Testing my resilience as an entrepreneur

Tammy Ven Dange, , , , , , , , 1 Comment on Testing my resilience as an entrepreneur

Yesterday was an interesting day: one of highs and lows that are testing my resilience and fortitude as an entrepreneur to push through with this business idea.

The first was finding out that I wasn’t short-listed for a local government innovation grant. I really thought I would at least get past the first round, but I can only guess that it had to do with the fact that I was trying to crowdfund the rest of the money.

If I were in their position, I can see the risk of their money not being used for an actual outcome. I’ll follow up with them next week to try to get some feedback. In the meantime, looks like I’ll have to pay the patent lawyers out of my savings… again.

The other was a good thing – a major milestone yesterday! I finally got to see the prototype of Product #3 for the first time. It looked fantastic. In fact, it looked to be of higher quality than I had expected which means I need to revisit my pricing strategy.

There was a problem though as the connector pieces were made from a different process and plastic than the main pieces (just for the prototype), and they don’t hold tight enough right now. It’s a simple fix in the manufacturing phase, especially since we expected some things to fail in this first prototype.

However, I’m on a pretty tight deadline at the moment, and I start shooting video on Sunday. We don’t have time to go back and have the connector remade just for the video. As such, we’ve come up with a decent work around in the meantime, but it does mean the assembled pieces aren’t quite as robust as planned at the moment.

The other challenge that we recognised yesterday was that the Chinese New Year shut-down in China is going to delay the moulds. Fortunately the holiday is in late January this year (rather than February), and so we’ve looked at the calendar and believe that we can get everything shipped to customers in March 2020 if the campaign is successful. That’s about a month longer than I wished.

In any case, I’m certainly testing my resilience as an entrepreneur this week as I got home at 10pm last night from Brisbane and jumped on the 6am flight to Melbourne this morning for some other meetings. As tired and a bit stressed as I am, it still feels way better than having a job!

How much do I need to raise for my first product?

Tammy Ven Dange, , , , , , Leave a Comment on How much do I need to raise for my first product?

From the beginning of this adventure, the most asked question has been, “What are you making? The second most asked question has been, “How much do I need to raise?” If I tried to answer the money question back in April when the ideas first came to me, my estimate would have been off by a mile.

The answer now that I have real info as of today? About $200k for Product #3!!

Yes, that’s a lot of money! The moulds will be made in China. If they were done in Australia, it would have been three times the price.

However, the manufacturing will be done here in Australia with Australian recycled plastic. We are currently trying to see if we can do it mostly out of milk jugs. Wouldn’t that be a great story where we can say that X number of milk jugs are used in every product?

Today, I just signed off on $7500 in prototype costs. That too is a lot of money out of my pocket personally. My manufacturer asked me if I wanted to sleep on it ,and I told him that I have been waiting to make this decision for 4 months.

It’s essentially all or nothing at this point. How much of the $200k do I need to raise? All of it.

If the crowdfunding is not successful, then I’ll need to look for a job and pursue this business as a side hustle. So, I might as well and go all in now.

Moving forward…

Raising funds via video

Tammy Ven Dange, , , , , , , , Leave a Comment on Raising funds via video

In a new business, there are lots of little things to prepare for big milestones. Fundraising is usually one of the more dreaded tasks for a start-up. However, it can also be one of the most creative if you’re raising funds via video.

I have two funding opportunities due in the next month. One is a grant that requires a 60 second video pitch to get past the first round. The other one is for a crowdfunding opportunity.

For the 60 second video, I’ve really struggled to write a script that covers the most important points in that short time period. That’s basically about 175 words with my speaking pace – hardly 2-3 short paragraphs.

However, when I started to storyboard the scenes, I realised that I could actually reduce my script by adding subtitles to the video with that info. What can I say in pictures so that words are unnecessary? By writing it this way, I managed to get the spoken narrative down to just 120 words which allows more time for cut-away scenes.

I just have to make sure I capture compelling video. This is not an easy task unless you know what you’re doing. And I don’t – at least not from a technical point of view. I reckon that I could easily spend 2 days or more on capturing the video and editing alone for the 60 seconds of content.

This is going to be even more critical to do well with the crowdfunding campaign. There, I have to make an entertaining movie to capture my audience’s attention and dollars. To do the video professionally might require it’s own fundraising effort! Luckily, I think I’ll have some sponsors to help with that one.

It’s the 60 second video that will have to be done completely on my own due to budget. I’ve never made a real movie before, but I have written short scripts for a cartoon series. The cinematography is going to have to be amazing to tell the story well which makes this a bigger challenge for me since I have very little experience here.

Still, it actually sounds like fun. I’ve been playing with the two storyboards in my head. I don’t have a lot of time left to get this sorted, but if I have to do fundraising, I might as well make it as fun and creative as possible.

After all, I can’t control whether or not the funding is successful. However, I can give the audience the best show possible within my abilities and budget.

Why I’m considering crowdfunding

Tammy Ven Dange, , , , 4 Comments on Why I’m considering crowdfunding

I arrived back in Australia yesterday, and spent today at a crowdfunding class sponsored by The Mill House Ventures. They are a local social-enterprise incubator in my hometown. The presenter was the CEO from Start Some Good which is a crowdfunding platform specifically for social-enterprises.

I’ve been considering crowdfunding as a funding option for a while, and it’s not just about raising money. My two major reasons are:

  1. It could validate the market value of my product ideas which will also increase the value of my business; and
  2. It could fund my first mould without having to give away any equity.

The second reason is more important than the first to me as giving away too much equity too early to investors could jeopardise the social mission of the company. I can already hear them asking me why should we make these products from recycled plastic in Australia when it’s cheaper to use virgin plastic in China.

This is something that people have already warned me about as the rights of shareholders apparently overrides any social mission even if I’ve written it into the Constitution.

I considered a not-for-profit model too, but it really limits the ability to raise funds from outsiders. Furthermore, because we are focussed on selling consumer products to achieve our social mission, the business lends itself naturally to a for-profit structure.

After taking the class today, I’m convinced that this is the right way to go for one of my products in particular. It fits the criteria well, and essentially sets me up to pre-sale products before investing further into the moulds. Plus, if I get accepted into the Mill House program, they’ll give me resources and a little bit of marketing money to increase my chances of success.

After the class, I ran into the manager of the local innovation grant which I looked at earlier. I asked him if it would jeopardise my chances of getting the grant if I received a little money for the crowdfunding campaign. He said it might actually increase my chances because it validates that someone else thinks I have a good idea.

With that info, I now have about two weeks to submit my application for both the crowdfunding program and the grant. I just need the final numbers from my manufacturer so I know how much money I need. That meeting will occur on Wednesday next week when I fly up to Brisbane.

The scary part about being Employee #1

Tammy Ven Dange, , , , , , , , , , , , Leave a Comment on The scary part about being Employee #1

I’m used to running fairly large organisations. Since, I’m not an expert in anything, it actually works out pretty well for my generalist skill set. Instead, my job is usually to figure out everyone else’s strengths, and then to get the best out of them to meet our company’s or organisation’s goals.

So now that I am a staff of one, it’s pretty scary. There are no redundancies in skills. There’s no one else to get my work done if I take the day off. There’s no one holding me accountable for schedule or progress. And other than friends and family I confide in or the market research I do, there’s no one to even tell me that I’m heading in the wrong direction.

Currently, I’m the inventor, the website designer, the market researcher, the procurement officer, the social media strategist, the IT support desk, the brand manager, the manufacturer liaison, the bank, the logistics officer, the head communicator and the coffee runner amongst all other things.

It’s a pretty heavy burden being Employee #1 when I’m used to sharing the load.

Right now, I notice it most when I don’t have any contractors doing work in the background. It doesn’t matter if they are designing logos, preparing manufacturing quotes or fixing issues with my website. Whenever, I’m the only one working, I get nervous (and fewer emails).

Of course, it costs money to hire others to do work. Therefore, I only do this for activities where I clearly don’t have the skills to do it myself. So far, taking this approach still means that I’m usually waiting on others to complete something before I can either make a decision or progress the company forward. Yet, in a weird way, I feel better knowing that I can work on something else in the meantime.

So while I’ll continue to march forward mostly alone right now, I hope to have a team working with me next year. For I know that this business will be far better off if I’m spending my time as a manager than trying to do everything myself. I just need to start bringing in income before I can do that.

How to bring on investors?

Tammy Ven Dange, , , , , , , , , , Leave a Comment on How to bring on investors?

The Constitution template that I used for my company has 20+ different kinds of shareholders identified – from ordinary to founder to nearly the entire alphabet. While I had a few companies in the past, I’ve never brought on investors to help fund the businesses before. So, this is all new to me when the capital required for my new business exceeds my savings.

It’s incredibly common to hear start-ups talking about bringing on investors whether in person or in books and interviews. We also talked about this at business school too, but I naively thought shares were issued in order of the time of when you received in investment i.e. A to Z. This doesn’t appear right.

Why is it that no one really gives you the step by step of how to bring on an investor for your business?

For instance, which of the 20 different shares do I try to “sell” first? Some have voting rights, some have dividend rights and some have both. Also, if I use convertible notes (loans that eventually change to shares), what kind of shares would they normally convert to, and what about employee share options? Which ones should they get?

If anyone knows of a good book, please let me know. Otherwise, I’ll share on this blog as I gather more info. I still have so much more to learn.

Preparing Tender Docs

Tammy Ven Dange, , , , , Leave a Comment on Preparing Tender Docs

I’m brain dead from working on the tender docs all day, but at least I’m done. I’ll do one more review in the AM and then send them out to three manufacturers to provide quotes.

I’m not going to pretend to know everything about the manufacturing process. Instead, I’ve left plenty of room for the companies to provide me with advice and assumptions in their response while still trying to get apple to apple comparison. Hopefully this simple tender format will short-cut the time it takes to gain knowledge and pricing.

Design workshop for Product #1

Tammy Ven Dange, , Leave a Comment on Design workshop for Product #1

Design workshop on Product #1 today with my uni student designer and mechanically-minded friend. I think we sorted a decent solution, but will test it with manufactures.

Good chat with Manufacturer #4. Sent him a NDA so that he can bid on work too.

It struck me really hard this afternoon that there’s a chance that I can’t make these products at a reasonable price in Australia at any quantity. This is what happened with my previous tea company where I was being forced to package it elsewhere. Is it worth continuing if I have to outsource the work to China and screw the social mission of using Australia recycled plastic? Most people would tell me yes.

I hope to know the estimated product and set-up costs in the next two weeks. In the meantime, I’ll slow down my spending on the company until I know for sure. Last night, I just spent another $2k on a premium domain I really needed. Fingers and toes crossed that the product manufacturing costs are in line with my budget projections.

Intellectual Property

Tammy Ven Dange, , , , , Leave a Comment on Intellectual Property

Everyone keeps reminding me that I need to protect my intellectual property (IP). So, today I spent a few hours looking at the patent process. I know I need to do this, but I’m constantly weighing the cost of protecting ideas and designs that haven’t resulted in a cent yet. Still, if I want to attract investors, I know that my company will be worth more if I have protected IP.

IP Australia has lots of great information on its website. They’ve suggested that the “application to a standard patent” process can cost about $12k per product just in Australia alone, but I’m not sure if that includes legal fees. Ouch! Afterwards, I still have to apply and pay separately for other countries.

Investors advice from friends

Tammy Ven Dange, , , , Leave a Comment on Investors advice from friends

Spoke to three female friends today who gave me some good advice about financing my business. One’s a successful entrepreneur who has built and sold a company. One’s an investment banker. And one’s been in the angel investing / start-up world for as long as I’ve known her.

It’s interesting to hear their different perspectives about the risks of taking external money. The big thing is the loss of control including the potential to lose the environmental mission if my investors’ values are not aligned with mine. I’m so lucky to have friends like these as supportive advisers too. I’m sure I’ll seek their advice again when I get closer to that decision point.