February 21st, 2011 → 12:47 pm @ Norman
I’m returning from the conference of the Australian Association of Angel Investors. Their conferences are world-class, and Angel Investors can learn a lot by attending.
Among the other information presented was the average time to close a deal during 2010… 146 days.
Is it reasonable that deals take almost five months, on average, to close?
When I was an entrepreneur trying to raise money, I was always disappointed, and sometimes angry, at how long it took. Occasionally I’d be in a situation where an investor would hear the elevator pitch, get excited by the opportunity, and write a check immediately; but more often, I went through the long grind of presentations, due diligence, and terms negotiation.
Now I see things differently.
The Angel Investors aren’t looking for a one-night stand. They want a meaningful, long-term relationship with an entrepreneur they can respect and trust. So entrepreneurs who do get the quick cash may find they’ve been funded by passive investors who will bring little extra value. The investors who take the time to get to know the founder, and the business, are more likely to back up their cash commitment with advice, contacts, and perhaps Board work. Taking a long time to raise funds can be stressful for the entrepreneur, but it allows time to form high quality investor/entrepreneur relationships.
Of course, just as a quick deal may be a great deal, a slow deal may also be poor one. Some investors do waste a lot of time in their processes, encouraging entrepreneurs to present to them even when they have no intention to invest. Such people are, in my experience, the exception.
Most investors are as keen to get the deal done as are the entrepreneurs.
The difference is just that most investors have learnt to avoid one-night stands.
February 18th, 2011 → 1:05 pm @ Norman
I was a judge at the Unlimited Investment Challenge last year and supervised a format that many entrepreneurs are familiar with – a contest to pitch investors, Dragons Den-style to gain a let-up to accelerate their company.
In almost every case, they had “runs on the board” and had demonstrated a market for their products. While most of them were looking for further investment to grow their companies, they were also looking for experienced investors who would come aboard with good advice on how to grow.
“Too often Kiwi start-ups focus on their founder , or product and forget the importance of brand the ability to scale quickly – probably the thing which interests investors most.
After all, why would you put your money into a company with the growth trajectory of a woozy snail?
It’s easy to pick holes in most start-ups and their ambitions. But what I observed was a turning point in New Zealand entrepreneurs and their nascent businesses. Maybe we are beginning to see a tipping point in the kind of people involved in new enterprise.
What I liked is that we are starting to see genuine entrepreneurs coming though. Finally I get people talking brand at me and ultimately that’s all that matters. We saw a group of entrepreneurs pitching to us, not a succession of techos obsessed by their inventions.
February 16th, 2011 → 5:57 am @ Norman
Hard questions demand hard answers. Here’s my slide deck that I use teaching entrepreneurship to students.
February 14th, 2011 → 7:04 am @ Norman
Intolerant and insensitive?…. Could that be me?…. Apparently, yes! A friend was recently explaining to me how I’d offended several people, in separate incidents. She said, “The trouble is, with the language you use, it sounds like you’re saying your views are UP THERE and you’re looking down on other people’s views.” Bummer! She could be right! What I’d seen as ‘expressing strong opinions’ some saw as ‘strong personal attacks’. (more…)
February 14th, 2011 → 6:03 am @ Norman
It’s not the strongest of the species that survive, nor the most intelligent, but the one that is most responsive to change.
Companies have a fairly predictable life cycle. They start with an innovation, search for a repeatable business model, build the infrastructure for a company, then grow by efficiently executing the model.
Over time, innovations outside the company (demographic, cultural, new technologies, etc.) outpace an existing company’s business model. The company loses customers, then revenues and profits decline and it eventually gets acquired or goes out of business. (Looking at the Dow-Jones component companies over time is a graphic example of this.) (more…)
February 10th, 2011 → 5:58 am @ Norman
Posted on September 20, 2010 by steveblank
One of the ironies of being a startup is that when you are small no one can put you out of business but you. Paradoxically, as your revenues and market share increase the risk of competitors damaging your company increases.
Often the cause is the inability to grow the startup past the worldview of its founders. (more…)
February 7th, 2011 → 2:48 pm @ Norman
Mistaken ideas about the nature of entrepreneurship abound. This morning I sat in a meeting with various people involved in economic development. One had just returned from an academic conference on entrepreneurship. He reported that only about 10% of entrepreneurs started commercial companies …say again! (more…)
February 4th, 2011 → 12:08 pm @ Norman
I have been doing some research with my team into Universities who are teaching entrepreneurship classes. This has been very interesting indeed.
We believe that
We have published the list on Google Docs if you are interested in downloading a copy – or editing and updating our information.
February 4th, 2011 → 11:43 am @ Norman
Here’s my latest slide deck about how to manage both upside and downside risk in your business.
January 25th, 2011 → 8:58 am @ Norman
The founder and I entered the boardroom where the Angels were waiting for us. We did introductions, and the founder started his pitch. This founder is good at pitching, so I didn’t have to say much. I spent most of my time observing the Angels. One of them was very aggressive. He used all the body language and verbal signal games that men display to establish dominance (aggressive questioning, interrupting, finger pointing, and so on).
I briefly imagined him as a gorilla, bouncing up and down with bared teeth, and shrieking at the founder… ok, it wasn’t quite that bad. But he was definitely making a power play. (more…)