When considering entering into a partnership or making a private
investment in an early stage company, beware of the “idea
guy”. This is a title sometimes used by entrepreneurial
minded individuals who don’t contribute to the growth of the
company through development, sales or management but develop
concepts (ideas) for products or services for some market
opportunity.
From my experience, idea guys often have little ability to manage
cash flow or people. Without the proper partners in...
Read More »
The following is a guest post by a fellow
Gravity Ventures member and
friend, Dr. Tony Ratliff:
Learning to Pitch Before You Start Raising Capital
By Dr. Tony Ratliff
It only took about six months of deal flow and a handful of
“pitches” before I realized that most entrepreneurs are really,
really bad at “selling themselves” and “pitching” their ideas and
companies to investors.
I cringe every time I listen to a great start-up idea or read a
well-written business plan, and then watch in horror as...
Read More »
I have said it a million times since learning the lesson myself in
a failed entrepreneurial effort a couple of years ago, the CEO of
any entrepreneurial venture must understand the importance of
managing cash flows and how to use cash flow analysis for the
strategic growth of the company.
Trust me, I am all into the Six Sigma approach of throwing a couple
of innovators together, rolling out a v1 product as quickly as
possible, and slowly scaling the company from hobby phase to a
successful...
Read More »
It has been said a million times already on this blog – a CEO,
especially one which is seeking funds from private equity
investors, needs to understand finance. Often a basic
knowledge of sources and uses and cash flow analysis is enough, but
in many early stage investment rounds, savvy investors expect the
CEO to know the company's internal rate of return (IRR) - and
why it matters.
I meet many entrepreneurs who have served as VPs or middle managers
before embarking on their entrepreneurial...
Read More »
Next week I am moderating the plenary panel at TechPoint’s
Innovation Summit entitled
Funding Innovation.
Check it out:
TechPoint
Innovation Summit
Also check out the
sponsors page. I
counted today, and
nine Alerding Castor
Hewitt clients are sponsors of the Summit. That is
awesome.
This year’s panel members represent private equity investors, angel
investor groups, successful entrepreneurs and grant funding
organizations which look for funding and investment opportunities
in Indiana...
Read More »
I guest lectured at Purdue’s Entrepreneurship Capstone course again
last week. I love it – for an hour I talked about my
experience in entreprenuerial law, business law and funding law to
Seniors in Purdue's entreprenuership concentration program on
issues consider when structuring a new company. Honestly, I
thought I had them bored out of their minds (yes, there was that
one Greek letter wearing frat guy who was asleep about 10 rows
back), but I was impressed when we got to the Q&A time...
Read More »
I recently read a summary of a lecture on applying the seven deadly
sins to software development. The sins are:
|
Lust
|
Obsessive or excessive thoughts
|
|
Gluttony
|
Over-indulgence, over-consumption
|
|
Greed
|
A sin of excess like lust and gluttony, but in reference to
wealth
|
|
Sloth
|
Laziness, indifference, apathy
|
|
Wrath
|
Uncontrolled feelings of hatred and anger
|
|
Envy
|
Resenting another because they possess something you do
not
|
|
Pride
|
Excessive love of self
|
The idea is not to sell products leading to the sins themselves...
Read More »
In my recent blog series,
Entrepreneurial Law - Developing a Good Business
Model, I addressed how an entrepreneur needs to work through
three prongs in order to develop a sustainable business model
developed for growth: Market Opportunity; Management Team; and
Capital Structure.
Private equity investors asses the same prongs when determining
whether to make an investment in an emerging company, but I find
that investors tend to set the prongs in their own priority
ranking. I think all three must...
Read More »
This is the third post in a series on developing a good business
model for an early stage company.
2. Solid Management
Team
I have heard it said that more businesses fail due to cash flow
than anything else. I completely disagree. I say that
more businesses fail due to management team issues than any other
reason. If a company dies because of cash flow, it is usually
because the wrong person was at the helm and poorly planning and/or
making bad decisions – either market opportunity was not...
Read More »
Any good business model includes: (1) a strong market opportunity;
(2) a solid management team; and (3) a sound capital
structure.
This is the first in a series of posts that will outline each
point.
1. Strong Market
Opportunity.
This is more than just finding a market opportunity that you want
to address. It involves development of a detailed model of
what the opportunity is (“IS”), how you can address it better than
anyone else (“HOW”), and how you can be profitable in doing so
(“PROFIT”)....
Read More »
I had the privilege of speaking
at the
Rainmakers Incubator event this morning. I
thought the Rainmakers team did a nice job organizing the event -
even with a last minute change in location due to factors outside
of their control. Thank you guys for the opportunity to join
you this morning!
The topic given to me was "Three Things Every Entrepreneur Should
Know." My legal practice focuses on entrepreneurial law,
funding law, SaaS business law and securities law. In these
fields I see a lot of...
Read More »
I love Indianapolis,
but I find it a difficult place for emerging companies to raise
capital through private placement offerings. More established
companies have less trouble, but earlier stage companies often are
caught in a chicken/egg situation – they need capital to move to
the next business stage, but private equity investors don’t want to
invest until they are through that next stage.
Part of what makes Indiana so great is that we are very fiscally
conservative. In fact we were one of only...
Read More »
Does your business take advantage of
opportunities when they arise? Or, like most businesses, do
you watch competition seize opportunities before you consider or
execute on them?
There is a good article in this months Harvard Business Review by
Donald Sull on a business’s ability to execute on
opportunties. It is a worth while read, but I will summarize
the key points in the next three posts.
What your company needs for execution:
1.
The ability to spot new
opportunities. This requires...
Read More »
New technology businesses usually face two hurdles to get their
product to market. The first is proof of concept. The
second is proof of scale.
Both are intended to solve the “Ability” stage of the business plan
process and move the business into the "Meeting" stage:
Recognition of Market ->
Recognition of Market Opportunity -> Ability to Meet Market
Opportunity -> Meeting Market Opportunity at Profit
Proof of concept is simply the proof that the business can develop
a working prototype that...
Read More »
The Federal Trade Commission has published its Final
Guide Concerning the Use of Endorsement and Testimonial in
Advertising (16 C.F.R. Part 255) (link to notice-
www.ftc.gov/opa/2009/10/endortest.shtm).
This Guide addresses in detail the use of blogging endorsements for
products. Under the new Guide, bloggers will be required to
disclose the material connection they share with the seller of a
product or services. These guides are not law, but are rather
administrative interpretations of law to...
Read More »
I read an interesting post
yesterday on
Small Business Trends by Professor Scott Shane,
Professor of Entrepreneurial Studies at Case Western Reserve
University. It is a good read for current entrepreneurs and
those daring to dream of starting their own company.
Here is the post:
Most entrepreneurs believe a bunch of myths about financing new
companies that hinder their efforts to raise money. Here are a
few:
Myth 1: It takes a lot of money to finance a new
business. Not true. The typical...
Read More »
Golf is a game of mental
dichotomy. On one side you have
details. Keep head down, swing through
ball, pay attention to stance, keep knees bent, elbows create a
“V”, swing through waist, maintain balance…
On the other side, you hear people say,
“You’re thinking too much.”
“Relax.” “Just hit the ball.”
I play golf a few times a year with my
dad. He talks about the two persons in
his head with two distinct personalities. If
you claim multiple voices in your head anywhere else than a
golf...
Read More »
This has been a hard week for me to get blogging.
The problem is a great one to have - I have a lot of client
projects going right now and am finding the time to sit down and
write difficult. So, rather than a typical blog post, let me
provide some updates on what has been keeping me busy lately.
As the economy is showing signs of life once again, many of my
entrepreneurial clients are finding opportunities for strategic
partnerships, private equity funding, bank financing and...
Read More »
Most entrepreneurs I meet are not
short of business ideas. Some are good (e.g., web
intelligence); some are bad (e.g., restaurant bathroom touch-screen
marketing); Some will find markets; Others will not.
One of my roles as an entrepreneurial law attorney is to help these
individuals recognize and focus of their core competitive
products. How do we get the key products to market?
And, how fast can we do so?
Technology entrepreneurs in particular have a hard time with
this. They have a...
Read More »
As
an Indianapolis attorney, I work daily with business owners
who are pursuing their passion.
Powered by Compendium