Raising Money in a Different Way

While in business schools, we like to talk about venture capital and angel investors, the reality of entrepreneurial life is that most entrepreneurs raise money from family, friends and fools. But in the June 5 Wall Street Journal , Diana Ransom brings up some other options for funding a business in her article, Unique Ways Entrepreneurs are Raising Money.

The Times They Are a Changing

Reuters writer David Lawsky just posted an interesting article on the venture capital industry, called Venture Capitalists See Their Industry Shrinking. While this industry gets far more attention, both good and bad than they deserve, the piece provides some interesting insights and stats; one of which was that the number of VC firms dropped by ten percent over the last year as investment money disappeared.

From the article:

"It is very tough to make a commitment to a new venture fund these days," said Panda Hershey, director of global private markets for the large pension fund, TIAA-CREf. "Many of us benefited in '99 and 2000, but subsequently it became very tough for venture as a whole to get returns," she told a panel at the Venture Capital Investing Conference. "I would say, please produce some returns before we re-up with you."

Now They Get It

A favorite movie of mine is “Wag the Dog” the 1997 dark comedy with Robert DeNiro. In it, his character who is a political consultant, keeps using the phrase when referring to the press, “Now they get it.” I was thinking of that expression when I saw the piece in today’s Wall Street Journal written by Josh Mitchell, “Car Chiefs Grilled on Dealer Closings.” Now Congress and the press are "getting" one of the untold stories about the entire mess with the auto industry, and that’s the problem that shutting down thousands of dealerships will cause for small towns all across the USA.

As one example, over the years I’ve spent a lot of time in Cody, Wyoming, and in that town of around 7,000 year-round residents, the car dealers were among the biggest and best employers, they were big contributors to charity, and they were the ones youth baseball, soccer and hockey teams went to for sponsorship. Truth be told, youth sports in our country the last twenty years would have been in a world of hurt without car dealers as they were the ones who paid for lots of uniforms, bats, and balls.

This same story about economic impact for communities can be told across the USA, and with these dealers going out of business, the trickledown effect for our country will be huge. This should have been something that was addressed with Detroit before the billions in bailout money was given to them, but as is often the case, “Now they get it” is heard later rather than earlier and the impact has yet to be felt. Rest assured though, it will be felt.

Bloblive!

A couple of years ago, I met with the president of Blue Orb, Pete McAlindon in Orlando, and he introduced me to Jeff and Rich Sloan, who had launched StartupNation. Over coffee, we talked about the need for “community” for entrepreneurs. We talked about how lonely it is running your own shop and how you need to have people to talk to about your problems. When I owned my companies, there were a group of us who used to go out for dinner and beer at tradeshows, and talk about our problems. We weren’t competitors, so we felt that we could talk and share, and in the process we learned from each other.

I bring this up because of an article on entrepreneurial community in the NY Times written by Don Steinberg. The article, A Network for Small Businesses and Start-Ups, provides some interesting food for thought. The article talks about bloblive, which as the article mentions are events trying to create a community where entrepreneurs can feel free to share ideas and concerns and get feedback and maybe even some advice or a connection. Think of it as idea networking for the entrepreneur.

While it’s possible that the owner of the program, the Advanta Corporation (yes, that Advanta Corporation which is in a world of hurt these days thanks to their credit card business) isn’t the best one to launch what they are calling ideablob’s, perhaps colleges and universities through Centers for Entrepreneurship are better served to fill the need the Advanta has identified. But hats off to Advanta for taking the first step and reaching out to our community through these forums.

Professional Athletes and Doing the Right Thing

Sometimes professional athletes are seen as a group of immature, spoiled brats. Read this piece from ESPN and read about the Denver Nuggets (including Syracuse University grad Carmelo Anthony) doing the right thing.

Entrepreneurship is More than Just Tech Companies

David Berg provided me with an interesting piece on entrepreneurship and the government from Nextgov.com. The article described the Obama administrations interest in startup companies and the technology that often times jumps out of these entrepreneurial ventures.

The Obama administration is reviewing the government procurement process to better position innovative startup companies to compete for technology contracts, said Vivek Kundra, the federal chief information officer, on Tuesday.

Kundra made the announcement at a business conference in Washington hosted by the Mid-Atlantic Venture Association, which represents professionals from private equity and venture capital firms that together manage more than $100 billion in capital.

"We're looking at the procurement process to make sure we're able to tap into some of the best ideas. We cannot continue to spend billions of dollars on IT projects that haven't produced the dividends we've been looking for," Kundra said in his speech. "The federal government can lead when it comes to innovation."

Government officials are "very early" in the process of improving the procurement system to bring in promising VC-backed technologies, Kundra told Nextgov after his speech.

While I of course, applaud anything the administration is doing that helps entrepreneurial companies, Washington might also want to think of the literally thousands and thousands of non-tech companies that are in need of better access to capital, lower tax rates, and other support that will help them launch and grow businesses that will employ many people providing that wonderful trickledown effect. Tech and the VC companies get the attention, but it’s wise to remember that VC companies invest in only around 3500 (mostly tech) deals each year.

A Time for Entrepreneurship

Very nice piece of inspirational video on entrepreneurship that comes to us from grasshopper.com. Thanks to Jeff Cornwall and of Belmont University and his blog, The Entrepreneurial Mind for posting.