At first I thought it best to completely stay away from this story, then I realized after a conversation in our office tonight that there are some interesting details in this story that may make sense for me to collect and reflect on. This is a collection of the posts on the AngelGate drama going around in the venture financing world. If you read the following articles in order, and some of my personal insights provided below, you’ll understand what’s going on and  have a great understanding of the topic from multiple, differing, but all intelligent perspectives.

Format is:

Name of author (sentence summary)

My insight/review, blah blah blah.

Enjoy.

#####

TechCrunch (this is where it all started)

Mike Arrington of TechCrunch, went to a dinner with some super angels, meaning people who invest early stage, but with other peoples money (some definitions may vary). Arrington was tipped off on the dinner and had a hunch that it was about price collusion in early stage deals. So, he just showed up in typical hard nosed journalistic fashion…

http://techcrunch.com/2010/09/21/so-a-blogger-walks-into-a-bar/

Dave McClure (we’re not bad, we’re hustling & a healthy fuck you)

Dave’s approach is consistent and honestly I kinda like it. He basically makes the claim that these meeting happen but no, they weren’t colluding on prices. They generally meet with some of the big names to make good things happen and help direct the industry in a positive direction.

http://500hats.typepad.com/500blogs/2010/09/fire-in-the-valley.html

Ron Conway (blasting super angels)

Ron is a stand up angel and I hope someday I get the chance to work with him. This letter (that was intended to be private) got out and of course published on TechCrunch. He basically calls out some negative super angel behavior and attempts to disassociate with the crew that is potentially acting in an unethical fashion. If there’s anything I took away from this, it’s that some nasty things were going down around that table.

http://techcrunch.com/2010/09/23/ron-conway-angel-email/

Brenden Mulligan (can’t we all just get along)

This post is probably the least circled of all the posts here. However, its one of the most honest and innocent summaries that I’ve seen and I have a huge amount of respect for it. Brenden is a good friend and he literally nailed this one. If I were to write a post with my thoughts, I’d probably just ask to repost his. The gist is chill out, we all need each other.

http://bmull.com/dont-let-this-angelgate-crap-drag-out-communi

Mark Suster (reality sets in, advice for entrepreneur)

Like I posted on Marks blog tonight… Every time I have an interaction with Mark, whether twitter, or reading his blog, I have a growing respect for his perspective and realistic, balanced approach to business and life. This is the best response yet to a very sticky but interesting topic. It’s fair, it’s real, and it like most things I agree with, sides a bit with the entrepreneur about how to handle what is inevitably the real world. His advice is a little bit deal with it, and a little bit, how to deal with it. Thanks Mark.

http://www.bothsidesofthetable.com/2010/09/23/what-entrepreneurs-should-do-about-price-fixing/

Quick thoughts on big valuations from pre rev startups:

There are a lot of folks that don’t understand why Twitter or other startups like them can be valued at such enormous valuations while showing minimal or zero revenues. I respect your skepticism. It’s tough to understand why these early stage start ups have millions of users but aren’t profitable. Please understand that most of them could create revenues if they wanted to, but just turning on the revenue spout isn’t most important. Turning on the revenue spout when all the pieces are connected properly is critical. I’d like to use this analogy to explain this further.

If your connecting a hose to the spout/spigot and you turn on the water prior to ensuring you have the hose connected properly, you’re going to have a mess on your hands, everyone’s getting wet and the process of watering your grass and using the hose is a failure. However, if you ensure a proper connection from spout, to hose, to sprinkler, you’re going to have a great experience, the grass get’s water and growth occurs.

These companies have already proven that they know how to acquire users, the water is running, now it’s a matter of connecting the pieces properly before they turn it on so that the combination of water (users), hose (business model), and sprinkler (team) are all connected properly to maximize their revenue opportunities.

Excuse errors, first post from my iPhone. (Update: added photo)

Update: Twitter is reported to be profitable after making search agreements

Recently Mark Suster discussed the topic of VC seed investing and when it can be a bad thing on his blog, Both Sides of the Table. This reminded me of a conversation I had with another experienced entrepreneur offline who said… “First time entrepreneurs shouldn’t be picky. If someone is offering you venture money it’s your lucky day and you’d be a fool not to take it. Don’t argue the terms first time around, once you’ve had a successful exit, then you can have the upper hand.”

So I reached out to Mark on the topic because I think he’s one of the more forward thinking VC’s out there and got his take. Here’s the interaction below. Thanks Mark.

My question to Mark:

There is a school of thought that a first time entrepreneur who hasn’t yet proven herself should basically take any money they can get. Get your company off the ground with anyone who is willing to take a bet on you and be picky with your second startup effort.
What are you thoughts on this? Maybe you can put on the entrepreneurial side of the table hat for this one?

From Mark:

My view, you always raise the highest quality money you can. If you’re first time and you can’t get the A team but you’re convinced you have a great idea then you look at your lesser options. Only scenario where I wouldn’t take the money is when the terms are so onerous that being successful doesn’t add enough to you as an individual. At that point I tell people to find another idea (or possibly another profession). Thanks for your question.

So, for young entrepreneurs, if you have an opportunity to raise money you probably need to take it. But always weigh the cost. How much are you giving up? Make sure you keep enough of your company that you’re still willing to sell all out (emotionally not, financially) to make it a successful one, you’re going to need that motivation down the very difficult road that you’re now driving.

image via flickr

[This is the second portion of a series on raising seed funding for a web startup. You can find the first post here, where we discussed referrals, short pitches, accountability, and tracking opportunities. Note: I’ve never raised any seed money for a startup. I write these observations to share what I’ve been learning and to motivate myself and the other entrepreneurs in my shoes to get out there and get’r done.]

I won’t take those terms. You know your situation better than I do so any decision about funding must be very specific to the conditions of that startup. Always keep that in mind. However, it’s my opinion that if your a new entrepreneur, you take what you can get. Don’t push for one form vs. another, or hold out for a great named investor. Take something to get you going and/or keep you alive. If you’re important to the business as the entrepreneur (which I assume you are) then you get equity in later rounds, they’ll have too to keep you. People who are good get compensated, end of story. On your second startup you can become particular, negotiate harder, and work with the big name investors.

Giving away shares for cash. A lot of founders and early-stage investor are focused on percentage. This may help in initial deal terms, but this is a short term number. It’s healthy and common for companies to take 2nd, 3rd, and more rounds of funding so percentage won’t ultimately matter. What you need to focus on is price. Investors want to avoid dilution but often mix up percentage dilution with economic dilution. Their percentage might decrease but the value may increase.

Percentage dilution in most contexts is actually rather meaningless, but economic dilution is crucial.  The reason is simple.  An emerging business which is growing and creating value for itself is able to sell its shares at a higher common share equivalent price than in previous financing rounds.  Under this scenario, new investors buy shares at a higher price than existing investors.  Existing investors surely suffer percentage dilution, but they also enjoy economic accretion.  This is a good thing for existing investors, because although their percentage interest in the emerging business goes down, the value of their economic interest in the company goes up.

Once you throw blood in the water the sharks come. Ok I’m not sure if the analogy is that good but deals will get competitiveve once you have a single term sheet. Momentum becomes critical to prove to your first investor that you’re legit and to show that the deal terms were favorable. Each consecutive term sheet you get makes the next one easier. Remember that pipeline we talked about? Now is the time to hit that hard.

Here’s a voicemail Travis Kalanick left on a 2nd termsheet prospect on a recent *competitive* deal. The recipient of this voicemail called back in 5 minutes, AND ended up being the lead on the deal (notice the urgency while staying true and credible):

Hey , wanted to check in with you regarding . . .things are heating up with a couple other parties and it looks like things could get done pretty quickly from here… wanted to check in with you, see where you’re head’s at on the deal, and see if we there’s a shot we can work together on this one… give me a call back as soon as you can… talk to you soon

Piggy backing is piggy banking. You’ve likely talked to many “small time” investors leading up to this point. They weren’t ready to make the investment at first but now that you’ve landed a term sheet from a likely larger investor there is nothing wrong with letting the small players piggy back the deal. They now have confidence that it’s a legit investment and can just use the same terms as the existing term sheet. $200k can double or triple relatively quickly this way so don’t slow down after 1 or 2 investors agree. The clock is ticking.

Don’t be this guy, what an idiot.

The best entrepreneurs are never finished. Keep selling your idea, keep piling on investors at the original terms, and don’t let the first big guy change his terms just because you’ve added others, fight collusion. A very smart entrepreneur, Travis Kalanick, says that “until the deal is closed, you have at best a 50/50 shot of it happening.” The moment you think you’re done with a deal, watch this video again and save yourself the embarrassment.

image via BenGoode

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• Term sheets that you don’t want (startupcfo.ca)
• Raising Seed Funding For A Startup (Part 1) (thedreaminaction.com)
• The Down Round (startupcfo.ca)

I’ve been studying a lot about raising a seed round of funding for a startup. Once your prototype is out and some traction is shown, if you’re going to need capital you gotta work very hard to get it. Here is the first of a multiple (probably 3) part series on the core things I’ve learned about raising a seed round. Note: I’ve never raised any seed money for a startup. I write these observations to share what I’ve been learning and to motivate myself and the other entrepreneurs in my shoes to get out there and get’r done.

Part 1.

Cold calling is for sales people, get a referral. If you have a recommendation from a trusted source you’ll always be in a better position with an investor. Angel networks &/or individuals will always take a referral over a cold call because you’ve already been through one layer of filtering. So, because of this reality it’s super important to always ask for a referral. Even when you meet with someone who might not be a great fit, as long as you think they liked you and would pass on your name in a positive light, hit them up for a referral.

Time your pitch with 1 cup of coffee. You won’t always have the opportunity to pull out a powerpoint deck or spend an entire meal mulling over the details of your plan. You need to have 3-4 different length pitches ready in your head. If you get a change for 10-15 minutes with a high profile investor you need to have a 10 minute pitch and a list of FAQs in your head so that the 15 minutes is a powerful use of your time. The goal is always getting the money but priority number two is the next meeting.

Beggars can’t be choosers, and you’re the beggar. Go to Angel networks, conferences, networking events and always keep your A-game on. Meet with folks who are Angels, who know Angels, who want to be Angels, etc. Give them the short pitch and setup the next meeting with whoever you can.

Use the buddy system, it’s safer. You should have a partner that you’re able to share your experiences with and that will keep you accountable. You need to be able to digest the conversation with a co-founder or close adviser so that you don’t miss any critical pieces of feedback. As you meet with investors they’ll have different concerns and at each subsequent meeting you should be able to completely address their concern from the previous meeting. If they have the same question or concern twice, and you don’t have an answer, shame on you. It’s easy to miss things without someone to keep you aware of the details. Accountability is key.

Never miss an opportunity. After every meeting you should have a list of what you need to do in order for that person to invest at the next meeting. You should have a list like this for every single person or group in your pipeline. This will become important when your first/anchor  investor is locked down and you need to bring the sub investors to show momentum. Document everything and know what opportunities are available.

Always ask for the money.

image via nardip

What I’d like to see more of in Chicago is…

1) VC’s and Angels who blog – so that they communicate what is interesting to them and so that they are more accessible or even appear more accessible to the areas entrepreneurs.

2) An increase in the understanding that failure won’t kill you – in the Valley, as well as in NYC, people understand that successful businesses often come from trial and error. Here in Chicago, with the strong industrial goods trading culture, failure is BAD. We need to get over that.

3) Midwest cities need to stop fighting for control – none of you are as big as the hubs (SF & NYC) so work together so that you can pull resources to create a single, strong, job pool and start to create really solid companies.

Next week I’m speaking in Milwaukee about a startup that I started and how/why it failed. That’s my first step.

The reason why I’d like to see more of these 3 things is because from what I’ve seen through the people that I’ve talked to here in Chicago, there is absolutely no reason that Chicago shouldn’t have as strong of a startup culture as any other ecosystem outside the Valley (like NYC or Boulder). People always ask the question, “can you start a successful tech company or web company outside of Silicon Valley?”

Hell yes. Here’s why.

All huge companies with extremely large exits. Here are some other reasons.

Two awesome Venture Capitalists wrote about this topic back in July 09. Fred Wilson (who made this list of companies) argues that it’s a ‘crock of shit’ to think that great tech companies can’t start outside the Valley. And Matt McCall talks about the higher deal valuations in the Valley, hyper-competition, and other factors, that actually hurt entrepreneurs.

I completely agree with Matt and Fred’s point of view on this topic. Which is why my mind immediately wanders to the question, “What’s the solution?”. So these 3 issues serve as my proposed solution, but I can’t do it alone.

We need Chicago’s tech & entrepreneurial & investor folks to understand our challenges and act to fix them! There is no reason that a failed venture should be such a huge negative, other companies should be chomping at the bit to retain your experience within their companies. Out in the Valley it’s almost encouraged to try and fail or at least easier to explain and embrace. Starting a startup and not being successful is all part of the process to starting a startup and being successful!

We desperately need more VC’s and Angel investors like Matt and Fred, accessible and blogging, talking about the challenges from both an investment perspective and a entrepreneurial perspective. We need to close the gap between money and entrepreneurs with ideas and businesses. Chicago VC’s need to start giving talks and attending entrepreneur meetups and events. Be in the community and help foster it.

Hey Milwaukee folks, I lived their and enjoyed my time there, but you have to stop having younger brother syndrome toward the Chi. There is an incredible community of creative talent in Milwaukee and Chicago companies should be tapping that pool. This day and age employees don’t have to be in the office 5 days a week so jump on the train and get down here 2 or 3 times and lets work together to build a strong Midwest startup culture. Also, don’t give me this bunk about universities. Mark Andreeson went to U of I and so did Max Levchin, there are brilliant technologists in this area, just give them a reason to stay.

image via sergilvs

Many of you followed the process of starting, building, then closing SocialDreamium. I’ve been learning and exploring over the past 3 or 4 months and I’m back on the startup bandwagon. I’m cofounding a startup that’s focused on social commerce (announcement soon) and I’ve been working on setting up that company. In the process of this formation there are some detailed questions that needed to be asked and some considerations that are critical in order to answer this question appropriately.

These are common startup questions who’s answers are dispersed around the web but I’ll aggregate much of that information here with resources that I found and some of the learning’s that I’ve acquired. As a disclaimer, don’t take my advice or learning’s as fact, just learn what you can from it, but seek further legal advice if necessary. I have consulted my attorneys in this process, and so should you.

So, as a bit of a background, I’ll address some of the questions and answers that led me to this question. First…

Why a C-corp, not an LLC?

To simplify, and likely over simplify, LLC’s don’t have shares, they have ownership percentages. Percentages get messy in divvying up, and it is also difficult to value the amount that a specific percentage is worth. So it’s much easier to say that 100 shares at $10/share = $1000, rather than saying 1% = X amount. Share values can change quickly, especially when investment is introduced.

Also, LLCs are a product of state laws and it is those laws that often make it impossible (or difficult) to do an IPO of an LLC. When VC’s invest they are looking for that company to do 1 of 2 things, be acquired, or go public, this is called an exit. If IPO’s (going public) are difficult or impossible, it makes perfects sense that VC’s would discourage this structure.

As David Cohen, founder of TechStars said on his ColoradoStartups blog, you can recover from forming an LLC and hoping to take investment, but it may not be pretty.

Of course anything can be fixed, so it’s far from fatal if you do set up an LLC. You can set up a C corp and have it buy the assets of the LLC. It just costs money and time. You end up with less money and the lawyers end up with more.
The other issue that people pointed out (in their arguments for LLCs) is that valuable losses can be passed through to the personal taxes of the investors and founders with an LLC. While this is also true under ideal circumstances, it turns out to not be true at all in most common cases.

So, if you’re looking to take outside investment in your business, you’ll likely want to startup out as a C or S – corp, not an LLC. Next questions…

What do you need to know before incorporating?

Pulling directly from the Wisconsin government website, which is where our startup will be founded (the reason for this is enough for a separate post), you’ll need to answer these (or similar) questions:

1.    Name: The proposed name of the new corporation.

⁃ make sure you’re name isn’t taken

2.    Registered Agent: The name of the registered agent and the registered office address.

3.    Number of shares of stock authorized: The number of shares of stock the corporation shall be authorized to issue. Some quantity of shares must be authorized.

⁃    Answered in next section
4.    Incorporators: The name and complete address of each incorporator.
⁃    Founders
5.    Drafter: The name of the drafter of this document. The drafter is the person who is completing this document.

6.    Signature: The articles of incorporation must be signed by one or more incorporators.

7.    Contact: The name, address, email address, and phone number of the contact person for this filing. All communication regarding this filing will be via the e-mail address of the contact person.

8.    Payment: You need a credit card (corporate or personal) to pay the filing fee. DFI accepts only MasterCard or Visa; debit cards are not accepted.

9.    Fees: Online Wisconsin Stock For-Profit Corporation filing fee is $100.00. This fee is not refundable.

So, how many shares should be issued, the cause of this post?

We will likely issue a total of 10 million shares of common stock. This will allow us to give 8 or 9 million shares to the founders (yes we know the details, but don’t wish to disclose), and have 1 to 2 million shares in an options pool, for a fully-diluted base of 10M. The point of the unissued shares are so that in the event more shared need to be issued, we have the “back-up”. This might be used as incentive for future early employees, but not co-founders.

As the startupcompanylawyer states on his blog:

From a purely mathematical perspective, it doesn’t matter whether there are 1 million or 10 million fully-diluted shares. However, when companies are granting options to new employees, even the smartest engineers feel better receiving options to purchase 100,000 shares as opposed to 10,000 shares, even if it represents the same percentage ownership of the company.

If the avg IPO is $20/share IPO price (just a guess), with 15 million shares outstanding (total shares available), that will mean you have a $300M market capitalization (total value). This is about the minimum amount needed to complete an Initial Public Offering and keeps you free of doing a stock split at the time of the IPO.

Update: The question of Par value of shares authorized also needs to be answered.

In this process Par value basically means the minimum value you’re promising to share holders that your stock will sell at. The fact is, it doesn’t mean much. Although you can’t trust everything on wikipedia, here is the excerpt that better explains the concept:

Par value is a nominal value which (a stock) has no relation to market value and, as a concept, is somewhat archaic. The par value of a stock was the share price upon initial offering; the issuing company promised not to issue further shares below par value, so investors could be confident that no one else was receiving a more favorable issue price. Thus, Par Value is a nominal value of a security which is determined by an issuing company as a minimum price. This was far more important in unregulated equity markets than in the regulated markets that exist today.

Par value also has bookkeeping purposes. It allows the company to put a de minimis value for the stock on the company’s financial statement.

Issued vs Authorized Common Shares

You might have caught that I stated above, about 8M to 9M shared would be issued, but a total of 10M common shares would be authorized. I’ll break down the difference here, and why the differentiation exists.

Most people own “common” stock shares. This is the most basic class of shares, but their are many and each come with different ownership “rights” associated with them. The ownership rights might include security, voting rights, access to company profits, among many other things. At the beginning, the stages that we’re in, we probably don’t need to worry about all these different stock classes, but as we evolve and becoming a house hold brand :) we will need to worry about these things. For example, in our goal to bring in outside investment, creating “preferred” shares will likely occur, or creating “voting” and “non-voting” shares might be valuable. At the point we are doing this we’ll definitely be using legal expertise.

At our stage, “early”, the shares will allow common stock owners to participate in ownership activities of the company, and in this case ‘issued’ shares are what’s important. Authorized is the allowable number in the future, but not actionable until issued.

Summary to Business Structure Decision

The reality of legal business structures are that there are no hard and fast rules for the equity structure of a tech company at its liquidity event, which means cash comes into the business via a sale or an Initial Public Offering. A relatively normal structure at an event like this would be something like 20% being retained by the original founders, 20% for all other management and staff combined, and 60% being held by investors (this assumes two or three rounds of financing.)

But we’ll worry about one investment at a time.

To Lawyers reading this…

If you find any fundamental mistakes in my understand I would genuinely appreciate any feedback but this is the best understanding I have on my conversations with my attorneys and the mass’s of content that I’ve studied on the web. Thanks for your help.

If there is one thing that I do plenty of at GE, it’s present. Whether this be over the phone or in person telling a story in a business setting is a skill that one should continue to foster and treasure everything you learn. Along with presenting, the skill of building powerful Powerpoint presentations in order to communicate a project status, present a business case, and sometime request funding for a project is key. I’ve never pitched VC’s or Angel investors for funding on a startup, although I may soon :), but I have learned a thing or two about requesting cash using a solid slide deck and good story.

Recently, I’ve been studying methods on pitching for startup venture funding and have looked through many example decks and I’ve created this list of tips for getting funding in either the corporate or startup worlds. Believe it or not, I find many similarities between the two. I’d love your feedback on which tips have worked for you or which tips you disagree with.

1. You can visually overwhelm, don’t – Your visuals will usually be posters or charts and most of the time in a PowerPoint deck. Whatever you decide to use to grab your audiences attention, you should keep visuals simple and focus on adding to the story, not distracting from it. The most powerful tool you have in the presentation is you, so make sure that is the focus, take the Steve Jobs approach and use very simple slides to enhance your vocal presentation.
2. Be you, that’s what they are investing in – Especially in the startup world, the investors will be looking at you very closely to see if not only your idea is good, but how you plan to execute that idea. Make sure to be yourself and show them the real person they are investing in. By trying to be something your not you won’t come off confident, capable, or authentic…3 must have’s before making an investment.
3. Don’t be boring – Your goal is to keep the audience engaged and interested in what you’re pitching. If they get bored, they won’t invest, so make them laugh a little. My junior year Chemistry teacher educated her audience, but it wasn’t interesting or engaging at all. Had she made us laugh a little and been cognizant of the fact that half the class was sleeping I think we may have invested more time into her class.
4. Focus on them, not the idea – If you lose focus of your audience, they’ll lose focus of you. Make sure not to dive too deep into the details of your project or idea otherwise you’ll lose their attention and the chance of getting funded. If you are staring at your slide or the screen, then they are looking at your ass or their blackberry’s, and not your pitch. If you don’t keep eye contact with the investors then you’re essentially talking to yourself.
5. Have a conversation – If you are reading your presentation or just going through the bullets without any real engagement then your not getting anywhere. Keep them engaged by keeping examples relevant to them, or ask them direct questions that require a response. This will keep them on the ball and related to your story. If you go too deep in the technology or details of your idea then they won’t be able to respond or relate with you.
6. Say, “I don’t know” – Do not try to be flawless. It is critical to built a rapport with your audience so that you can connect with them on a real level. If a question is asked of you that you don’t have the answer to, then just say, “I don’t know, I’ll definitely get back to you”. They will be impressed with your honesty, your comfort level, and with your request for a follow up. Sometimes, I’ll say I don’t know just so I have the opportunity to follow up with them. This gives me the foot in the door next time. The uber critical key here is to be honest. If they sense that you are trying to pull one over on them, your chances of funding are finished before they started.
7. Prepare but don’t obsess – You obviously need to prepare enough so that you know the topic you are presenting, but if you are too rigid and too rehearsed it will be obvious. Do not try and memorize a script! Know the bullets of your pitch, then wing it. There is a comfort level that you’ll build with your audience when you talk with them versus reciting to them that will be very valuable to you. Comfort level is very important when pitching for funding so find your personal, ideal level of preparation by doing it over and over.
8. Don’t be stiff, but don’t rock out – When presenting I’ll usually stand up if I can. Even when it may seem more appropriate to sit I like to stand to grab the audiences attention and introduce the right amount of motion. When beginning public speakers talk they are usually doing 1 of 2 things: They are stiff as a board and their audience falls asleep, or they are rocking from foot to foot so bad that it completely distracts from the message. I like to use the area to walk from side to side to highlight a specific points and draw visual focus to the point I’m making at the time. If you know your slides, you can use your body position to really bring focus to the topic. Just remember, save your rocking for the weekend.
9. Remember me – Just like in my post about getting a job talking about the importance of elevator pitches, it’s critical that you do or say something that will be memorable. In the case of VC’s, they hear tons of startup pitches and there needs to be something about you and your idea that really grabs their attention. Think about crazy “go-to-market” strategies as a way to capture their attention…
10. Call to action – At the end of the pitch, do not just finish with “Questions?”, that’s weak! Make sure you have a clear and concise call-to-action from the audience. You’re either asking for an approval, for a funding, or for a pat on the back, but you want something, so make sure and ask for it. If you leave the end of the pitch open ended even the best slide deck and greatest story can be turned down or brushed off. Put the ball in their court and call for a decision.

We’ve all heard the adage, you need money to make money, well in my experience it’s true. Asking for money is not easy but it’s a skill that if you work on now it will help you exponentially later. If you’re 22 with the next Facebook, or if you’re 60 and you just found a must have investment property, pitching for and getting funding is a must have skill.

Have you ever raised VC money? What tactics did you use to land the much needed cash? Or, if you’ve pitched for, but never received VC funding what were some of your lessons learned? We’re all about helping each other out on THE DREAM IN ACTION so let’s hear your stories!

photo credit: tiedemann.marc

People think that winning an awards show like The Crunchies makes them a success…false. Along those lines, SO many people consider getting a solid round of venture funding a success…false again.

Why or how is it that a company can be successful without making money (or, creating value)? If you sell your company to Google or Oracle or whoever, then you’re a success. You’ve created an entity that creates value enough for another entity to spend $$$ for what you’ve created. Similarly, if you create an entity that creates value enough so that consumers or other businesses purchase your product, and the money you make from that sale can cover the costs to create that product, then you’re a success. This is business success, very simple.

The notion of winning a venture round = business success, is still being carried over from the dot-com bubble of 2001 and the sooner it dies the better off entrepreneurs and VC’s will be.

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Great interview with Fred Wilson by Nicole Simon for the pre LeWeb podcasts series.

Click here for the interview.