Alex brings significant business development experience, knowledge, and a big network of contacts to NextUp Labs. I am particularly excited about Alex’s experience with licensing and marketing.

For Alex’s official bio check out our Company page and please feel free to email him with congratulations on joining NextUp Labs!

We thought our expertise in mobile combined with their domain experience would make a great team! However, in practice, we encountered three challenges with our model:

1. Valuation

With first time entrepreneurs, we struggled to agree on how to value their idea. One of our potential customers insisted that theirs would be the next billion dollar company. We should be happy to take 10% for executing on the idea, they said, because “10% of a billion is still a lot of money”.

2. Lack of focus

Some of our prospects struggled to focus the idea that they pitched to NextUp Labs. Each meeting seemed to bring a new idea or substantial variations on the initial idea. With so many moving parts it was difficult to focus in on the key problem and the proposed solution.

3. Due diligence

We found ourselves spending substantial time performing due diligence on the potential businesses because of the domain experts we were attracting. For example, if a potential customer proposed a product for chiropractors we needed to find a network of chiropractors who could provide meaningful feedback on the concept. Even if we could overcome the first two challenges above, we found it incredibly expensive and time consuming to do a proper due diligence.

Our Pivot

I would love to say that we saw exactly how the market would better use our skills, but it actually happened organically. We found that our target market isn’t domain experts who have ideas for a new business but rather struggling domain experts who have already started their new business.

Working with struggling startups resolves our first two challenges. Most startups have a very good understanding of the value of their idea if they are unable to execute (zero) and they are focused on solving real customer problems.

That left only the challenges associated with due diligence. We found that by working with existing startups, we ended up working more closely with companies who were already in spaces we understand well (e.g. social or wireless networking). Working in domains we understand significantly reduced the burden of due diligence.

Since our pivot in January we have been making great progress. We have some outstanding customers, and we receive a lot of positive feedback from potential customers on our pitch. The concept of complete alignment with our customers goals, and taking our compensation in revenue share and equity, resonates strongly with our target market.

For the past three months, I have been speaking with entrepreneurs all over North America who were looking for advice about their mobile and consumer web start-ups/businesses. These are smart, talented people with great ideas. However, many of them had a common problem. They were missing a key skill that was holding them back from the next level of success. For some it was a technical expert that could help build a more robust prototype, for others it was someone with business development and financing knowledge to compliment a technical team.

Traditionally, these entrepreneurs would engage a consultant who could complement the start-up’s existing expertise (eg. a custom software development firm, a marketing agency, etc). The challenge for start-ups is to ensure that the consultant is aligned with the overall vision for the business. I heard too many horror stories about delayed projects and challenges working with vendors.

I believe entrepreneurs can use a partner who is directly aligned with their interests every step of the way. So, I created NextUp Labs to fill that role. Instead of accepting a fee for service, we want to help companies by sharing in their success through revenue share and equity.

As part of our model, I want to write about NextUp Labs’ experiences on this blog as we work with a variety of start-ups seeing their challenges and successes.  It is an incredibly exciting time to be part of the start-up ecosystem and I couldn’t be happier to contribute my time and skills to making it better.