Advice To Cleantech Start-ups: Find Paying Customers
After a terrific presentation by my friends at the Eleos Foundation yesterday, I met a gentleman who helps small companies get off the ground by pre-selling their products into the market. Now there’s a kindred spirit. In my experience, too many newly formed companies sit around whining about the lack of investor support and engagement, then haphazardly enter the market with no real-world testing of their business concept. This gentleman (and I) recommend killing both these birds with one stone.
Get out there and sell!
Here’s a conversation I often have with my clients:
If I told you that you could have either a) $5 million in investment capital, at the expense of 70% equity in your company, and a venture capitalist breathing down your neck until the exit strategy materializes, or b) $5 million in purchase orders from credit-worthy customers, while retaining 100% equity in your company, and garnering precious insight into your marketplace, which would you choose?
It really is the ultimate no-brainer; it just takes a little hustle. Please let me know if I can be of service here.
Obviously finding paying customers makes sense, although that can be very difficult. For example, if you want to sell electricity, it could be difficult if you cannot say for certain exactly when it will be available.
Frank,
You’re right, it can be difficult to get purchase orders before you meet all of the purchaser’s requirements…such as telling them when it will be available!!
However, even in that situation you can understand the fit of your proposed offering with their need. Now that sounds really obvious, but I don’t mean simply “They need electricity, we’ll have it, it’s a fit.”
Rather, understanding their electricity purchasing decisions (do they ever buy off the grid), how they evaluate prospective providers, when was the last time they brought on a new supplier (why? how’d that work? how often does that happen?), what is their demand pattern the last 12 months, etc.
How do you find this out? You meet with them and ask them. You can think of this as invoking the selling model or, if you prefer, just think of it as a discussion to learn about their situation, tell them about your plans, and together determine if there might be an important fit.
If you cannot find “customers” today, what will your sales department do in the future? Actually it ought to be easier for you to do it today because you can change the product and pricing and make executive decisions to close a deal which a sales person cannot do. And once you learn the keys to selling, you can hire the right sales force to call on the right customers to offer a bull’s-eye product.
Yes, it’s difficult, but it’s along the decisive path to understanding your business opportunity and what it takes to develop it successfully.