash flow, your brand, and/or your technology. An IPO stands for initial public offer and is when your company is listed on one of various stock exchanges, the most popular being NASDAQ or NYSE. This means that a piece of your business is sold to an open market that any person can bid to buy shares in.
There are two different types of people that can help you at this stage. The first of which are business brokers or merger and acquisition specialists. These are the people that help scout acquisition opportunities, and guide a business through the intricate process. The second group are lawyers that specialize in taking companies public.
CC Capital Advisors – Kansas City, MO – Mergers and acquisitions specialists
O’Keefe & O’Malley – Overland Park, KS – Merger and acquisition lawyers
ABMI – Overland Park, KS – Sales transaction and scouts
Mid Cap Advisors – Kansas City, MO – M & A advisors
The aspect of this article that I want to emphasize is that you as the entrepreneur must be real with yourself as to what stage you’re actually at. It’s a waste of time and a bullet to your reputation if you start attacking different stages before you’re ready. Play the level that your on, or you’ll never beat the game. All of these recommended partners and investors care about you as humans…it’s a central theme of being from Kansas City…we all support each other on a personal level. But until you get to their stage, they can’t help your company as much as they might want to help you personally. Don’t waste your time until you’re there.