After living hand-to-mouth for several months, the Entrepreneur envisioned a day where his financial woes would be over. Food would be plentiful. Shelter would be secure. All the resources necessary to grow his company would be at hand. He felt that it was time to go before the Elders and ask for an unlimited, guaranteed supply of cash to spend in any way he chose.
In my line of business, I have entrepreneurs who come to me and ask for advice about raising Venture Capital. The problem is that they can’t answer the most basic question standing in their way: “What to you want to do with your company five years from now”. If you’re not willing to sell the company, cede control, and otherwise “cash out” of your enteprise, then venture capital is not an option. If your goal is to grow a nice “lifestyle” company, then grow it on cash flows. If your desire is to create a company that you can pass on to your oldest child, then invest your life savings and take out loans to cover your (financial) shortfalls. Never, ever, approach a venture capitalist for money under these conditions.
If you want to take your company to the level where it dominates a sector, is attractive to acquisition by a larger player in the market, or is set to IPO (an unlikely result and a topic for another posting)… then, by all means, get your company ready for venture capital.
Your source of funding will dictate a few things… (more…)
In the beginning, there was an Idea. A simple, basic Idea. And it was good.
And so the saga begins. This is my story about an individual who wants to make a company out of an idea and where he might end up. For the sake of this blog, I’m going to be bouncing around as the topics present themselves in the course of my consulting business and working with various entrepreneurs here in my backyard.