Are you more focused on funding or on growing your business?
Do you read about huge valuations and the resulting funding and find yourself green with envy?
According to Ron Conway, founder of SV Angel, …it’s always good to bootstrap for as long as possible, meaning it’s better to not take money from a venture capitalist or angel investor; startups should strive to be self-sustaining at first.
When fundraising it’s important to know what you really need as opposed to what you can get.
Ego trips, too, play a role in fundraising. After all, think of the bragging rights and the media frenzy that come with large investments.
But raising funds means giving up equity as Xenios Thrasyvoulou, founder of PeoplePerHour.com and SuperTasker.com in London and New York, learned the hard way.
…venture capitalists expected his company to grow five times in 12 months. Though he viewed his firm as having a healthy, sustainable growth rate, it didn’t meet those expectations, and he was forced to hire an expensive and large management team. Eventually, Thrasyvoulou regained control of his company, but he reminds other entrepreneurs that “sanity is more important than vanity.”
Of primary importance for all founders is to remember that what goes up always comes down—especially the economy.
That means not just careful fundraising, but careful spending; it’s far smarter to bank the money than to spend it on plush startup living.
Read the article and learn from those who can say, been there/done that. It’s not the same as listening to them on-stage, but it’s a lot less expensive.
A Friday series exploring Startups and the people who make them go. Read allIf the Shoe Fits posts here
“Vic” is the go-between and coach for an organization that arranges for entrepreneurs to pitch panels of investors in an ongoing program.
The investors provide feedback on the product, pitch, etc., and may end up funding it.
When entrepreneurs apply Vic sends them a questionnaire and set of pitching guidelines.
Both were developed by the investors to ensure high quality pitches that contain the information they want and address their basic investing concerns.
Completing the questionnaire makes it simpler to organize and build the pitch, while the guidelines include important Dos and Don’ts.
Vic then works with the entrepreneur to refine and polish the pitch, which results in better and higher-level feedback from the investors.
I thought it sounded like a great program for founders looking for early investment and asked how it was received.
Vic’s response was about what I expected.
There are eight points in the questionnaire. Of the ten accepted applicants, only a couple will return the forms and even their response are the result of being asked two or three times. Moreover, those who do respond only cover two or three of the eight questions.
I asked Vic how creditable the pitches were and what was the investor reaction.
Most of the pitches are missing crucial information, which annoys the panel and makes their feedback more abrasive, because they feel their time is being wasted. The constructive part is much more basic and often covers verbally the same information that was in the questionnaire and guidelines.
I asked how the entrepreneurs reacted to that.
They aren’t happy and often blame me for not coaching them on the what and how of the presentation. One guy, who didn’t return any of the prelim work, even said, “Why didn’t you help me the way you were supposed to?”
Now the question you need to answer is if this guy is a ten (on a scale of one to ten, with ten being the worst) what number are you?
When possible I prevail on someone I know to attend the major AlwaysOn conferences, usually it’s KG Charles-Harris, but more recently it’s been Chris Blackman.
Last week Chris attended this year’s AlwaysOn Venture Capital Summit at Sand Hill Road in the heart of VCland and got a glimpse into the future investment strategies of that storied world.
From Chris Blackman
A culture of innovation? Customer driven? Family oriented? Work hard play hard? Top down or bottom up?
Do companies still embrace and boast about these corporate attitudes anymore?
Judging from what I heard at the AlwaysOn Venture Capital Summit they have taken a back seat to burnishing a reputation of being a green in many companies—but not all.
Amiel Kornel, senior managing director of the Emerging Technology Group at venture firm Spencer Trask still cares about those values and behaviors.
In particular, he looks for “companies that will define new market categories of business while emphasizing a top down approach to a balanced lifestyle.”
Innocentive is Kornel’s poster child for such values.
It also created the business category known as crowd sourcing.
For example, last week, the US government announced an online challenge with the aim of discovering a process for how the Internet can help with rapid problem solving. How was it won? A group of MIT students used incentive-based collaboration techniques to encourage individuals to share the winning information.
Innocentive is fast becoming the nexus of such competitions. They have the ability to bring together thousands of minds to solve intellectual challenges quickly.
Mr. Kornel reminds us why company culture is important: “Key individuals must be fun to spend time with because at the end of the day, this relationship is like a marriage.”
And to be productive it needs to be a good marriage.
I’m fortunate to be a member ExpertCEO, an online community of CEOs of startups and fast growing companies that offers peer support and advice.
A couple of weeks ago a member invited everybody to post “things you’d never hear a VC say.”
They were pretty hilarious, with some of the best responses coming from VCs themselves.
Apparently I’m not the only one who felt that they’re too good not to share and today we were presented with a great compilation of the 12 best entries.
Anyone who has worked in a startup or spent time around VCs will appreciate the following; anyone contemplating doing so should appreciate the insights.
When RampUp Solutions started in San Francisco convincing entrepreneurs, let alone VCs, that culture was of critical importance, that corporate culture needed to be architected as carefully and consciously as any product and that hires needed to fit the culture and not just the needed skill set it felt like we were swimming against a tsunami.
We were, but that was then and this is now.
Now people such as Silicon Valley venture capitalist David W. Pidwell give public talks at major universities on “The Attributes of Building a Corporate Culture,” focusing on how entrepreneurs are often so overwhelmed with starting the business that they overlook creating the corporate culture. Pidwell believes that corporate culture provides the core values, policies and practices that define employee behavior and internal operations.
Culture underlies equally the success or the failure of companies of all sizes. In larger companies incoming CEOs ignore the corporate culture at their own risk and are often dumped for either botching it or not changing it.
Entrepreneurs face difficulties that are hard for most people to imagine, let alone understand. You can find anonymous help and connections that do understand at 7 cups of tea.
Crises never end.
$10 really does make a difference and you’ll never miss it,
“Vic” is the go-between and coach for an organization that arranges for entrepreneurs to pitch panels of investors in an ongoing program.
When possible I prevail on someone I know to attend the major AlwaysOn conferences, usually it’s KG Charles-Harris, but more recently it’s been Chris Blackman.
