Smart Money - João Kepler

Smart Money - João Kepler

Discover the art of attracting investors and smart money to your business!

If you are an entrepreneur then you know the difficulties of finding an investor and especially finding one that shares your dreams, this summary of the book "Smart Money" is to you!

Be aware that these difficulties are often caused by a lack of knowledge about where to find an investor and how he or she thinks, and even how to use the right indicators when presenting your business.

Knowing this, John Kepler, an expert on the subject, shares in this book all the tricks and methods learned throughout his career.

Want to know more about Kepler's teachings? Stay with us!

About the book "Smart Money"

The book "Smart Money" was launched by the publishing house Gente in 2018.

In his 192 pages and 10 chapters, John Kepler shows all the details of what he has learned in his entrepreneurial and investor career about getting good partnerships, overcoming obstacles and attracting capital for his investment.

About the author João Kepler

João Kepler is an entrepreneur, investor, presenter, columnist, author, and co-author of four books.

Known as the "man of 1000 startups", Kepler was awarded by the Startup Awards as the best angel investor in Brazil.

In addition, for consecutive years, he was awarded as one of the greatest promoters of the Brazilian Entrepreneur Ecosystem.

To whom is this book indicated?

Ideal for entrepreneurs or future entrepreneurs, companies, or startups who want to know the secrets to win investors and creating a profitable business.

Main ideas of the book "Smart Money"

  • The steps of a Startup;
  • The main steps for obtaining investment;
  • How the investor thinks and where to find him;
  • The legal and legal aspects of angel investing;
  • The role of the mentor;
  • Entrepreneurship as a lifestyle;
  • Using metrics and KPIs in the right way;
  • The importance of innovation.

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[Book Summary] Smart Money - João Kepler

Overview: A startup's journey

Kepler begins the book by identifying, based on his experience, something in common among startups.

The starting point of the startup's journey is the market. At this stage, the business is no longer a simple idea and there are already the first paying customers that validate the business in the market.

The next step is Evolution and Audacity: entrepreneurs are generally rushed and bold, evolving very fast. However, the business is still starting, so attention and care are required.

When the startup is coming out of accelerators and receiving the first angel investment, it is in the Investment or Bootstrap phase.

After that, it is in the Limbo / Gap phase that the entrepreneur begins to realize that not everything is flowers and some decisions need to be made as these will define the future of the business.

The Faults and Adjustments step is when the faults begin to appear: systems, processes, people... So, listen carefully to each feedback as it can highlight the missing value in your service / product.

"Will it really work?" This phrase is common to hear in the Nervous / Difficulty phase, where difficulties and nervousness give way to questions.

And that's where the Struggle stage comes in when the CEO himself begins to doubt his ability to be there. Family and the employees themselves even advise giving up and getting a job. It is at this stage that many falls.

However, those who reach the Learning phase, after facing all the previous stages, have reached maturity. He has corrected all that was wrong and is convinced of the ups and downs of the undertaking.

Implementing the improvements learned from previous processes is called Improvement.

Finally, Product Market Fit (PMF) is the ideal fit between pricing, product/service, and market. Those who go beyond this stage grow back more consciously and assertively.

Why do startups fail?

A study by CB Insights listed the main reasons that lead a startup to failure. Among them are:

  • Build a solution by looking for a problem, that is, not aiming at a "market need";
  • Wrong team;
  • Poor marketing;
  • Lose focus;
  • Do not use your connections or your network;
  • Lack of rotation.

What are Business Model and Product Market Fit?

Business Model is what is best known by the market and entrepreneurs. Basically, it's about explaining three pillars:

  1. Who will be your audience?
  2. How to monetize?
  3. Types of Business Model: Where Does Your Business Fit?

Product Market Fit, as its name implies, is the convergence and alignment of three elements:

  1. Product: what the company markets;
  2. Market: People who buy and pay for the product;
  3. Fit: alignment of supply distribution and market buying and consumption mechanics.

MARKET FIT

Overview: How to achieve capture

What investors expect most is that you show execution ability than a good project. Also, selling your company's stake to anyone will not solve your problem.

When choosing an investor, be honest with yourself and yourself as it is easier and more rewarding to work with people who do something you believe in and who have the same goal.

Then the author provides four tips to help in finding an angel investor:

"How to pitch?" Revenue goes in the following order: problem statement, market, competitors, business model, demonstration, team, expectations, investments, and spell;

"How to get an angel investment?"

  • If you have only one idea in your head, look for acquaintances and relatives;
  • If the project is still under development, then make challenges at events;
  • If it is validated, run after accelerators;
  • But if you are ready and need traction, the tip is the capture in equity crowdfunding platform;
  • Finally, with the project already underway, look for a senior investor;

"How long it takes?"

From the interest of the investor to the signing of the terms and beginning of the contribution, it is approximately three months;

"What are the important things the entrepreneur has to worry about?"

  • Seek out a mentor;
  • Have a definite purpose;
  • Appear in the right events;
  • Value your team;
  • Be humble.

Overview: Legal aspects of angel investing

On October 27, 2016, complementary law number 155 was approved, which solves one of the biggest obstacles to the growth of angel investment in Brazil: the lack of legal certainty for entrepreneurs.

What has changed in practice is that a startup, when framed in Simples, can admit an investing partner to your company, unlike before, where the investment was characterized as taxable income.

What documents should I sign?

The company, when dealing with a seed, venture capital, or private equity fund, must enter into some legal documents.

One is the Confidentiality Agreement, which is used to protect the entrepreneur from disclosing information about his business.

A Letter of Intent will also be signed, stipulating the main transaction conditions.

Kepler recommends that you seek legal advice to guide you through negotiation to avoid future problems.

These documents are divided into five major fields of interest and their respective contemplations:

  1. Governance: Protections, Right to Information, Board of Directors, Budget and Non-Competition;
  2. Management: Performance and Management Renewal, Business Plan and Budget;
  3. Corporate: Undiluted, Contingency;
  4. Liquidity (exit): IPO, Drag Along, Tag Along, Repurchase Obligation, Preemptive Right;
  5. Investment Conditions: Obligations of Investors and Entrepreneurs, Performance, Rights.

Overview: Metrics and KPIs

The author argues for not using "vanity metrics," that is, those metrics used only to boost the results, rather than focusing on the cash flow and working capital fundamentals of the business.

In his journey as an angel investor, Kleper claims to have seen several instances where the entrepreneur has set his personal goals and pride ahead of what really matters to the business: steady growth and effective results.

The author presents the fundamental metrics for early-stage startups. The business and financial metrics are:

  • Reserve versus Revenue;
  • Recurring Revenue versus Total Revenue;
  • Gross profit;
  • Total Contract Value (TCV) versus Annual Contract Value (LCA);
  • LTV (customer lifetime value at base);
  • Gross Goods Value (GMV) versus Revenue;
  • Customer Acquisition Cost (CAC).

Product and engagement metrics consist of:

  • Active users;
  • Monthly growth (MoM);
  • Churn: lost revenue or customer;
  • Burn Rate: loss of money;
  • Downloads.

Overview: Entrepreneurship

In this part of the book, the author approaches entrepreneurship as a lifestyle.

Kleper quotes that he likes to live entrepreneurship in its essence. He reveals that he is giving daily examples so that his children can have entrepreneurial behaviors. This, therefore, will be better prepared to face competition in the new world.

The author argues that whatever the fate of the child, what every parent idealizes is the tripod happiness, fulfillment, and strength.

If children are happy with their own choices, made by following the path they have chosen and strong to face the ups and downs of life, the father will surely have a feeling that his duty has been best fulfilled.

In addition, Kepler asks entrepreneurs to start thinking long term. New business only works and stays in the market if the entrepreneur has a lot of balance, persistence, detachment, and future vision.

He says:

"It's rare for a business that is built to last, to be successful overnight."

Overview: The role of the mentor

The mentor, according to the author, is the "guide, the counselor, the teacher, the great thinker." And that is not for anyone. To be a mentor, you need to have practical experiences and use this experience in your area to share with the mentor.

However, Kleper warns, "the mentor does not work miracles and is not magical." The road is long and the mentor is not a shortcut to success. It will help you in finding the best ways.

Everyone needs mentors, even those who are more experienced. John cites his example that despite being a mentor to many entrepreneurs, he has his own mentors who, whenever he needs to, turn to them.

Overview: Reinvent to survive

Significant changes occurred in the 21st century. We "relearn" to buy, sell, communicate, and use technology to our advantage. According to João Kepler:

"We are in the age of valuing intangible goods and intellectual capital and new business models."

And it is in this context of many rapid changes that Kepler sees entrepreneurs facing one of the biggest challenges of recent times. Not only by the context of the Brazilian crisis or the fourth industrial revolution but by the context and the changes that are happening, whether physical, digital, and biological.

The author argues that in the next ten years, 50% of today's professions will cease to exist. To cite, for example, the fact that the five largest companies in the world by market value today are algorithmic and platform companies, not the traditional ones we were used to.

And it will not only be these changes that entrepreneurs will face as challenges. It will be necessary to develop new skills and to use skills such as vision, creativity, empathy, and emotional intelligence.

What do other authors say about it?

Robert Kiyosaki, the author of the book "Rich Dad Poor Dad", says the first step in the enrichment journey should be to analyze your current financial state. With your work, what is the expected income potential now and for the future? What are your expenses and how can you sustainably sustain them?

Peter Thiel, in his work "Zero to One", says that "a startup with problems in its foundation can not be fixed." One of the biggest difficulties is choosing your partner. This decision is so important that the author compares it to a marriage.

Finally, the authors of "Innovatrix", Clemente de Nóbrega and Adriano Roberto de Lima, say that the most important thing is in business model innovation. When it comes to innovation, many have product innovation in mind. It is undoubtedly important but insufficient to sustain a business.

Okay, but how can I apply this to my life?

  • Put the soul into the quality of execution;
  • Understand the social evolution of people;
  • Always innovate looking for new processes;
  • "Relearn", reflect, "reschedule" and redo ";"
  • Think long term;
  • Use the correct metrics and KPIs;
  • Understand the legal and legal aspects of angel investing.

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By the way, if you want to know all the details of this work, you can get the full edition from the Amazon store:

Book 'Smart Money'

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