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Startups, Geeks, and Financing a Business
I have spent many years in the fabled Silicon Valley, working with startups and investors to develop new businesses in many different industries. Along the way, I have seen a lot, some good and some not so good. I have seen good entrepreneurs and investors, and I have lived through a few awful ones as well.
While much has changed, much has not. Some things have gotten better and others much worse. What has stayed the same is that it is still challenging to conceptualize, finance, and build a business to maturity in a good way for founders, employees, and investors.
To a great extent, I think that the system today is stacked against all of us.
I have concluded it could be much easier and more effective if we did a few things differently. This paper is a little of what I think! Click the graphic above to download your free copy.
America has long been a land of invention and innovation. Having lived through the entire PC revolution, I can see that we have been blessed with a massive change to the U.S. and the world due to technological innovation and a business climate that supported risk capital investment. For the past 30 years, this change engine has been based on the startup business industry.
The engine has shown signs that it no longer may be what it seems in more recent history. Some have said as early as 2012 that it is fundamentally and forever broken. Yet, from the pace of young entrepreneurs trying to start businesses to change the world again, one would never know there is a problem. You’d never know, that is unless you looked a little below the surface.
Entrepreneurs trying to raise money to start a business face numerous pitfalls, posers, crooks, charlatans, and RPRTrs (Right Place Right Timers) all scattered along what is, for many, little more than a boulevard of broken dreams. We have a cast of characters in both the good and not-so-good meanings of the word. We have entrepreneurs, serial entrepreneurs, venture capitalists, angel investors, angel investment groups, super angels, crowdfunding, facilitators, “consultants,” deal syndicators, incubators, accelerators, and many others. All of these entities want the entrepreneur, or the investor, to think they are “The Answer.” Some of them may be — many more end up being their worst nightmare.
In this paper, I try to give an overview of where these characters came from, what benefits they can bring, and the kind of harm they can render if we are not careful. I also try to track the changes and show how they have built the current dynamic environment. I also ask some questions for you, the reader, to think about.
In my opinion, from the entrepreneur’s perspective, access to smart money has never been easy. More importantly, from the investor’s perspective, it has not been hard enough. We believe a lot of things about the value of the hi-tech, biotech, and Internet industries. We also believe that startups are critical to our economic future. I am not sure that all we believe is correct. I do think there are some fundamental questions we should answer.
First and foremost, if we have a robust startup business industry, we need to understand why startups fail and how to help them not fail and bring them longer-term viability. If you read this paper, you will find that there are some things we can do to improve how we develop startup businesses that I thank can have significant long-term effects and are relatively simple to do.
This paper reflects my historical perspective working with startups and investors, what I have observed that worked, and what I have learned that does not. I have condensed several outstanding research papers as to both the evolution and current state of capital access from VCs, angel investors, and other sources, as well as some excellent reports on why startups succeed and why they fail.
Overall, my conclusion is that we should do many things differently if we want to continue to have a robust startup industry in the years to come. I make a few suggestions at the end.
I hope you will either click the link above or the title and download your free copy. I only ask one thing! If you feel this has merit, forward it to people you know and let them read it. As I said, this paper is free, and I hope it will circulate and open up some needed discussions.
Startups in America – Beware of Geeks Bearing Gifts (revised)
And as always, I appreciate you reading my blog and hope you find things of value here.