In this episode, Hall welcomes Jason Hull, Cofounder of Broadtree Partners. Broadtree Partners is a group of entrepreneurial investors focused on acquiring businesses where the owners are looking to transition from their current roles. They specialize in providing opportunities for owners to smoothly exit their companies and seamlessly change leadership, while preserving their legacy. As Jason puts it, they help owners who who want someone to help them "really realize the vision....or to allow them to get off the ride." Broadtree focuses on companies in the 1-5M EBITDA range, or what he calls "classically under-matched" companies.

Jason talks about the challenges and upsides, and what investors need to be prepared for should they choose to invest in this space. He also discusses his investment thesis, and explains some of the operational challenges in the acquiring companies that may be stagnant, but with potential.

In this episode, Hall welcomes Ronald LeMay CEO of Main Street Data. Main Street Data was formed in 2017 to bring precise data to the agriculture world. While data has improved in many other industries, agriculture remains behind the curve and Main Street Data has set out to change that. Main Street Data enables ag-related organizations to dive deeper than ever before into the data and insights that drive better decisions. They also provide growers with an objective scorecard for farming practices, along with insights for where to invest for a better return.

Before joining Main Street Data, Ronald spent most of his career in communications. He worked with Southwestern Bell, AT&T and retired from Sprint in 2003 as president and COO. He decided to join Main Street Data because it's a portfolio company of OpenAir Equity Partners. Ronald and his son formed OpenAir Equity Partners in 1999 to keep him moving since according to Ronald he would never have the ability to or interest in retiring. So he invested in the predecessor to Main Street Data.

Validation -- the Product Works and People will Pay for It

Today, we’ll talk about demonstrating product and market validation

In talking with startup investors the first two questions that come up are Product validation and Market Validation.

The product works and someone will buy it.

Investors look for evidence of this before moving into further diligence so it’s important to show this in your pitch.

Beta users are a great way to show the product works and customer interest.  In many cases, the product is a website providing some value in the form of data storage or analysis.

In today’s world, the chance that you will get the product up and running is fairly high but will someone use it and more importantly pay for it becomes the bigger question.

Customers who pre-pay for it check the market validation box. It demonstrates you are solving a real problem.

If you don’t have anyone paying for it, then you’ll need to resort to pipeline metrics showing the number of downloads, trials, and pilot programs.

While not the same as a paying customer it gives a leading indicator that the customer will most likely buy.

It’s helpful to show the funnel prospects go through in engaging your product.  This includes lead generation, qualification, closing, trials, pilot tests, and signed customers.

Investors look for a consistent signup percentage on the leads going through your program. 

While the absolute number of signups may not by high, the repeatability of your model can be compelling to the investor.

Thank you for joining us for the Startup Espresso where we help startups and investors connect for funding.

Let’s go startup something today!