I was listening to an interview last night with the CEO of JP Morgan Chase, Jamie Dimon. I was struck by his answer to a question about France’s Macron growing the French economy, and he mentioned entrepreneurship as one of 3 pillars.
It’s so wonderful to hear Corporate America rubber stamping the importance of entrepreneurship.
But one of the first minefields that a budding entrepreneur is sure to face early on, is funding.
For some it is a swear word and for some it is music to the ears.
The simple reason for this is that people go into funding without being clear about their reasons for seeking funding.
Once you are clear with your ‘why do I need funding and what will I use it for”, this will help you to clarify the kind of funding you need and where to look for it.
Your ‘partner’ in funding can have a huge impact on your startup journey.
One of our startups was super impressed that the first few investors they got on board, wanted no more than to hand over the money and receive a quarterly report of the company progress.
For these investors it was simply a means of pure investing, like putting money in a bank and seeing how it will grow over a period of time. Of course they were aware of the risks involved, but that is as far as their commitment would go.
It IS great to have an investor like that, someone that has faith in you and will leave you to do what you do best.
To get an investor like that you, as an entrepreneur, would have had to have given them great confidence and clarity in your path ahead.
So well done to you if you are clear and if you are literally just looking for money to grow your business.
But a factor that is often overlooked, is that funding is sought to solve nothing but a short term problem without thought to the medium term solutions this same funding can bring.
The short term problems may be funding a computer or 12, putting food in the mouths of the founder/s and a roof over their heads until they have a MVP to put out to market to begin getting revenue, may be dev work .
Take a minute to think medium term for your business.
The real use of an investor is in the advice, mentorship and market that investors can bring to the table.
These are integral to the longevity, sustainability and growth of your company. They spell FUTURE.
At Akro we have been asked on occasion to take over majority shares of a business, as they just can’t get it out to market.
We hate seeing all the ‘clever’ work being led to a point of desperation.
So ask these questions:
How passionate is the VC on my business
Do I need to work with a branded VC, or does this not really matter to my startup?
What can the VC do for my business: recruitment, strategic partnerships, global expansion, what other skillsets that are complimentary to your existing team?
And when you hit your dark days (which you will) is the VC group going to be with you through this?
A last point that is counter to the popular Lean Startup view, is “prepare in peace for times of war”.
And what this means is pay attention to possible dark days ahead.
Prepare by having money available in your account to use. This doesn’t mean you spend the money when you receive it. Keep it in the bank, paint your own walls of your offices, make your own furniture if you need to and rather keep money aside.
We look forward to welcoming you to our chat on Funding for Startups on 20 November.