Alan Meckler, CEO of Jupiter Media will be the keynote for the Early Stage Summit a great investor/startup conference we’re hosting on October 2nd. If you haven’t applied to attend yet, I suggest you do, the event is filling up fast.
I would like to officially announce that the Early Stage Summit will be on October 2nd 2008. The Early Stage Summit aims to fill the gap in NYC in the venture community by providing a forum for great companies to show off their products to the top investors from around town and also from around the world.
The Early Stage Summit is being produced by Bootstrapper.com with the help of Richmond Events, Susan Hahn & Associates, Pillsbury Withrop, Mashable, Seedingit.com, StartupHappy.com, SquareSpace and the Connectors Fund.
The goal is simple, allow 15 great companies to present in front of investors who will give live diligence feedback to help the companies understand themselves better. The event will be broken down into Tracks along industries and each will feature a keynote, a panel of investors, 3-4 pitches followed by live diligence from our investors followed by a chance to meet with the companies of your liking in our breakout rooms.
The event is by application only and I urge anyone, investors, entrepreneurs or press that is interested in attending to apply at EarlystageSummit.com. I’m also available for questions if you want.
If you are in the start-up world, I’d bet you’ve heard that you’re fair share of times. VC’s hear it all the time, execs hear other execs wine about it all the time and I’ve even been guilty of it. I mean c’mon, everyones had at least one cash crunch in their life, usually more than one.
What does it mean? — That it’s time to be creative. As soon as you utter those magical words, that should be a wake up call to stand erect and get to work because it’s time to bootstrap. Don’t wine, win! If you think you need a million dollar, earn it, go out and sell more widgets. Take a second job as a mortgage broker and convince all your friends in the valley that it’s time to cash in on their million dollar mansions. Whatever you do, don’t just sit around and wine and hopefully to find an investor cause unless you’re in the been there done that crowd, don’t bet on it. Bootstrap on it.
If you are pre-revenue, what are you really selling?
Potential ROI? No.
Potential Revenue? No.
Your idea? Maybe
You? YES
The single most important thing trying to raise napkin money is you. What is your background, why will you be successful. Why are you the guy to take THIS idea to the promised land. Do you have relevant domain experience or a successful exit? If the answer is no, it will be pretty dam hard to raise capital….unless…
You have a demo or IP and are willing to replace yourself as CEO….
In general the TEAM is most important
Second is the idea, as part of the idea is the size of the potential market
Third is the IP
Fourth - how you found the investor
Those 4 things together will determine if you get capital. If you don’t have good answers, you probably won’t raise a cent…
For those of you who don’t know, I’m a huge met fan. If you’ve ever been to Shea, occassionally you see a guy in a crazy blue/orange mets mask. That guy is me. I picked it up for $8 in the playoffs last year and its a hoot. Of course my GF thinks its stupid and tried to throw it out but I’m a Met fan through & through. LIke always though, I know how to stand out.
So back to the topic and I will explain my baseball analogy.
1) Prepare. Get your materials together, work through them, get them down. Make sure you’re warmed up.
The Art of Pitching Edit | Delete
Guy Kawasaki wrote the Art of the Start - which is a great book btw. Here is my simpler version - the Art of Pitching…
1) Always stretch first. = be prepared and warmed up
2) Practice makes perfect. Light bullpen sessions in your spare time are a good idea. = rehearsh your pitch
3) Video tape yourself so you can see your mechanics in action. = this serves 2 purposes, one you can see if you�re persuasive and show it to pepople for feedback and secondarily you can send it around as a teaser
4) Get a coach that will critique you and make suggestions = get an adviser to help you with your plan, even if you�ve done it before, a second opinion never hurts
5) Throw = go for it
6) if you see a flaw while you’re in a game, try a different pitch and correct it later. Don’t go back to square one in the middle of a game = if you�re in the middle of pitching and someone brings up a problem, don�t get defensive, deal with it, answer and keep pitching
7) Stretch again after = recap your pitches and critique yourself and edit your pitch for the next time
Rest for 5 days and hit the mound again = rest and try again
9) Repeat
10) W = hopefully close a few bucks
So you have a million dollar idea right? Well, do you have $100,000 to invest in it? no. have you been hit by a car lately and get a 7 figure settlement ? (pop quiz: where’s this reference from?)
So how do you get started? Couple of questions
1. Do you have any friends that are suckers? If so, start there.
2. Do you have domain experience. Ie: worked for a company in the same field of your idea in some level of responsibility? No…
3. Do you have friends with related experience?…No….
If the answer is no to all 3 of the above questions, I suggest saving your money and buying yourself a new car or get yourself a mistress. At least then you’d get laid constantly and not just fucked once.
I’ve said this a lot of times, it’s very important to have DOMAIN experience in what you are trying to do. If you don’t ask people that do and bring one of them on as a partner.
So you want to be greedy and keep all your equity? Are you rich now? No. So why the hell are you being greedy if by partnering with X you could be rich? If you do it yourself with no experience you will probably fail.
I have people come to me all the time with great ideas and limited budgets (under 50k) and say they know nothing about web development and ask me if they should built it in india for $4995…you know what i tell them…find yourself a partner thats a techie in the space that believes in you. I will not give you a dime because I have no faith in your ability to execute. Find a partner, please. If you can’t then you probably don’t have the connections to make the company work.
But you don’t want to give away all your equity? Give me a fucking break and go home now.
When you’re a serial entrepreneur there’s always a question that every possible investor asks “Why don’t you fund it yourself?” I’ve been asked it myself and so have lots of my friends.
Simple question right? Not so simple answer…
Here’s why: Serial Entrepreneurs Dilemma.
There are 2 parts to serial entrepreneurs dilemma.
The first is our tendency to spread ourselves too thin. One success usually mean we invest in 5 more great ideas before cashing out of the first and thus end up in a cash crunch. I know a lot of people that started quality valuable companies but not exit-able companies and thus the founders are worth $5MM, $10MM, $50MM but are basically broke. It’s a funny thing but there’s a good chance that your neighbor that founded a company you hear about all the time and that the papers say is worth X zillions of $ but isn’t public has a lot less money then you in the bank. So when your billionaire neighbor doesnt offer to pick up the check understand - he may need a loan. But one day he’ll cash out and hopefully remember that you picked up the check when you pitch him to invest in your great idea.
The other problem with serial entrepreneurs dilemma I addressed in my last post. We are a rare breed of trustworthy quick thinking people. Our enthusiasm gets the better of us and we tend to get screwed even if other people make a lot of money. We also don’t like to admit that we got fucked getting other people rich. Sure we made money but a $50MM company doesn’t mean we made $50MM. Odds are we made money, saved some, put some in more startups and are trying to double down (not out of greed but out of love for the startup life)
Between the two reasons, we tend to have a lot of paper money and a lot of people owe us favors but not have a ton of cash - though we’re always willing to invest what we can.
So now to answer the initial question “If you are so successful, why don’t you invest your own money” … a lot of times we don’t have a liquid $5MM to invest. Sure we usually can seed fund it but beyond that better to bring on other people’s money then stress yourself out.
Of course there are exceptions. Some people have huge payday’s their companies go public or get bought by Yahoo. Those people are lucky and the exception - they get serious cash out. Most even successful companies don’t sell for huge multiples and most serial entrepreneurs are good guys and like to give cash back to their employees when they cash out (out of their own pockets basically) so for every Peter Thiel, there are a million successful but not quie as successful entrepreneurs that by reading their resume you’d think they have tens of millions of dollars but really did well but not quite THAT well.
A question that often comes up is whether or not entrepreneurs should build a board of advisers for his start up. Its a tricky question. The answer is sometimes.
There are different reasons to build a board of advisers:
1. Buying credibility
2. utilizing their network
3. experienced advice
4. you think their name with get you funding
Now, these are all perfectly valid reasons but investors see through out - well at least most sophisticated ones. In general if you see famous personalities associated with a brand- run for the hills (unless it’s John Elway whose brilliant), its window dressing. (if you’re an investor)
From an entrepreneur’s perspective its all about moderation.
Boards are cool but they usually don’t add value and names usually don’t buy funding. You (founder) buys half the credibility and the other half comes from the idea, pretty much end of story.
However if you have someone on board who will actually make capital intros then sure, its cool. But there’s a big difference between someone who will be proactive and put their stamp on it then someone who will just say ok, use my name. Experienced advice is generally crap. Your asking people that are too busy for their own affairs to help you out. Maybe you’ll get 5 minutes. If you can’t succeed on your own, you shouldn’t be taking other peoples money (or maybe you should - to save your own ass)
My attitude is anyone who volunteers advice, ideas, help without asking for someone and whose advice is useful, you should ask to be on your board. That is the kind of person who would likely stand behind you and make introductions and not just sit idle and bullshit.
Is a big board a good idea = NO. Keep it small with people that are actually productive - with the exception if you’re pitching for political related business (then stock up on people you can buy).
if you try to buy credibility it doesn’t get that far. I know plenty of entrepreneurs with awesome track records (the kind of people other people put on their boards) that can’t raise funding for ideas = because they weren’t sellable ideas. Only give equity to people who offer help and you can trust.
****Bottom line is this: Advisers are good, but keep it simple and only invite people that proactively offer help.
- it also validates your idea.
