Typical Client Profile
Core Business Concept
Entrepreneurs
Startup Company
Financial Status
Work-To-Date
       

 

Potential clients often pose two interesting and decidedly correlated questions. First, what is the profile of a typical client for The Morgan Leigh Group? Second, what traits does the Morgan Leigh Group consider in assessing whether or not it can help a startup company?

While it is arguable as to whether a ‘typical’ client exists, there are certainly a number of common characteristics shared by the startups served by The Morgan Leigh Group and which can serve as an informal checklist for potential clients evaluating the prospective fit between our company and theirs. While not an exhaustive list by any stretch of the imagination, a number of these traits are described below.



The underlying idea or core business concept is key. As with a terminally ill patient, a fundamentally weak business concept is one for which we simply have no cure. First and foremost, the core idea must work -- on paper, in prototype, and in reality. Potential flaws or deficiencies must be satisfactorily addressed.

Second, the concept must address a real need of the marketplace. Implicit in this line of reasoning is that there exists a true market opportunity. Hence, there are real customers with significant purchasing power who could reasonably be expected to buy the end product or service in adequate volume over time. Third, the idea must be protectable. A good idea without significant legal, physical, or other protection to secure its value over time against copycat competitors is merely an empty academic exercise. (Top)



While there is much to pronounce about the desired attributes of the entrepreneurs or founders, suffice it to say that it is preferable that they exude exceptional enthusiasm for their core business concept and foster immediate confidence in their abilities and competence. Not only do the founders need a history and background that demonstrates their ability to pull off this new venture, but they also need to tell and sell this story to potential investors and partners. (Top)



LEGAL ENTITY: The legal entity that constitutes the official company does not necessarily need to be formalized immediately. However, it should be noted that most investors are generally comfortable with a c-corp structure and much less comfortable with alternatives such as s-corps or limited liability companies. A legally recognized c-corp is the preferred structure for investment purposes.

STAFFING PLAN: While a startup company by definition will not have all personnel in place, it should at least have the core management team committed and key future hires identified. Such is best evidenced in a completed staffing plan. A further personnel attribute, desired but not required, is to have members of the board of directors committed. Especially worthwhile is to have directors whose experience and success carry weight with potential investors. (Top)



MONEY IN THE BANK: Potential investors often talk about “skin in the game,” referring to the need for the founders to have some financial investment at risk, above and beyond the founders’ sweat equity. In part, they refer to the need for the startup company to have some money in place for critical initial activities-such as a complete business plan and set of pro forma financials. While each company has different needs, startups would generally want to have $20,000 - $60,000 in the bank to accomplish the full range of seed and pre-seed activities.

SEEKING FUNDING: In addition to the founders “skin in the game,” some startup companies are in need of a larger infusion of cash from an outside investor for necessary growth. Companies using our investor services typically are attempting to raise as little as $250,000 or as much as $5,000,000 or more.

If your startup company has no need to raise outside funds, it likely has no need of our investor services, but can be well served by our marketing services. (Top)



While there is a whole host of activities and tasks that are beneficial for the startup company to have accomplished, there are a few of major importance.

MARKET RESEARCH: First, market research is a crucial undertaking. At a minimum, the startup company and management team should be able to articulate the dynamics in its chosen market, including size, trends, segments and competitors.

COMPANY VALUATION: Second, there should be some basis for a company valuation. While valuation of startup companies is arguably more art than science, the fundamental components should be identified.

CAPITAL STRUCTURE: Last, there should be some time and effort devoted to at least a preliminary understanding of the proposed capital structure, which depicts the split of ownership over time and considers relevant shareholder groups such as founders, employees, directors, advisors and the various investors. While admittedly a complex area, the capital structure will take into account pre- and post-money valuations, potential returns and anticipated dilution. (Top)