Saturday, July 19, 2008

The Funding Flow Chart

Are you an entrepreneur looking for capital? If so, I hope this blog post gives you some level of advice that you will find useful. Raising capital is one of the most difficult things to do as an entrepreneur - but if you follow this basic flow chart - you may be able to make it a little easier.

1. Do you have a working product with a price and a customer?

If yes, continue to next question.

If No, please stop looking for funding and build a product and sell it to a customer. If you need money to build the product, then get a job or dig into your savings and fund the development yourself. If you can't afford it - dump your idea - and find a product you can build. Or find someone who can build the product and figure out how to compensate them (money / equity).

2. Do you have any experience building a company and taking a product to market?

If yes, continue to next question.

If No, then this is your chance to get experience. Find a way to turn one customer into 10, 20, 100 customers. If you don't know how to do that - ask someone who has. Find a mentor to help guide you.

3. Do you still (absolutely) need capital? Even though you are growing revenue and have a clear path to profitability?

If yes, continue to the next question.

If No then, congratulations - you now are in control - and Investors would love to give you money (although I suggest you not take it).

4. Do you want to trade off your freedom, absolute control and ability to run the company the way you want to for a little cash?

If yes, continue to the next question.

If No then, continue the grow the company until you are in a better position to either loan the money or fund growth through profit. (It may take a little longer to grow revenue, but it beats losing control of your company)

5. Do you need the capital to help fund your salary?

If yes, continue to the next question.

If No, then - return to #3.

6. Are you really an entrepreneur?

Thursday, July 03, 2008

A New Direction (for Startup Florida)

It has been six years since we started Startup Florida. We have accomplished a great deal, and have learned much more than we ever thought possible about Venture Capital, starting ventures and ofcourse the entrepreneurial community in Florida.

I am very proud of what we were able to accomplish (despite the failures). We broke new ground in the angel investment community, and we were able to put together a nice portfolio of companies for our investors. Overall, we executed the model we set out to explore.

Now, with any business - we will adjust how we operate based on our past experience. We re-evaluated the market, looked at our successes and failures and hope to refine our model.

As of today, we are launching a "new" Startup Florida. If I was to describe the change in one word it would be "simplification". Our goal is to simplify our model, and ultimately try to recapture the "raw" entrepreneurial spirit of launching new ventures.

The first step we took was to analyze each venture we started or invested in, and look for obvious mistakes we made. The second step was to list what we did right in those ventures that have done very well, in hopes we can duplicate the recipe. And the final step, is to really dig into the numbers and see which deals will ultimately reward us with dividends.

Here are some conclusions we made:

1. The startups that did the best were ones we came up with the idea. Ironically, as a "venture firm" we ultimately read the market, and formulated better business ideas than most entrepreneurs who came in off the street.

2. The startups that did the best raised the LEAST amount of money. This is probably the most disappointing statistics. I am not sure if it is because the "good ideas" took off quicker, thus required less money - or perhaps it is more fundamental than that - and the companies that had less money focused on building a business, and not becoming a "road show" wasting time and energy on raising capital instead of building a business.

3. The startups that did the best kept costs modest and didn't hire anyone (until they were profitable). Another crazy stat - but very relevant. Again perhaps the product they built didn't require a lot of resources, but it is a very key point of reflection.

Overall, you can see where our conclusion become obvious on where we needed to take our business.

1. We needed to focus on what we know. (Internet technologies)
2. We needed to focus on smaller investments. (Seed Round)
3. We needed to be part of the "idea" phase. (Co-Founder)
4. We needed to be involved.

So now we are doing just that - simplifying our model, and looking to duplicate the success we have had following the rules above.

Please check out our new Website -

It goes into more details of our new model