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I hear many executives and professionals in large corporations talking about their dream of jumping ship, and starting their own company. What they don’t realize is that the longer they wait, the more big-company habits they are acquiring, which will make their eventual decision harder and entrepreneurial efforts less and less likely to succeed.
Certainly, the longer they wait, the greater the variety of excuses they will find for why now is not the time. Common examples include; need to work on my resume, broaden my experience, enhance my skills, save my income, and maintain a stable family life until my children are gone. Most will then NEVER make the step, and remain unsatisfied through much of their career. Read more
My thoughts on this have changed a bit over time, as the general pace of—and level of activity in—the startup world has begun to hyper-accelerate. It’s always a good idea to be able to approach someone with whom you’ve had at least a nodding relationship, because that immediately differentiates you from a pure, over-the-transom funding request, and you are much more likely to at least get an answer. Read more
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I’m not much of a television person, but my family loves one of the popular “reality” shows, called “So You Think You Can Dance,” so I’m sort of forced to watch it every week. Over time, I’ve concluded that even startup entrepreneurs can learn a few things from this one. Of course, you must ignore the pomp and circumstance of the TV staging.
I’m on the selection committee of our local Angels group, so I know that every CEO approaching our group for funding goes through ten minutes of creative “dancing,” to give us a basis for selecting startups that are most qualified and “ready” to proceed to the next level. If selected, they go through it again in the real meeting of 40-60 investors. It’s tough and not fun for either side. Read more
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If you expect to succeed in the thrill-a-minute, roller coaster ride of a startup, let me assure you it takes more than a good idea, a rich uncle, and luck. In fact, the idea is often the least important part of the equation. Most investors tell me that they look at the people first, the business plan second, and only then at the idea.
If you want some tips to beat the insurmountable odds, take a look at the following concepts, adapted from Richard C. Levy’s book, “The Complete Idiot’s Guide to Cashing in On Your Inventions.” He was talking about inventions, but I think his concepts apply perfectly to any entrepreneur starting a business: Read more
This is changing as the whole world of venture/angel/seed funding is rapidly morphing, but typically a ‘real’ Series A round is small enough for one traditional venture fund to do the whole thing itself. Very occasionally, they might split it with another fund, but that would probably be the exception.
What we are often seeing, however, is large-ish “seed” rounds of up to as much as $1-2 million, led by an early-stage seed fund, “super-angel” or angel group, which might put in +/-50% of the round, with the balance made up of other seed funds and value-adding angels (‘super’, ‘grouped’, or otherwise.) Read more
Equity-based crowdfunding (that is, providing regular people with the opportunity to purchase stock in private companies) will not be legal in the US until the first quarter of 2013 at the earliest. At that time, any company planning to operate as a “funding portal” will have to comply with an extensive set of rules and regulations established by the U.S. Securities and Exchange Commission, which have not yet been released.
Project-based crowdfunding (that is, providing individuals or companies with the opportunity to accept donations from supporters, or pre-sell their products) is currently legal, and is exemplified by sites like Kickstarter. Read more
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I still get business plans, looking for an investor, that say all too clearly that the primary “use of funds” will be to do research and development (R&D) on some promising new technology, like superconductivity or cancer cures. Entrepreneurs forget that investors are looking for commercial products to make money, rather than R&D sunk costs, so investment hopes are sunk as well.
In fact, the term ‘research and development’ covers a continuum of activities, so you need to use a more precise term to maximize your funding likelihood. There are opportunities all along the continuum, and they need to be mapped to the right academic environments and public- and private-sector development organizations before a funding source can be determined. Read more