Category: Investors

“If you don’t take money, they can’t tell you what to do” – Bill Cunningham

This quote came from a book about bootstrapping.  The advice is to bootstrap as long as you can for two reasons.  First, the closer you get to selling your product, the more value you create in your startup and the less equity it will cost you should you decide to take on venture capital.  Second, when you take on investors, you take on partners who have a say in how the business is run.

As CEO, you are accountable to keeping your investors informed and you will have milestones to accomplish in order to continue receiving their money.

So let’s be clear about investment capital – it buys you time.  When you are ready to scale and really launch your product across your market, it takes a lot of money.  National campaigns are very expensive.  Sure you could grow incrementally through social networks and word of mouth but it takes months and years to get a large following.

Using other people’s money buys you that time but there’s a cost.  You share ownership and a Board of Directors who can decide to fire the CEO.

How important is your ego to you?

 

Blogging Gazelle is published daily by Shawn Carson

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“In answer to the question of why it happened, I offer the modest proposal that our Universe is simply one of those things which happen from time to time.” – Edward P. Tryon

One reason entrepreneurs start their own company is because they simply can’t work for someone else.  There are plenty of great, inspiring books extolling the virtues of “entrepreneurial independence”.  Another motivation for owning one’s destiny is the opportunity to create wealth.  You have a set amount of time on the planet and entrepreneurs choose to use theirs to create wealth for themselves as opposed to shareholders of a corporation.  All good stuff!

And there there is the issue of control.  Entrepreneurs who demand control of everything will struggle…for two reasons.  First, you can only control a fraction of the variables you encounter.  You can’t make customers buy the product and you can’t make investors invest.  You have no control on how your competitors react and let’s not get started on employees.  And then there’s a little thing called the world economy that can eliminate profitable markets overnight.

The other reason for the stuggle over control is you’ll never get there by yourself.  You will need partners, investors and key employees.  You will have to share equity with these people and in doing so, you are sharing control.  With apologies to Bob Dylan, if you’re building a high growth startup, you’re still going to have to serve somebody; customers, investors, shareholders.

If this is going to be a problem, then you should take another look at the Food Truck (but then there’s the Health Department…)

Blogging Gazelle is published daily by Shawn Carson

“It’s not the amount of money you raise, it’s who you raise it from.” – Jason Freedman

One popular saying is, “the best deal is the one on the table.”  It’s hard raising capital and if you are lucky enough to catch the attention of an investor, you’d be crazy not to take the money and get on with it.

On the other hand…

It’s never just about the money.  For one thing, there’s the personality issue; a conversation for another time.

The point here is that your investment partners need to bring something to the relationship beside their money.  They need to have a track record of helping their portfolio companies get to the next level of investment.  They also need to bring their Contact List to help you grow the business and get you in front of the right advisors.

If it’s just about the money, you might be better off, GULP, to pass on the deal.

“By not having any money to waste, you never waste money.” – Derek Sivers

This is a great thing about startups.  When every dime is precious, and if it’s your dime, you tend to be very efficient with capital.

This should never change once you have acquired other people’s money (OPM).

They have invested in you because you have convinced them your idea will provide them with a return.

Make sure you choose the right funding partners and when you do, take care of them.  Take care of their money.  Treat like it’s yours.  Provide them with a return.

Everyone get’s to eat before the cook.

This quote is from Derek Sivers “Anything You Want”.  Get it.  Read it. Share it.