Category Archives: Invested Interests

Invested Interests

7 Reasons for Entrepreneurs to ‘First Know Thyself’

If you are going to be a real entrepreneur, it’s important that you know yourself well. After all, you won’t have a direct manager charged with giving you feedback, and your team probably will be afraid to tell you what they really think. Entrepreneurs need to recognize their own strengths and limitations.

In any case, your skills, talent, knowledge, personality, and strengths are your best assets as an entrepreneur. I’ve extracted many of the following points about knowing yourself from a book aimed at women professionals, called “Career GPS”, by Ella L. J. Edmondson Bell, Ph. D., but I see them applying equally well to every entrepreneur, man or woman. Let’s see what you think: Read more

Invested Interests

Test Your Business Model Against These 10 Elements

You can’t succeed in business without an operational model that delivers value to customers at a reasonable price, with an underlying cost that allows you to make a profit. There are no “overrides” – for example, businesses don’t thrive just because they offer the latest technology, or because everyone wants to be “green, or because their goal is to reduce world hunger.

I expect that should seem intuitive to all entrepreneurs, but every investor I know has many stories about startup funding requests with major business model elements missing. The most common failures are solutions looking for a problem, lack of a defined market, and giving away the product. Read more

Invested Interests

6 Reasons Why Startup Prototypes Attract Investors

It’s a long way from an entrepreneur’s “idea” to a working product with a real market and paying customers. A necessary intermediate step for proof of concept, credibility with potential investors, and communication with your team, is a working prototype. Building a prototype should be an early and high priority task for every startup.

A prototype doesn’t need to look great, or be built to scale, but it better accurately translate your vision into something real and tangible. For less tangible products, like software, it should simulate the look and feel of the final product on relevant base hardware. Here are some key objectives to keep in mind when designing your prototype to make it attractive to investors: Read more

Invested Interests

Are Startups Now Changing the World Instead of the Web?

It’s too soon for rigorous data analysis. I don’t have surveys. But I’ve been through about 120 startup business plans in the last month and it seems like there’s a big shift. There’s a lot more science and a lot less web. There’s a lot more save the people, save the world, than there is save the web. surgery

I’m talking about what I’ve seen as a member of a local angel investment group and a judge at four business plan competitions. This is just anecdotal. Still … it’s been a long time since I’ve heard somebody promise the next Facebook, or next Twitter, or next Netflix.  Read more

Tim Berry , Founder, Palo Alto Software
April 24th, 2012 0

Invested Interests

Startups Need the ‘Why’ Before the ‘What’ to Build

All too many startups are founded simply on the basis of a new and exciting technology invented by an industrious technologist. This is the origin of the “solution looking for a problem” and “if we build it, they will come” syndromes, which result in surprise and frustration waiting for funding, and waiting for customers that don’t materialize.

The right approach is to start by solving a problem causing real pain to a large number of customers willing to pay real money for a solution. Develop the solution with your technology, and develop a strategy to maximize your impact in the marketplace. I’ve talked about the solution part several times, so this article will focus on the value of a strategy. Read more

Invested Interests

Angel Investors: Watch for Business Plan Competitions

I just finished three days as a judge for the Rice University million-dollar business plan competition, which was held at the Rice campus in Houston last Thursday through Saturday. If you’re an angel investor and you aren’t aware of business plan competitions, maybe you should be.

The finals were very impressive. As the six finalist companies went through their pitches, every single one was a very attractive investment. If you’re curious, look at NuMat Technologies, the winner. Then look at Medtric Biotech, Lemm Technologies, SolidEnergy, Solanux, and Salveo Vascular, ranked second through sixth, respectively. You’ll see nothing there but high-end technology, innovations, intellectual property, experienced management teams, very impressive resumes, and huge markets. Read more

Tim Berry , Founder, Palo Alto Software
April 18th, 2012 0

Invested Interests

Amount of Startup Equity Depends on Contribution

One of the first tough decisions that startup founders have to make is how to allocate or split the equity among co-founders. The easy answer of splitting it equally among all co-founders, since there is minimal value at that point, is usually the worst possible answer, and often results in a later startup failure due to an obvious inequity.

Another common “failure to start” situation I see is one where the “idea person” insists that the idea is 90% of the value (and 90% of the equity). In the real world, the “idea” is a very small part of the overall equation. A startup is all about “execution” – meaning the equity should be allocated based on the value that each partner brings to the table in each of these dominant variables: Read more