Restarting America's Innovation Engine

Thanks to Amy Schmitz for passing on this interesting article, How to Restart America’s Innovation Engine, from Daily Finance.

William Sahlman a professor at Harvard is interviewed on entrepreneurship and capital in the article by Peter Cohan. While Sahlman is one of the guru’s of entrepreneurship education, I’m not sure I would agree with him that most talented management teams have no trouble getting capital. I've seen too many great teams with outstanding ideas go no where with VC's because they weren't in that particular hot space.

However, I do agree with him that VC’s provide a very important source of capital to the entrepreneurial marketplace, and that they “spearhead innovation” throughout the economy. I also enjoyed the praises that Professor Sahlman heaped on the angel investors, one of the least recognized and yet most important pieces of the financing continuum for entrepreneurs.

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