Confessions of a Startup Guru: The Traits of a Successful Entrepreneur

Starting a new business is no doubt difficult. But for some, the task of managing startups is inherently easy and is usually enjoyable. Many successful entrepreneurs, for instance, wouldn’t let pass an opportunity to start a new business.

One of them is 36-year old Phillip Chipping – founder of successful mobile accessory company ZAGG. Chipping, who started founding businesses at the age of twenty-one, has a number of achievements under his name. These include, obviously, the success of ZAGG which he started in 2005 in his parents’ backyard.

Considering the small number of people who would need accessories for their gadgets, Chipping said that he never expected ZAGG to be very successful. Several months after the launch of his company, however, Apple introduced IPod Nano – a device that is very prone to scratches.

And while other companies are still thinking about the possible solutions for this, ZAGG already has one. Thus, despite the limited number of advertisements posted online, Chipping’s company started attract customers. And as the saying goes, the rest is history.

According to Chipping, ZAGG started only with $500 daily sales and two members. Following a single press release, however, it rose to $10, 000 and a couple of neighborhood scouts. After one year, his company finished with $750, 000 in sales and dozens of workers.

Chipping left ZAGG in 2008, a year after the company went public through the OTC market. ZAGG, which currently has a market cap of $300 million, joined the Continue reading “Confessions of a Startup Guru: The Traits of a Successful Entrepreneur”

Finding Alternatives to Convertible Bonds

For many startups, convertible bonds (also known as convertible debt) are one of the most common sources of financial support. This type of simple and inexpensive agreement helps entrepreneurs strengthen their companies and prevent it from collapsing immediately after its establishment. Despite its enticing promises, however, there is an apparent negative side to convertible bonds – the presence of debts.

In various articles, several successful entrepreneurs have noted the increase in the number of startups that are burdened with debts because convertible bonds. Perhaps some investors would argue that the bonds are nothing but equity investment. Technically and legally, however, these are still debts which are yet to be converted to equity in a future investment round.

Convertible debt is not an issue in startups that are doing well in the market. However, in bad situations, the bonds (technically, the debt) should not be seen as the company’s savior but rather its possible cause of collapse.

Some well-established entrepreneurs note that the problem with these types of financial support is that it gives the investors the opportunity to call for the debt anytime after the end of the so-called conversion period. Like what was stated, this is not an issue in successful startups. But for those that are facing problems, this might spell the company’s doomsday. Imagine an investor calling for the debt at the time of your company’s struggle to stay in the business – simply unacceptable.

With the increase in the amount of funds funneled into startups across the United States, the problem with the ballooning of debt due to convertible bonds must be addressed. This problem is not obvious in most startups in Silicon Valley. In other areas, however, it is very evident.

With this, company owners should be made aware of the negative aspects of the agreements that they are tempted to accept. In the case of convertible debts, entrepreneurs should consider looking into other possible financing deals such as what some entrepreneurs dub as the “convertible equity.”

While convertible equity has the similar functions of convertible bonds, the former’s difference from the latter is very significant: there is no debt. Convertible equity is the convertible Continue reading “Finding Alternatives to Convertible Bonds”

The Power of Trust: Things to Keep in Mind During Meetings with Potential Investors

Every startup owner recognizes the difficulty of securing investments from venture capitalists. For many entrepreneurs, the process of applying for financial support requires a special set of skills that will help them secure the investments. And while this is generally true, some people tend to overlook a lot of simple things that can boost their chances of getting what they need.

In the past, for instance, seafaring traders and explorers were able to secure capital from the early versions of venture capitalists even without the help of grandiose presentations. One of them was Christopher Columbus, who received financial backing from no less than King Ferdinand and Queen Isabella of Spain.

Initially, one might argue that any monarch would spend a fortune to support an expedition that seeks to explore a new frontier. At a closer look, however, it can be deduced that spending a lot of money to finance a very risky venture is a madman’s decision. If so, how did Columbus persuade the king and queen to support his expedition?

The answer is complicated. But it should be emphasized that the idea of exploring a new frontier is not the only thing that he presented to the royal couple – he also provided them with information that helped him gain their trust.

In the field of venture capitalism, everyone must remember that trust is a very important element. The reality is that there are a lot of people who have the money and are willing to invest in various promising ideas. Despite this, however, there is still the idea that it’s hard to secure investments. This is true, but the reason is not because of the lack of funding but because of the lack of trust on the part of the venture capitalists.

As an entrepreneur, you must follow the footsteps of Columbus. Do not just present them with your ideas. Instead, give them information that will gain their trust. Moreover, try to treat them as monarchs.

Keep in mind that a private meeting with potential investors usually signals their belief on your ideas. Do not spend your time selling your proposal. Rather, use it to assure them that you will succeed with the objectives that you have already laid on the table. Focus your pitch on your team’s qualifications and guarantee them that you are capable of expanding the business using their investments.

Here are some things that you can do to gain the trust of your potential investors:

1.      Exhibit extensive knowledge on the nature of your proposal;

2.      Assure them that you understand the importance of every centavo that they invest on your company;

3.      Provide them with accurate information about your previous venture, partnerships, and accomplishments;

4.      Tell them everything that they need to know. This includes not just the positive aspect of your company but also the problems and challenges that you might encounter; and

5.      Do your best to work with your investors. Have a shared view of success and promise them that you will be responsible in handling their investments.

There are various things that you can do to gain the trust of your potential investors. Just keep in mind that you have to do this as early as possible to assure the success of your fundraiser.

 

More detailed information and useful advice can be found at  Funded.com Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.

Need Funds? 6 Steps In Applying For A Venture Capital

If you are planning to establish your own startup, one of the first things that you have to do is to secure financial support. One way to do it is to apply for a bank loan. Another – and the more popular one – is to seek support from venture capitalists.

Because of the competition, getting an approval from a VCs is not that easy. However, with the amount of available funds out there, it’s never impossible to get one – if you know what to do.

Everyone agrees that in the process of getting financial support from VCs, the most important moment is the time when you make your pitch to your potential investors. And while you have to pay a lot of attention to this particular occasion, you must also keep in mind that most of your time will not be spent on the actual pitching – it will be on the preparation.

Like baseball pitchers, entrepreneurs who want to secure investments should spend more time preparing for the pitch than the actual pitch itself. Following is a step-by-step preparation process that aims to assist entrepreneurs who seek funding from venture capitalists:

Step 1: Look for Specific Partners

Instead of just looking for investment firms, entrepreneurs should focus their time identifying specific venture partners. Despite working at the same investment firm, partners usually differ in terms of operations, capabilities, and expertise. Some investors, for instance, prefer startups focusing on electronics or health-related services, among others. Knowing this will save you a lot of time.

One way to help you in your research is to speak with other entrepreneurs who recently closed investment rounds. They can give you information regarding not just the firms but also the specific venture partners.

Step 2: Get to Know Your Potential Investors

After identifying a number of potential investors, learn how they operate. It is not advisable to immediately approach them and ask for funds – it’s a one way ticket to rejection. What you must first do is to get to know them and, if possible, get them to know you.

You can connect with them through social media accounts. Follow them on Twitter and check their Facebook presence. You can get their attention by providing insightful and interesting comments on some of their posts. Keep in mind, however, that you have to do this moderately. Otherwise, you’ll be tagged a stalker with a vested interest.

Step 3: Secure Meaningful Referrals

Establishing a social media network with your potential investor is not enough to get their approval. More than that, you should get their attention by securing referrals from people they trust.

Recommendations from accountants and lawyer, while not entirely worthless, would not usually secure an investment. What you must have is a referral from an entrepreneur who is already on the portfolio of your potential venture capitalist. Getting one is difficult, but it might spell the difference between an approval and a rejection.

Step 4: Preview Your Venture First

Like what was previously stated, immediately asking for money is not a very effective move. Thus, when you get the opportunity, schedule a meeting with your potential investors and tell them that you want to preview your venture and get their insights. This will pique their interest and will assure positive reception to future meetings.

Step 5: Provide Updates and Follow-ups

Following the preview meeting, do not forget to send your potential investors with updates and follow-ups. Giving them information about the improving status of your startup will act as a signal that will entice them to forge a partnership with you.

Step 6: Initiate Fundraising

Finally, when you have finished the first five steps, coordinate with your potential venture capitalists and ask them for possible investments. This step should not be very difficult especially with all the information and recommendations that you have previously gathered.

Following the six steps would take a lot of time. But it will assure you that when you return to running your business, you have secured that elusive investment that you really need.

More detailed information and useful advice can be found at www.funded.com Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.

5 Characteristics Of A Successful Startup

Hundreds, if not thousands, of startups and growth companies are established in the United States each year. And with the rise in their number came the increase of articles that cover every single detail concerning this market. Many of these articles provide tips and other useful information for startup owners. Some articles, for instance, outline things that would-be entrepreneurs must avoid doing. Some, on the other hand, list a number of signs that signal the possible collapse of a startup.

This article is not too different. But instead of showing the negative signs that signal the failure of a company, it opts to enumerate the opposite. Here are five characteristics that signal the apparent success of a startup:

Presence of steady customers

This is very important. Failure to have a steady line of customers who are willing to pay for the products or services spells doom for any company. Thus, before establishing a startup, would-be entrepreneurs are urged to the study their respective markets. Are there enough customers who will sustain the business in the long run? Will the products or services validate the assumptions of the customers about the startup? What will entice the initial customers to return and avail (or re-avail) the products or services?

These are just some of the things that owners must know before starting a company. The point is, the presence of a steady line of paying customers is the most important sign that will signal the success of any startup.

Have clear objectives and strategies

The most successful companies know what they are doing. It’s as simple as that. Startups that operate in panic or simply survive because of instinct will most likely fail. In order to survive and be successful, would-be entrepreneurs must have a solid agenda and a well-thought of strategy. Having a list of objectives, goals, and vision assure that the company will never go astray.

Cautious and Thrifty

The increase in the number of startups and growth companies may be attributed to one thing – the rise in the number of institutions that offer early stage credit or other forms of financial support. Because of the availability of funds, a number of startup owners tend to forget that the one of the purposes of having a company is to earn money. One must never forget that the ability to conserve early stage funds is an important characteristic of a startup that will surely succeed.

 Transparent

It’s understandable for some companies to operate in secret. Coca-Cola and other popular brands, for instance, heavily guard the contents of their respective secret formula or recipes.

And while it is reasonable to keep some things out of the public eye, having too much secret may jeopardize any company. Startup owners must consider the implications of keeping too much from the employees and customers. People tend to get suspicious, especially when there are a lot of question marks surrounding the business. This is definitely not a good way to start a company.

Effective Communication

Finally, companies that exhibit effective communication not only with the customers but also with the employees are bound to succeed. After all, communication is the key to a harmonious working relationship. Owners must realize that communication is not just about sharing positive news concerning the company. It’s also about conversations on problems and challenges that are being faced by the startup. Effective communication in a company, in a nut shell, is about professional people talking about the truth and nothing but the truth.

Unless there are cataclysmic events that would affect the operations of the company, any startup exhibiting these five signs will surely succeed.

 

 

More detailed information and useful advice can be found at Funded.com Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.

 

Is It Time To Apply For A Startup Accelerator?

Following the rise of startup accelerators, the number of new entrepreneurs who want to get a position within these incubators has also significantly increased. Wall Street Journal reports that the applications to more than 200 accelerators around the world have almost doubled in the past two years.

According to Marc Nager, Chief Executive Officer of Startup Weekend, an accelerator may be good for those who are new on the field of entrepreneurship. However, in isolated cases, some of the terms may not be as acceptable. Nager provided some information that might help those who have yet to apply for an accelerator.

Understand the Basics

For Nager, would-be entrepreneurs must start with understanding the basic terms of the deal. He said that before applying, they should look at the benefits that they will get once they participate in this venture.

In the world of startup accelerators, a lot of value will come from the network that will be established amongst the students, mentors, and program leaders. Nager added that the applicants should also use to their advantage the possibility of having one-on-one experience with experienced entrepreneurs. He stresses the need for applicants to identify at least three mentors who have had experience on the industry that they are working on. This will ensure that the sessions will be maximized and will result in a highly beneficial experience.

Choose Wisely

Nager advises that when applying for startup accelerators, would-be entrepreneurs should consider signing up in well-known programs. He said that these will ensure better results that will be advantageous for the participants.

Unfortunately, well-known start-up accelerators usually have very low acceptance rates. With this, applicants can also try signing up in local versions of the accelerators provided that they have high quality program, mentors, and leaders.

Nager also noted the rise in the number of accelerators that offer specialized programs. There are those that focus solely on providing programs that help healthcare startups, civic startups, and startups that use a specific technology, among others.

The specialization may be advantageous for some startups. However, it must be noted that there are also things that one may miss if he or she decides not to sign up in one of the traditional accelerators that offer a wider range of coverage. Because of this, would-be applicants should know how to weigh the benefits before deciding to participate in specialized programs.

 Work on that Application

As stated, the chances of getting admitted into a well-known accelerator are very slim. Because of this, would-be entrepreneurs should toughen up their applications if they want to get the nod of the evaluators. 

One thing that they can do, Nager says, is to understand how the applications were evaluated by the accelerators. He also said that having a good team that will shine above the rest will boost the chances of getting selected.

Finally, he said that the applicants must do all their best to impress those who will decide on the applications. He suggests the use of human element, among others, to get the approval of the decision makers.

More detailed information and useful advice can be found at www.funded.com Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.