Great People Do Great Things

I am a huge fan of Mark Suster. His blog is a treasure chest of ideas and lessons learned. If you aren’t subscribed to his blog and you are an entrepreneur, you are missing out.

Here is a great video which talks about pitching to VC’s and the approach you should take. With the market extremely hot these days and many people looking to raise capital, this is a very apt video.

How to Make Money in 6 Steps

How to Make Money in 6 Steps – Jason Fried

I am not a fan of subject headings like the one above. It tends to trivialize the process of generating revenue. Which is very far from the truth. I read the article because it is written by someone I am a big fan of, Jason Fried. When you go through the article however, you will see that the steps outlined, are far from one of those money making blueprints that are passed off as business plans.

The six steps are listed below. I would however, strongly recommend reading the entire article to get the correct context.

1. Understanding the buyer, is the key to being a strong seller

2. It’s all about passion

3. How, and why, to charge real money for real products

4. There are different pathways to the same dollar

5. The true value of bootstrapping

6. A word about practicing

Three Types of Deals VC’s Do

Charlie O’Donnell is a partner at First Round Capital and he has some awesome posts up on his blog. He also did a startup called Path 101, which is in a similar place to what we want to do with Identifii. I was reading through his blog post, The three types of deals that VCs invest in and I thought to share it with everyone. This is specially for all those who are looking to get backed by professional money early on in their ventures.

Excerpts from his blog

VCs put money into something that’s innovative, they tend to do it in an innovative sector.  So, it’s not just about the idea, but they want that idea to live in an ecosystem that is in flux or generating new and interesting approaches.

So, if you’re doing something innovative in cleantech, mobile apps, hyperlocal, or some kind of social media monetization tool, an innovative vision can get funded.  VCs are willing to make bets on visions of how certain markets will develop, even if they don’t know all the details of how the business works out.

If you are not in an area that VCs are excited about, you basically have two options.

The first, and probably best choice, is to go make some money.  VCs, specially those in the second half of their funds, will invest in baked in ROI.  Once you prove your ability to make money, then it becomes a simple matter of an associate spreadsheet.  How much do you make now and, what valuation can we get it at?  What will you make with some product improvements and a new head of sales, maybe some international expansion and, what can we sell it at, when?  Dollars in, dollars out, pure and simple.

The next choice, which isn’t really a choice, is to have done it before.  This is betting on the jockey, not the horse.

Pitching to VC’s

It is my last class at the Founders Institute today. Can’t believe 4 months have just passed me by. I will be recapping the entire journey over this weekend with a post. Today, we will have the opportunity to pitch to Angel and Professional investors. Exciting times! I linked to Mark Susters post on pitching to a venture capitalist a few days ago. I found another great video that is also helpful.

If you have pitched successfully to angels or VCs I would really like to cover your story on my blog. Please do get in touch with me.

How to Raise Venture Capital

Mark Suster writes one of my favorite blogs on venture capital & entrepreneurship. He also has a weekly web show on venture capital which is a much-watch for entrepreneurs. His latest web show broke down the process of how to pitch to a venture capitalist. It is a great show and gives a lot of insight on how a venture capitalist thinks about the process. It also provides entrepreneurs with a lot of tips to increase their probability of closing an investment round.

If you want to read through the major points please read the full post here.

How Much Do You Need to Raise?

“The Question is Why” The Founders | TechStars Boulder | Episode 1 from TechStars on Vimeo.

I watched the latest episode of “The Founders” a short while back, this is definitely a series I would recommend to everyone, specially entrepreneurs. This series gives you a sneak peak at the ‘behind the scenes’  scenario of an entrepreneurship incubator. In it, a venture capitalist I follow (Brad Feld) , asks a group of entrepreneurs the question, “How many of you guys have not figured out how much money you are going to raise”. Far too many hands went up and it struck me that this question is really not given enough attention at all. As bootstrapping entrepreneurs, most of us look to raise a round of capital and more often than not, allocate an arbitrary number as to how much.

He goes on to say “At any moment in time, raise the least amount of money to reach the next moment in time that makes sense.” I thought about that statement for a long while, it made a lot of sense. I believe a majority of technology entrepreneurs envision raising millions of dollars and hopefully morphing into something like Google. We jump the gun, and this has been repeated time and time again by successful entrepreneurs;  raising “too much” funding” plays against you. By setting your round requirements with a tangible milestones that can take you to the next level, forces you to focus on creating a realistic trajectory for your business. Raising a round of funding is not an exit for the entrepreneur, it is actually an additional responsibility, that must be shouldered to reach the next milestone.

In conclusion, the ability to answer the above question, with a methodical and structured plan, will give a much more positive and reassuring signal, rather than telling an investor that you need to raise $X to reach the next milestone. Articulating your vision, as well as not forgetting to bootstrap, will not only help you validate your idea faster, it will enable you to remain agile and be able to pivot when things do not seem to be working as planned.