Discipline a key factor in success

ONLINE SALESMAN: Group Commerce founder Jonty Kelt talks to the Canterbury Software Summit at Addington from New York.
ONLINE SALESMAN: Group Commerce founder Jonty Kelt talks to the Canterbury Software Summit at Addington from New York.

Bootstrapping for as long as possible instills discipline in start-up companies, and helps the founders hang onto ownership.

That was the advice of Kiwi entrepreneur Jonty Kelt who spoke to about 500 people at the 2012 Canterbury Software Summit in Christchurch yesterday.

Kelt heads United States- based global technology firm Group Commerce from his New York headquarters and dispensed some practical advice for local start-ups wanting to expand overseas.

Running your firm independently on a tight budget for as long as possible instilled discipline, and minimised dilution of your ownership, he said.

Group Commerce helps media companies to sell products online and includes The New York Times among its clients.

The key to securing clients and investors was identifying a real problem for a big market, and finding a scaleable repeatable solution that had margin.

Investors were interested in the market a business was targeting and who was in its team.

A pretty standard trajectory for start-ups obtaining investment in the US was 75 per cent dilution within two years, with the founder left holding 25 per cent, Kelt said.

"You have to bootstrap for as long as possible. It also has the benefit of minimising dilution. Bootstrapping makes you disciplined."

A funding process typically took 12 to 16 weeks before the money hit your bank account, Kelt said.

"Get a good lawyer. Minimise dilution and keep control."

In a funding presentation the simpler the presentation the better.

"Generally speaking, 10-12 slides. Keep it simple, with a financial model attached to it.

"Ultimately an investor wants to look you in the eye and see your conviction. You've got about 30 seconds to connect with your investor.

"Get an experienced board of directors in place who will challenge your views. You don't want yes people around you."

You only had so much time, so much credibility, so much capital and so many brownie points with clients, Kelt said. So a constant review of business strategy was crucial.

"It's all in the metrics. As soon as you have data, treasure it."

There should be no such thing as a one quarter surprise, he said.

Also speaking at yesterday's summit, Minister for Science & Innovation and Economic Development Steven Joyce said Christchurch would emerge stronger after the earthquakes as a result of the resilience of Cantabrians, and the ICT and hi-tech space was an important part of that. New Zealand should look to the Asian market which was a "massive consumer engine which is coming" to create opportunities here.

The Press