One thing most start up entrepreneurs have in common….they have no money. The have a great, million dollar idea, but don’t have the knowledge, resources or experience to launch the company, build a team, take a product to market, attract capital, and reach the end goal of successfully creating wealth for themselves and their investors. Many entrepreneurs can learn most of the fundamentals when the enter into a university that has an “entrepreneurship” program as part of their business school. But if you can’t or don’t want to spend 2-3 years and hundreds of thousands of dollars going to college to be an entrepreneur…And you don’t have thousands to spend on consultants to help you and guide you….what is an inspired entrepreneur to do?
Us the 1-10-100 plan. Below is a 10 minute video broken into two part that provides a high level overview of the 1-10-100 plan. Below that is a link to the hour long podcast on the topic that was recently recorded from the Compassionate Capitalist Radio show. The basic idea behind the 1-10-100 plan is if you are serious about learning how to successfully launch and build a multi-million dollar business, and really don’t have any money to invest in your success, you can at a minimum do this:
10 hours a week
$100 budget a month
Commit to a year of having the discipline to spend 10 hours a week reading, watching educational videos and webinars, and attending seminars and networking events. Budget $100 a month to pay for some of the educational materials and to attend events or join specific organizations. In the videos and podcast, Karen Rands goes through a step by step process of where to find free content and where to find useful seminars and meetings to participate in. She also covers how to budget the $100 a month and the 10 hours a week to accomplish a specific goal. At the end of the year, you will have gained the knowledge necessary to know what needs to be done, confidence to meet with investors and gain their confidence, and the skills to build a quality team that will help you execute your fully developed business plan.
1-10-100 Plan for Entrepreneurs Video Part 1
1-10-100 Plan for Entrepreneurs Video Part 2
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Podcast Session on the 1-10-100 Plan for Entrepreneurs seeking to start a business, find angel investors, and build a successful early stage company worth of venture capital.
Understanding the value of your Intellectual Property… whether it something you use in a product today or something that you think might have value in another product or market – how do you figure that out? This post and the associated podcast is dedicated to maximizing the worth of your Intellectual Property – as it relates to your internal use, your competitive position in the market place, and your company’s value to the investors.
Barry Brager, Founder and Managing Partner of Perception Partners joins us to share his expert knowledge. Perception Partners is a Global advisory firm that helps companies and investors understand, quantify and maximize the value derived from innovation and intellectual property. They enable their client to increase revenues and profits with by getting the Story Behind the Story™ in R&D, IP and M&A.
Barry is recognized as a leader in the IP industry. In 2009, 2010 and again in 2011, Barry was named one of the world’s Leading IP Strategists in the global IAM250, published by IAM Magazine. Barry holds three patents himself and others pending related to the use of mobile phones a remote control devices. Barry is a frequent speaker on IP strategy, valuation and the links between patent intelligence and competitive advantage.
We welcome Barry to the show to share with our entrepreneur and investor audience 3 key aspects of IP protection and valuation market place:
What should smaller/mid size businesses be doing to improve their IP strategy in the coming year?
First thing is to Google it…. Don’t waste time doing something that has already been done, but you can look a little harder to figure out a different way to do it; And
www.google.com/patents – for US searches, friendly search compared to US patent office
www.espacenet.com – global patent research, can translate.
How can entrepreneurs benefit from the trend of “open innovation?”
This is where people partner and collaborate with patent owners or IP innovators to bring products to market, commercialize the IP, or sell their IP to be developed to a larger company that is trying to bring that type of innovation to market to solve a problem they have identified.
R&D departments at universities, SBIR, hospital research and government (DOD, DOE & DOT) are a source for IP technologies for collaboration and commercialization.
What advice would you give to those seeking to monetize their patent portfolios in the near future?
Get a description of who would use it and why, create the story, and who needs to hear the story.
To learn more about Barry Brager and Perception Partners, and sign up for their free newsletter, visit their website at:
By definition, a seed round of finance is used to finance the genesis of a business. An entrepreneur has an idea and they need capital to validate the business model, develop a prototype, get a patent, attract advisers and management…basically to build a company. It is the riskiest of capital because any investor is really investing in the entrepreneur’s character and capabilities. If that entrepreneur has a history of dreaming of things and not completing them, then that is their “M.O.” and it will be very difficult to raise friends from those around them that are familiar with their track record. On the other hand, if that entrepreneur has been highly successful, in other things…as a community leader, executive in a company, or successful business owner, then those around him or her will be more willing to take a risk that the entrepreneur will execute. Angel groups rarely invest at the seed round. There are some that are set up for that and plan on actively participating in the company to help build it, almost as an incubator. Here again, there is the challenge on valuation.
Valuation really comes down to math. Most often this issue arises because an entrepreneur doesn’t understand the cap table and how valuation is built over time and how stocks are issued over time. It isn’t what the entrepreneur thinks the company is worth. It is a combination of what the entrepreneur’s perceived value of the company is and what the investor is willing to pay for their shares based on their belief that they can make a return on investment.
Entrepreneurs can get in trouble some time when they raise their seed capital and because the “friends & family ….and fools” buy into the company at too high of a valuation because they are all caught up in the CEO’s vision and excited declaration of potential. Most startups are valued out of the gate at less than $1M. So if you are raising a seed round and raise $250K but only give up 10% of the company for that initial round, that is putting your valuation at $2.5M. If you can take that $250 and get a product to market and customers in the back log, then you may be able to justify a valuation of higher than $3M when going for that next round of $1.5M, but likely that won’t be the case and your original investors are diluted as you give up 50% pre money.
This is where the emotional issues of “control” start to reek havoc on entrepreneurs. Often entrepreneurs doesn’t understand how control is actually handled in a company, and it isn’t solely based on who has the most shares. If the bylaws are set up properly on how board seats are given up and chairman is selected, you have two classes of stock, and maintain the greatest individual share holder amount of preferred and majority overall of the common, you can maintain directional control of the company…until your VC round that is :-).
The best way to avoid this whole issue and to increase the value of the company with the seed capital you raise before giving up equity is to use a convertible note. Investor accumulate interest on their investment and convert in the A round at the then valuation. You as the entrepreneur has the ability to take that capital and boot strap your way to getting a product in the market, a team built, and ready for cashflow. Now you can negotiate for higher valuation and more tangible aspects of your business to warrant the higher valuation of $3-5M as an “early stage” rather than start up company.
We have found that entrepreneurs have the most control over their valuation if they can be successful in raising a seed round from an affinity group of investors that are emotionally tied to their success, and using that money to launch their company, patent their product, produce a prototype, before going in front of angel investors that have a higher expectation. Angel groups, although risk tolerant because they actually play in the high risk game of early stage investing, are subsequently risk adverse if the company is more of an idea, a start up, than an actual company fully commercialized. To increase the valuation during an angel round a company needs to fill in its gaps….management team, advisers, joint venture partners, LOIs from customers, or actual customers, commercialized product and actual strategy to bring it to market.
Listen to how three companies raised seed capital and bootstrapped their way to the next round to maximize their value.
The idea of crowd funding is all over the internet. But in reality, it is a lot of hype. The Jobs Act that passed in 2012 had a lot of bold initiative intending to make it easier for entrepreneurs to raise capital by making private investments available to the masses, rather than the sophisticated wealthy investors.
Well intentioned advocates, missed the point. Not be able to attract the “average joe” to an investment wasn’t the thing making it hard to raise capital, it was the invisible wall created by FINRA, through their unbridled power provided the SEC, that prohibited access to the wealthy and sophisticated investors. The JOBS Act and the Crowd Funding lobbyists missed the point.
Fortunately, the SEC might actually get it.
So although entrepreneurs still CANNOT sell equity in their company through online portals, television ads, direct mail, and social media (they can take donations and sell over valued stuff), the SEC is making movement toward eliminating the two biggest REAL inhibitors to raising capital and enabling entrepreneurs to bypass the wealth managers and financial managers that have been the gate keepers to the sophisticated and accredited investors.
1. General Solicitation
2. Prior Relationship
With the removal of these two restrictions, entreprneurs will be able to raise capital through REG D and REG A offerings to accredited investors and find those investors through any means of outreach they can manage and afford. The burden of validating the investment doesn’t reside on the posting service, or the company, but on the investor that completes the investor questionnaire and certifies they are accredited or sophisticated enough to know they are making a risky investment.
This was the topic of the podcast http://tobtr.com/s/4387055.
And the host, Compassionate Capitalist, Karen Rands, also covers what companies can do to prepare for raising capital under this new programs when it is available later this year.
A lot has been written about forming good management teams to grow a business so that it can thrive and provide a legacy to the community and to the founders’ families. Some entrepreneurs find that they get married, start a business, or one has started a business and marries someone in the business, or as the business grew, the spouse joined the business. However it happened, they may wake up one day and find that there is a conflict. There is a disconnect in the business relationship or in the marriage, or it is hard to tell which, but the conflict is impacting both.
If it was simply a dispute or difference in opinion on process or strategy in the business, usually it can be worked out through discussion, and the conflict and resolution are left at the office. But, when that same partner comes home with you, sits at the dinner table with you, and joins you in bed later, sometimes it is difficult to leave that conflict and resolution at the office….and visa versa.
Karen Rands recently covered this topic during the Compassionate Capitalist Radio show, with her interview with Sylvia Lafair, founder of Creative Energy Options (CEO). An expert in this area, Sylvia and Karen explored the unique dynamics when you have a spouse as a partner.
The challenges a husband and wife business team face over time as their marriage dynamics change and their business evolves are unique. Communication is key. Understanding each others strengths and weaknesses and how those change as the roles within a marriage and a work environment change are critical. Married couples have invested not only into their own lives, often times their children’s lives but also into a business that is their livelihood and so there is more to lose when one is failing and has a potential to impact the other. Listen to learn more about the tips for managing to this unique dynamic:
Black carbon plays a much bigger role in global warming than many scientists previously thought. Black Carbon is produced as a by product from the CO2 that is emitted when any thing is burned. Black Carbon has an environmental impact 40,000 X the toxicity of CO2.
When there is one environmental factor that has potential to impede sustainability across the board for all business and community, there is a profound economic impact as a result. On one hand, it’s existence hurts the economy. Yet, when there is an innovation to the way of doing things that has a positive action because it no longer produces the same amount of the bad Black Carbon, and that can be measured, a financial value can be placed on that. Likewise, innovation that produces the opposite effect in that it removes bad carbon from the atmosphere and that can be measured, then a financial value can be placed on that. When there is true financial reward for changing the way energy is produced – removing Black Carbon from the process, the environmental impact can be arrested.
When something can be measured and valued, it becomes the subject of trade and finance – an economy. That is New Carbon Economics, and we are the threshold of profound shifts and potentially the start of the bubble Karen and Ian talked about nearly 4 years ago in 2009.
Even the non-political, non-scientific publication The Rolling Stones put energy and resources into understanding what Black Carbon means to our economy, our health, our viability as a free society- from our myopic American perspective to the real impact that is being felt world wide:
Listen to the Latest Broadcast – Why this now will get the attention of the markets across the globe – how value is being placed on it – the money that is available – the growth of the free market, and how entrepreneurs can find out if the qualify for this type of value add to their business model.
So what does this mean to an entrepreneurial endeavor?
The measure of the value of the company isn’t just the intellectual value; or the value of your assets – contracts, inventory, equipment; or what is on your balance sheet. Now entrepreneurs potentially have another value that can be sold or held as an asset value – that is the measure of how you impact the environment with emissions that replace bad carbon, or because of innovation that produces the same thing without the creation of black carbon. When an entrepreneur can measure how much their process accomplishes the same thing without the black carbon, and there fore a reduction in black carbon…that becomes and asset, a something of value that can be sold
Plain and simple.
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Instead of the big stick, making CO2 and production of Black Carbon criminal, the creation of a financial reward will go far to changing the behavior of big business and bring the innovation to the market that has been long needed. And with ANSI clearly on board to impartially set the financial standard for the value of these credits, the market will be freely trading and little chance of fraud exists. Sustainability is a big issue for the long term economic growth. Providing incentives to make real change on how things are manufactured, energy is produced, and goods are distributed will go a long way toward insuring sustainability.
Currently before the U.S. Senate are at least 3 bills proposing to legalize how private companies raise private investor capital through a process called Crowd Funding. A contentious and potentially epic battle is under way…. not just in the hallowed halls of capital hill but between two of the biggest and most visible arms of the federal government that have much to lose or gain depending on how this legislation is approved. Read on to learn more and to get the links to the two podcasts recorded on this topic:
The Entrepreneurs: Innovators who struggle to find capital and attract money for their project and are frustrated with the barriers to identify potential investors and the limits on how you can communicate to those investors about their opportunity.
The Investors: Not really in play, generally not showing up for the game or the practice or the signing day. Basically, by and large, they could care less because if they even know about making private investments, and wanted to be in that game, they could find a local pitch event to attend and meet the companies in their area to invest in, they could join Go Big Network, or any number of posting sites already in existence and invest away.
The Politicians: As we approach the BIG GAME election year, they want to be the ones that say they voted favorably for some program that had potential to create jobs. And since most new jobs come from early stage small business, they want to go back to their voters and say they helped change the world for entrepreneurs seeking capital will work, since general consensus is all the money spent trying to get banks to lend and tax breaks to investors to invest haven’t worked. Even Obama has jumped into the fray by expressing his support for the JOBS Act.
The Lobbyists: There really are 3 groups of lobbyists trying to push this legislation through–why because they have the most to gain financially when Crowd Funding is approved. 1) Current Crowd Funding sites like Kickstarter and Indiegogo already have a platform to turn the switch on to enable equity transactions, 2. Posting Sites like Go Big Network that can lift the veil of secrecy between their investor subscribers and their entrepreneurs subscribers and charge bigger fees, and 3. Social media sites like Facebook and Google that can now tap their MILLIONS of eyeballs to introduce entrepreneurs to investors – through ad revenues and posting & transaction processing fees.
The Government: The SBA (Small Business Administration) and the SEC (Securities Exchange Commission
Recently, I was out to dinner with some of the movers and shakers in the entrepreneur and capital world in the Southeast. Through the course of the evening we kept coming back to the topic of what entrepreneurs do that make or break their success in raising capital for their business. And then AGAIN, last night at a seminar, an investment banker and I got to talking about this very same topic. When People who have access to the capital and know what it takes to attract the capital, get into conversations with Entrepreneurs on what they need to do to launch, grow and succeed in business, and they need outside capital to do it….there seems to be a common psychological deficiency among the entrepreneurs that “never get it”.
Investors and Brokers reading this will be nodding their heads as they read these insights. Some entrepreneurs will think “I know someone like that” or “I used to think like that”. Some entrepreneurs will think, what in the world is this lady talking about — because they have built a fundable business and they have attracted capital and do hire the expertise they need when they need it. And yet others will think, what in the world is this lady talking about and they still won’t “get it”.
Tell me what you think about these observations….
1. Companies are getting funded – case in point: I had to reschedule and then struggled to find a good line up of qualified companies to present to our last Atlanta Angel Investor Club. Three of the companies that had been approved to present, cancelled because they had either received funding or committed capital before the event. So if an entrepreneur is not getting funding, it isn’t because there isn’t money available. Reality check: It’s them – not the investors. This was true in 2002, in 2009 and in 2011—just because the market is down, doesn’t mean the capital is gone.
2. Entrepreneurs will be penny wise and pound foolish -They often will put every cent they have and leverage their future trying to get their business going, flail around trying to attract capital, and fail. They’ll blame those “ignorant” investors that “just don’t get it”, the economy, their geography or whatever and whomever they can to deflect the reality that they simply don’t know how to raise capital – identify it, attract it, close it — and they don’t know how to position their business in such a way to make it attractive to investors. Ever heard the definition of insanity is doing the same thing over and over yet expecting the results to be different?
Then, when that CEO is desperate, the company is on life support and has no money left, they can’t make payroll or the next product launch milestone, they finally seek help. Six months earlier, they will have talked to the very people that could get them access to the capital and position their business for success, and they won’t want to hire that expertise. Then they’ll come back to that same expert and say “I have to get money in the next 30 days, can you help?” This is when we in the start up and early stage investment world have a collective laugh mixed with tears when that entrepreneur hangs up or walks away. They won’t hire the expertise they need, when they have the money, to get across the goal line—penny wise & pound foolish. They let their ignorance and false sense of entitlement stand in the way of their success and their company’s success.
3. They don’t take the time to put a capital strategy in place that maps to a cohesive business strategy. Nobody can understand how they will make money because they don’treally know how they are going to make money. So they don’t really know how much money they will need now or in the future. They seek too much money too soon to warrant their valuation, so there is a disconnect with the type of capital they are seeking. They don’t take the time to actually learn how to raise capital effectively. Or, they fall victim to the “poor CEO vs rich founder” syndrome in their terms offered. And all of this could be fixed if they just took the time to engage and get their sequencing correct, their messaging on target, and their capital and business strategies aligned.
If any of these points are “aha” moments for you or sound familiar– for you or an entrepreneur you know, then time is of the essence. It is the saddest thing when innovation never gets to market that would better our world because an entrepreneur who doesn’t know what he/she doesn’t know or worse, knows that he/she doesn’t know what they need to know or have the skills/experience but feels he or she is “entitled” to that information and expertise at no cost just because they are a “poor entrepreneur”.
I call these kind of entrepreneurs Sloths.
Don’t be a sloth….be a gazelle, be a cheetah….Learn the keys to unlock Your most direct path to success, blast through limitations and turn YOUR Business into a HIGHLY FUND-ABLE business!
Don’t Miss this limited opportunity! Take action now so you can get on the right path to attract the capital you need to bring your innovation to market, grow your company, and create wealth for you, your family and your investors.
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