Saturday, October 31, 2009
Angel Investment-Part 2
While we are on the subject of angel investing, take a look at the wonderful post from Bill Grimm’s blog, Thoughts on Advanced Entrepreneurship. Bill is a professor of entrepreneurship at the Crummer Graduate School of Business, but he is also an attorney who has touched almost all of the technology related deals that have taken place in Central Florida in the last 25 years. Here is a link to his thoughts on Myths on Angel and Venture Capital Investments.
Angel Investing
Playing catch-up today in the office, and ran across this interesting article and resources on angel investing from the October 28 NY Times. From the article: Small-Business Guide - Small-Business Guide - The New Rules of Angel Investing - NYTimes.com
Angels are still financing deals, but at lower valuations and with more specific milestones. They have grown more picky and less tolerant of risk. “What you’re seeing now is a real flight to quality,” said David S. Rose, chairman of New York Angels. “If you are the real deal, you can get funded.”
What’s the real deal? Angels are looking for companies with more modest capital requirements. They seek companies that bootstrap, beat quicker paths to profitability and have proven management teams. “The most striking change is angel investors are way more discerning about where they deploy their capital,” said Bruce Cerullo, a Boston-based angel investor who specializes in health care. “Now groups like ours are looking for more fully baked ideas that are much closer to revenue generation.”
I think the other reason that angels are able to be pickier about deals, is that there are so many other options for them to invest. For one, think of all the distressed investments that are available; the investment advisors for many of these angels are presenting other less risky and potentially more lucrative options for their available capital. That said, angels are investing, but as entrepreneurs, we need to make a clearer and more compelling case as to why they should invest their money with us versus the other options (think real estate) out there.
Angels are still financing deals, but at lower valuations and with more specific milestones. They have grown more picky and less tolerant of risk. “What you’re seeing now is a real flight to quality,” said David S. Rose, chairman of New York Angels. “If you are the real deal, you can get funded.”
What’s the real deal? Angels are looking for companies with more modest capital requirements. They seek companies that bootstrap, beat quicker paths to profitability and have proven management teams. “The most striking change is angel investors are way more discerning about where they deploy their capital,” said Bruce Cerullo, a Boston-based angel investor who specializes in health care. “Now groups like ours are looking for more fully baked ideas that are much closer to revenue generation.”
I think the other reason that angels are able to be pickier about deals, is that there are so many other options for them to invest. For one, think of all the distressed investments that are available; the investment advisors for many of these angels are presenting other less risky and potentially more lucrative options for their available capital. That said, angels are investing, but as entrepreneurs, we need to make a clearer and more compelling case as to why they should invest their money with us versus the other options (think real estate) out there.
Thursday, October 29, 2009
Great Speakers/Great Messages
One of the great things about being involved with a University is that I get a chance to hear and meet wonderful speakers. Last week, I heard the founder of the Discovery Channel, John Hendricks, give a great lecture on entrepreneurship. John spoke on the need for entrepreneurs to be passionate and nearly obsessive about their venture to be successful. He also said that we should pay attention to our daydreams. For John, one of his daydreams was a tv channel for documentaries, which in essence was the elevator pitch for what would become the Discovery Channel. He also talked about the Planet Earth series and their upcoming big-event series, Curiosity, where they will tackle 60 big questions.
Last night, I heard James Olson, the VP of Corporate Communications at US Airways (and a Syracuse University graduate) speak about the Miracle on the Hudson. He took us back to last January, when he was sitting at his desk and got a call and needed to comment on the spot to the fact that one of their airplanes was floating in the Hudson River. He told a packed audience at the Newhouse School of Public Communications that planning and drilling is indispensible to prepare for a crisis, but that you also have to be flexible enough to make changes on the fly when those changes are called for. But he also reminded all in attendance that transparency is required, because whether we like it or not, in this day of 24/7-always-on-all-the-time media, even private letters to customers will be made public, so we might as well think about that at the outset. US Airways still has on their website, a spot where you can see lots of information about the incident, including the letter that was sent to the passengers of 1549 just days after the accident.
Last night, I heard James Olson, the VP of Corporate Communications at US Airways (and a Syracuse University graduate) speak about the Miracle on the Hudson. He took us back to last January, when he was sitting at his desk and got a call and needed to comment on the spot to the fact that one of their airplanes was floating in the Hudson River. He told a packed audience at the Newhouse School of Public Communications that planning and drilling is indispensible to prepare for a crisis, but that you also have to be flexible enough to make changes on the fly when those changes are called for. But he also reminded all in attendance that transparency is required, because whether we like it or not, in this day of 24/7-always-on-all-the-time media, even private letters to customers will be made public, so we might as well think about that at the outset. US Airways still has on their website, a spot where you can see lots of information about the incident, including the letter that was sent to the passengers of 1549 just days after the accident.
Tuesday, October 27, 2009
Thoughts from the Other Side of the Desk
I just ran across this article that was posted on Reuters back in early October called The Secrets to Getting Your Green Business Funded. It’s a question and answer session with venture capitalist Bryan Korba and he offers a perspective from the other side of the desk on talking with the institutional investor. In particular I liked his items, which I’ve placed below, that are red flags that turn off investors:
1. Closed-minded entrepreneurs.
2. No real startup experience.
3. Need to spend millions of dollars to generate insignificant revenue.
4. The company has no model to generate revenue (it's customers, not buzz, that generates revenue).
5. The company can show no operational roadmap on how to build and manage the required business processes (sales, accounting, customer service, quality control, etc.).
6. Unrealistic valuation of the company.
7. Entrepreneurs that try to control everything.
8. Trying to raise money instead of building a business
1. Closed-minded entrepreneurs.
2. No real startup experience.
3. Need to spend millions of dollars to generate insignificant revenue.
4. The company has no model to generate revenue (it's customers, not buzz, that generates revenue).
5. The company can show no operational roadmap on how to build and manage the required business processes (sales, accounting, customer service, quality control, etc.).
6. Unrealistic valuation of the company.
7. Entrepreneurs that try to control everything.
8. Trying to raise money instead of building a business
Sunday, October 25, 2009
Stop Solving Your Problems
Because I couldn’t watch the NFL game on TV that I wanted to this late afternoon (Saints vs. Dolphins), I instead read through the stack of magazines that were covering my desk and littering the floor of my office. Flipping through Fast Company, I ran across an interesting piece, Stop Solving Your Problems. While most of the article dealt with big company stuff, I found myself thinking about how entrepreneurs could take the same notions and apply them to our own companies. Consider the notion that the authors Dan Heath and Chip Heath, raise as they begin the article:
“Your business has a big problem. You've thought about it, but you can't seem to crack it. So you consult your colleagues -- to no avail. Then you turn to the big guns -- your industry's top experts. They've got nothing. (Well, to be precise, they've got 40 PowerPoint slides worth of nothing, and you've got $225,000 less of something.) Now what?”
While most of us won’t spend $225,000 with a consultant, how many of us have spent less and were left with a consultants report and the nagging feeling that nothing was solved. The authors go on to point out that…
“We start by tapping the local knowledge, and if it's insufficient, we go looking for specialists. But what if we're following the wrong protocol? We should stop looking for experts and start looking for analogues. It's a big world: Chances are someone has solved your problem already.”
Take a look at the article and then try to apply it in a less costly manner (most of us aren’t going to get NASA involved) to our own problems.
On a related thought, see Dan Macsai’s take on three ideas that the newspaper industry can copy to help its business.
“Your business has a big problem. You've thought about it, but you can't seem to crack it. So you consult your colleagues -- to no avail. Then you turn to the big guns -- your industry's top experts. They've got nothing. (Well, to be precise, they've got 40 PowerPoint slides worth of nothing, and you've got $225,000 less of something.) Now what?”
While most of us won’t spend $225,000 with a consultant, how many of us have spent less and were left with a consultants report and the nagging feeling that nothing was solved. The authors go on to point out that…
“We start by tapping the local knowledge, and if it's insufficient, we go looking for specialists. But what if we're following the wrong protocol? We should stop looking for experts and start looking for analogues. It's a big world: Chances are someone has solved your problem already.”
Take a look at the article and then try to apply it in a less costly manner (most of us aren’t going to get NASA involved) to our own problems.
On a related thought, see Dan Macsai’s take on three ideas that the newspaper industry can copy to help its business.
Wednesday, October 14, 2009
Maintaining Success
I was reading an article and came upon some interesting thoughts that were provided on the subject of how to be successful over a period of time. Sustaining success over a period of time is something that all of us who are entrepreneurs have to think about; whether it’s for a period of years or whether it spreads over a number of generations. Here’s what was said on the topic of how that sort of success happens and continues:
“You have to have a really over-arching plan. You need to have a plan to handle the challenge of the transition. You can't deviate from that plan. You have to approach the job with a vision so that you're not going to a mystery place. You have to know where you're going, accept the challenges and take it all in stride. Expectations are never adjusted because of the results. The focus is on standards, expectations and uncompromised principles. What we do doesn't fluctuate. We've learned to deal with the attention and the notoriety (of success). That doesn't change anything."
Who said these things? Pete Carroll, the head football coach at the University of Southern California. If you’d like to read the entire article by Al Lesar of the South Bend Tribune, here is the link to the story.
“You have to have a really over-arching plan. You need to have a plan to handle the challenge of the transition. You can't deviate from that plan. You have to approach the job with a vision so that you're not going to a mystery place. You have to know where you're going, accept the challenges and take it all in stride. Expectations are never adjusted because of the results. The focus is on standards, expectations and uncompromised principles. What we do doesn't fluctuate. We've learned to deal with the attention and the notoriety (of success). That doesn't change anything."
Who said these things? Pete Carroll, the head football coach at the University of Southern California. If you’d like to read the entire article by Al Lesar of the South Bend Tribune, here is the link to the story.
Saturday, October 3, 2009
Whole Foods: The Unique CEO
I was never a particularly big fan of going grocery shopping. It was something that had to be done of course, but it wasn’t something to enjoy and it was never a thing to look forward to. And then, when we moved to Santa Fe, New Mexico…I discovered Whole Foods Market. The first time I walked into one of their stores, everything was different. The customer service was exceptional, the fish department folks really knew their stuff, and I could get freshly roasted coffee to take home with me. Where had this store been my whole life?
Since that time, grocery shopping in America has certainly changed. And living in Syracuse, I have no Whole Foods (but I do thank goodness have the spectacular Wegmans), but I look back to my shopping mornings at Whole Foods with wonder; how did they turn this guy who hated shopping into one that actually enjoyed the process. This is just preamble to a suggestion that you read the article in this morning’s Wall Street Journal that is an interview with the CEO of Whole Foods. The interview is comprised of one cup of business 101, one cup of social entrepreneurship and a dash of pride from the CEO for having created a truly unusual store that in many ways has revolutionized the grocery industry.
Since that time, grocery shopping in America has certainly changed. And living in Syracuse, I have no Whole Foods (but I do thank goodness have the spectacular Wegmans), but I look back to my shopping mornings at Whole Foods with wonder; how did they turn this guy who hated shopping into one that actually enjoyed the process. This is just preamble to a suggestion that you read the article in this morning’s Wall Street Journal that is an interview with the CEO of Whole Foods. The interview is comprised of one cup of business 101, one cup of social entrepreneurship and a dash of pride from the CEO for having created a truly unusual store that in many ways has revolutionized the grocery industry.
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