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Top of Mind's 5 Must-Read Articles in Entrepreneurship

Thom Ruhe on March 18, 2014 Source: e360 Blog

Venture capital certainly has its place within the entrepreneurial ecosystem. Some of our nation's largest companies (and employers), like Apple, Google and FedEx, have secured this form of funding.

But plenty of Kauffman Foundation research tells us that VC funding isn't as mainstream in startups as one would gather based on its common place in startup news. In fact, less than 20 percent of the fastest growing young companies ever take venture capital money.

Most entrepreneurs look no further than their own savings to launch their business, turning cash flow positive before needing a dime from an outside source. For those who can't quite reach profitability by tapping solely into their personal accounts, that bootstrapping method is followed in frequency by two equally personal methods—maxing out credit cards and then, as we say tongue in cheek, by borrowing from friends, family and fools.

For the majority of entrepreneurs, this is their standard access to capital dilemma—a financing route that causes wonderful stress in their lives. But alternatives are emerging and they are changing the dynamic in the funding space. Last week I read an article that featured 11 entrepreneurs who didn’t rely on venture capital to grow their businesses, and not because they couldn’t get it, because it wasn’t right for their companies.

That article is one of my top reads this week, because it’s helping to show entrepreneurs that you don’t need VCs to launch a successful startup, along with some other great startup advice. I also threw in something for the angel investors out there.

11 entrepreneurs share their advice on fundraising without relying on venture capital

  1. Obtaining a merchant cash on your credit card processing income (can be good and bad)
  2. Convertible notes
  3. Raising money from friends/family
  4. Crowdfunding or pre-orders
  5. Charge card (allows you to spend more money than a credit card)
  6. Put your own money in
  7. Financing of tangible assets is a lot less risky for lenders than a cash advance on future sales or a personal loan
  8. Get sales: get on the phone and call customers
  9. Opt for a line of credit
  10. Sell something. Have cash flow.
  11. Rely on family and friend connections. Find an angel investor.


The 10 Most Common Startup Mistakes

  1. Hiring too quickly. It is easy as an entrepreneur to want to move fast and build a big business. Slow down.
  2. Giving too much equity too quickly. Do not be desperate even if you really need cash.
  3. Ignoring a hunch. Listen to your intuition, it is probably spot on.
  4. Only relying on your intuition. Make sure that you are also looking at numbers, KPIs, strategies and plans.
  5. Listening to outsiders too much. Nobody knows the business better than you do. Listen to people, but do not listen too much.
  6. Taking things for granted. Be grateful for investment. Have a contingency plan.
  7. Underestimating competitors. Be competitive and paranoid. Do not gloat in achievement.
  8. Not letting go. It can be easy to become a perfectionist and obsessive. However, having a team can make a big difference in the success of the business.
  9. Working too hard. Get your mind off work, or at least try to.
  10. Forgetting to enjoy the process. Have fun. People that work for you will mimic you.


Five Ways To Avoid Losing Money as An Angel Investor

There are five common ways that angel investors lose money:

  1. No plan to make money: It is important to have a model or strategy to make money. The key elements are staging capital, triage and concentration in the winners.
  2. One-and-done: Some investors only invest in the first financing round and not subsequent rounds.
  3. Too small a portfolio. If angels make less than five investments, they stand more than a 50% chance of losing money (Sim Simeonov’s research).
  4. Content being the small fry: Negotiate the “major investor” clause.
  5. Fail to value time: It is easy to get carried away spending a lot of time going to events, networking, reviewing plans and calling/trying to follow up with companies. The cost of time can be large.

What you need to know if your startup aims to join an accelerator     

The pros of joining an accelerator are the following:

  1. The network effect
  2. Your neighbors (in the same accelerator)
  3. Brand recognition

The cons of joining an accelerator are the following:

  1. Giving up a chunk of your company
  2. Aligning business needs with incubator needs
  3. Lots of must-attend events

In order to make this decision, the startup must decide what stage it is at and how it wants the company to build.

70% of Time Could Be Used Better - How the Best CEOs Get the Most Out of Every Day       

The average tech CEO works around 4,200 hours a year (300 days, 14 hours/day). Around 30% of that time is allocated emails. Another third is spent in meetings (studies show that half of those hours are wasted). Here are eight strategies to stop wasting time and missing out on opportunities. Maximize 70% of your time here.

  1. Say No: You may want to pay it forward, but you have to draw the line at some point. Create “no” templates.
  2. Be an email ninja: Use SaneBox to take out all of the bulk email out of your inbox.
  3. Rule of thumb: If you can send a particular email in under 2 minutes, do it immediately.
  4. Manage your energy: The average tech employee sits 9.3 hours a day. Make sure to move around.
  5. Build playbooks: For anything you do more than three times, write down the process.
  6. Get great at external meetings: Connect out of work to build a personal connection.
  7. Get great at internal meetings: Kill the status meeting. Just have everyone update via email, Google doc, etc.
  8. Leverage assistants: This will extend your capabilities.
  9. Give your team leverage: Walk around and ask your team questions.


Tags:  Top of Mind, Articles in Entrepreneurship, venture capital, VC funding, venture capital money, investment, bootstrapping, capital dilemma, funds, angel investors, accelerator, productivity,

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