Before DesignMyNight became the juggernaut that it is today, Nick and his team were out speaking with bar owners, discussing their pains and challenges. From this, he got the unique insights needed to create a product that his target customer group was yearning for, and used a tight feedback loop to iterate quickly (and we mean really, really quickly).
As an exited founder, Nick speaks with founders regularly at his venture studio, Horseplay Ventures which has backed 50+ startups, and on his podcast which helps founders perfect their pitch deck.
Looking to get a hold of him? Well, he’s a busy man but read through to Tip 10 to find out his winning cold outreach formula.
1) Show investors you know the industry.
Alongside having product-market fit, as an investor, Nick also looks out for ‘industry fit’, or industry knowledge. As a founder, you should know everything about the industry (competition, challenges, key players etc.). This knowledge comes from your own research, but can also come from speaking to customers. Investors know that given the early stage, you might not have a perfect product, but if they’re confident that you have the potential to quickly iterate because you know what the industry needs, this gives you a strong competitive advantage.
2) Nail your sales flywheel.
The flywheel is a highly efficient sales process that helps your team put their efforts to use where they will provide the greatest return. As an early stage startup, efficiency is everything, so think about how to get your sales loop spinning. With DesignMyNight, their flywheel was - SEO to drive traffic = bars wanting to be on the site = have to use booking software to be on site = more bars on site = more choice and SEO traffic = more bars wanting to be on site = more software sales ♻️
3) Be customer obsessed and use their feedback to shape your early roadmap
When launching DesignMyNight, Nick knew the hospitality industry didn’t often speak to the consumers/users, so this is where they could shine. Speaking with customers or potential customers builds rapport, and most importantly, ensures you’re building something people will buy. Not many users or customers get calls or emails from the founder, so this added touch can go a long way. When you’ve got this feedback, as you’re building your product, build alongside your potential customer base and be in constant communication with them. Nick would ask potential customers questions like 1) Do you want to help define what the product will be? 2) Is this what you want? 3) What are you missing? Questions like these shaped DesignMyNights’ roadmap, and can help do the same for you.
4) Iteration is everything.
If there’s one thing Nick said the most, it was the importance of the feedback and iterate loop. He used this as described above, after launching and while scaling. The team shipped weekly and responded quickly to changes that needed to be made.
5) Communication can slow churn.
Stop churn by speaking to customers. If you’re constantly checking in and building products customers love, you’re more likely to keep them. Even if customers are unhappy, they’ll see that you care and if you are quick to make adjustments, they’ll realise the value you place on customer care. For reference, average churn sits around 5%, and if you’re going for investment, they like to see around a 2% churn rate.
6) Create your own KPIs, and upskill your customers to help you hit them.
After DesignMyNight started growing, they had specific measurements unique to their business that they’d optimise for such as number of bookings, booking conversion, number of listings venues would upload, etc. Simple practices like additional training calls and check ins meant they could upskill their customers and help them become better customers, while also making their experience better. At DesignMyNight they also had their own red flags (linked with customer churn) so they knew when a problem was likely to happen so they could intervene. For them it was things like bars not confirming a certain % of reservations that were placed through the platform.
7) Keep your deck short.
Investors will spend around 90 seconds on your deck. While a deck should be capped at 15 slides, remember it’s unlikely investors will read the full thing, so if you’re not snappy, you’ll just lose investors. Nick likes decks to be visually impactful, concise and with minimal text.
8) Know your niche.
With angel investors, they’re typically looking for a 10X return in around 5 years (rather than VCs who typically look for a 20X). As an angel, Nick gets excited when a startup spots a niche in their sector, and he can understand clearly how that niche is currently underserved, and how this product will help (whilst generating return). When it comes to impact, Nick says impact within an industry is just as important to him as impact to the world.
9) How to answer the “exit” question.
Wondering whether to put your exit strategy on your deck? Nick suggests adding a slide with other competitors who had successful exits (and outline their stats when they were acquired) to showcase there is appetite in the market for acquisition. This shows your startups’ potential upside, without seeming like you’re already thinking about selling the company. It’s also useful for investors to see the stage at which the company sold, so they can begin benchmarking your company and its potential.
From a raise perspective, Nick really likes to know what you’ll be spending the money on that you’re fundraising. So spend a bit of time outlining that.
10) How to win at cold outreach.
Going out to investors cold? All investors are people too, and they’re often inundated with decks and outreach. Rather than trying to build rapport slowly, or sending over too long of a thesis, keep it short and communicate your ask clearly and concisely.
Nick’s formula is:
Sentence 1: really short sentence on why you are reaching out to them (and do your research rather than making it obvious you’re going for a scattergun approach).
Sentence 2-5: Outline what you do.
Line 2: My product is X.
Line 3: We are looking to disrupt [industry] by doing [competitive advantage]/feature 1,2,3.
Line 4: We already have X customers/We’ve already spoken with X no. of potential customers.
Line 5: With £XXXk of investment, we want to get to X customers, XX MRR, prior to our next raise.
Sentence 6: Please see the deck attached.
Sound interesting? There’s a lot more where that comes from on the video which you can see here.
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