But It's My Baby!

Making money is not always the top focus of an entrepreneur. As described by Ann Meyer in the Chicago Tribune today, founders often fail to make the transition from startup with full control to a successful growing entity.

According to Harvard research cited by Meyer, only one in four founders are still holding the reins when a company goes public. This indicates that successful startups manage to overcome the founders grip most of the time. This is not surprising given the multiple levels of capital needed to get to the public realm. Usually a startup must go through several rounds of outside financing to build the prototype, establish production, setup template installments, and the many additional fazes of launching a business. These successful launches, the ones that go public, are greatly outweighed by companies that involve private takeouts (including acquistion) and the failed companies. The failed companies you don't hear about are the ones that suffer from founder fatigue and often implode from personnel departures.

An early offset to a strong founder is having a solid financial person in place to display and bolster the cash flow side of the business, as well as to foster good relationships with financial market partners. Your banker and accountant, along with outside investors can provide solid backing and support and help lead a recalcitrant founder down the correct financing path.

Remember, 10% of millions is a lot better than 100% of zero.

Launching a New Business or Product Line

Forbes (see the March 26th article by Melanie Lindner linked below left) today published in it's entrepreneurs blog a good refresher on starting a business (or from my seat a new product line). They point out the biggest issues - having a solid Value Proposition and defining your Sustainable Competitive Advantage. You do hear these two mantras ad nauseam from venture capitalists, as well as smart angels for that matter. The only way you can obtain significant start up funding is with strong answers to these two issues.

One of the big issues not mentioned in the article was Exit Strategy, what I discussed on Monday. Investors want to know how they get their money back. Do have a read of this one, it will help you from making a fool of yourself.