VCs are from Mars, Entrepreneurs are from Venus

John Gray’s book Men are from Mars has the subtitle ”The Classic Guide to Understanding the Opposite Sex”.  To some entrepreneurs, Venture Capitalists might as well be the opposite sex. Many entrepreneurs don’t really understand them very well. In a good blog post by ex-VC and VentureBeat writer Tom Tzach, he offers 4 good tips to entrepreneurs. Here are my comments to his tips:

1. It’s a numbers game. Expect casualties.
Tzach reminds us that VCs get a huge number of requests for their time and money. If you are an entrepreneur seeking capital (especially if this is your first time), then you will have to play the numbers. You might need to pitch to 50 in order to find 3 who are truly interested. You might need 9 who are truly interested before you find one who will give you the funds.  Just like sales, it is a pure numbers game and the odds are not great, especially in today’s market where many investors are (un-admitably) scared.

I was at a venture meeting in Lisbon a few weeks ago and talked to one of the really classy European VCs (Diana Saraceni from 360 Capital Partners in Milan). She said that even though they have only 4 partners at her firm, they received 1202 business plans last year. They held 354 meetings with entrepreneurs and closed 6 new deals. If you are one of the 1202 then be prepared for a rejection. It is not personal. It only means that there are other (better?) deals out there ahead of you in the queue.

Tzach writes that in the US less than 2% of entrepreneurs pitching get funding, and that the average time for the process takes from 9 to 12 months. Don’t be discouraged, just plan to work hard.

2. Develop a VC pitching strategy
You will certainly need a strategy or else you will just end up shooting at any animal in the jungle that moves. Tzach recommends that you develop key parameters (like history, relevance of their portfolio, location, etc.) and then divide the prospective VCs into ranked groups. Start with those that are least likely to invest so that you get some practice before you tackle the big boys. Plus, if you screw it up in the first meetings, it won’t kill you. I think you will experience that pitching is a huge (and fun) learning experience.

3. You need to play your cards right
I have always been a lousy card player because I tend to play out my cards without a longer-term game plan (OK, I have other redeeming skills). Tzach reminds entrepreneurs that the VC community is small and that VCs like to talk together a lot. Expect this, but be selective in how you handle and manage your communication. Negotiating with 2 different VCs at the same time is not an ideal situation. Try to work out your deal with one and then shop the same deal to others if you need to fill the offering. Remember that while term sheets are confidential, they will be around long after you are gone. Treat them with extreme professionalism and care. I have a consultant (who I pay with options or shares) who always helps me with term sheets. He has saved me huge amounts of money and some rather embarrassing mistakes.

4. Don’t seek funding under pressure
The best time to visit a banker is when you are not in need of a loan. The best time to start your fundraising work is long before you actually need the capital. Fundraising will take a long time. It is like selecting a wife – you should use a lot of time to get to know each other before you tie the knot. VCs are smart and they will sense it if you are under pressure, plus when you show them your cash-flow budgets and financial statements, they will quickly figure out your predicament. Plan ahead.

Just as 50% of all marriages end on the rocks, only about 10% of all VC investments actually pay respectable returns. Realize that this is the reality and plan your strategy accordingly. Good VCs can be fantastic partners who can help you (not only with capital, but also with lots of assistance) to grow your business much faster than on your own… But you have to play by their rules in order to get them on your team.

Want to turn-around your business and achieve results in record time?
Contact me to discuss Executive Coaching, Group Facilitation and Management for Hire services for technology companies. You can learn more at www.ricksalmon.comwww.xelerator.com and at www.e-unlimited.com. Rick Salmon is an energetic entrepreneur who lives in Norway and believes that European startup companies can succeed and grow quickly if only they get the proper help and assistance. Please join the discussion and leave your comments. Subscribe to this newsletter/blog to receive frequent updates and tips.

 

Inspiration – What is your calling?

I believe that we all have something special to offer this world. No matter who you are… No matter what skills you possess or don’t possess, you have something special to contribute. Scientists have not yet succeeded with cloning a person. Each one of us really is unique. Totally unique. No two are alike, and therefore we each have something unique to offer this world.

What is it that really motivates you? What is it in your life that gives you energy and inspiration? What gets you up early in the morning or keeps you awake sleepless all night? Finding true inspiration is crucial for an entrepreneur. If you are not inspired by your work, then it will be a constant struggle. If you are truly inspired, then it will be a breeze.

So how does your business and your work inspire you? If it does not, then what would it take to change this? There is a huge amount of energy available to you if you can tap into inspiration. Money and fame will only motivate you so far. Finding a bigger agenda and aligning your life values with your startup business are keys to accelerated and sustained success.

Do you agree with this? Then hire yourself a coach to challenge you for 3 months. See what kind of huge changes you are capable of.  I have seen some pretty amazing and inspiring things the last years of coaching entrepreneur­­s. How about you?

INSPIRATION
When you are inspired by some great
purpose, some extraordinary project,
all your thoughts break their bonds;
Your mind transcends limitations,
your consciousness expands in every
direction, and you find yourself in a new,
great and wonderful world.

Dormant forces, faculties and talents
become alive, and you discover yourself
to be a greater person by far than you
ever dreamed yourself to be. 
– Patanjali (1st century BC)

Want to turn-around your business and achieve results in record time? Contact me to discuss Executive Coaching, Group Facilitation and Management for Hire services for technology companies. You can learn more at www.ricksalmon.comwww.xelerator.com and at www.e-unlimited.com.

Rick Salmon is an energetic entrepreneur who lives in Norway and believes that European startup companies can succeed and grow quickly if only they get the proper help and assistance. Please join the discussion and leave your comments. Subscribe to this newsletter/blog to receive frequent updates and tips.

Why are you an Entrepreneur – really?

What motives you as an entrepreneur? What is the real reason that you are willing to work long hours 7 days a week with low pay, few colleagues, no flashy benefits, no fancy office, no job security, and the constant risk of failure staring you right in the eyes? Are you crazy, reckless or just stupid?

These are questions that I ask myself often, and yet I have no intention of quitting being an entrepreneur. It is what I am. It is what I do. It is the skillset that I have learned, developed and have made into a lifelong career.

Watch the fantastic video below from Daniel Pink’s book entitled DRIVE. Ask yourself why you are an entrepreneur and what it is that really will motivate you and your colleagues to succeed.

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Whether you are working alone in a startup or building a dynamic team, finding the right factors for motivation is critical. Aligning values and creating empowering assignments will unlock peak performance in yourself and in your colleagues.


Want to turn-around your business and achieve results in record time? Contact me to discuss Executive Coaching, Group Facilitation and Management for Hire services for technology companies. You can learn more at www.ricksalmon.comwww.xelerator.com and at www.e-unlimited.com.

Rick Salmon is an energetic entrepreneur who lives in Norway and believes that European startup companies can succeed and grow quickly if only they get the proper help and assistance. Please join the discussion and leave your comments. Subscribe to this newsletter/blog to receive frequent updates and tips.

Fall in Love with your Market, not with your Technology

Why do so many early-stage technology companies struggle? One reason is that they fall in love with their technology. Many entrepreneurs are great engineers or scientists. They create all sorts of inventions and smart new technologies. They write algorithms, file patents and then they march out to search for markets, calling ”Is there anyone out there who could use my new technology?”

Pushing technology is like pushing on a rope.

When I graduated from University I had two buddies. The first one loved IT technology. He always had the latest PC/phone/PDA/gadgets. He chose a career in the IT industry and was constantly searching for that next razor-edge, earth-shaking, game-changing technology wave.  The second buddy chose to sell coffee machines. We smirked at this. He said that in most large office buildings (at that time – early 1990s) they drank really bad coffee. He was right and he decided to change this. He focused on the problems of a specific market. He licensed and sold whatever technology was best. He made a fortune selling these coffee machines. We others are still searching for new technology, much like Don Quixote out looking for dragons to fight.

I do corporate turnarounds for early-stage companies that are struggling. I have lots of tricks, but the one that works most often is to get them to let go of the technology obsession and to tune their ears and eyes on the needs of a unique market.

It is really simple and easy.

Don’t fall in love with your technology. Fall in love with your market. Your market will last for many years. Technologies just come and go.

Want to turn-around your business and achieve results in record time? Contact me to discuss Executive Coaching, Group Facilitation and Management for Hire services for technology companies. You can learn more at www.ricksalmon.comwww.xelerator.com and at www.e-unlimited.com.

Rick Salmon is an energetic entrepreneur who lives in Norway and believes that European startup companies can succeed and grow quickly if only they get the proper help and assistance. Please join the discussion and leave your comments. Subscribe to this newsletter/blog to receive frequent updates and tips.