Robert Ochtel’s Blog

An Experienced Approach to Venture Funding

Entrepreneurs, Heart, Brains and Courage Do Not Come from Your Investors and the “Land of Oz”

Many entrepreneurs expect investors to solve their problems. They firmly believe that investors with their investment funds will provide them with the necessary heart, brains and courage to develop a successful start-up company.  In addition, more often than not, these same entrepreneurs believe that securing funding from investors is like the “Land of Oz” – anything is fundable and all you need to take the journey and in the end, the investors (or the “Wizard”), will solve all of your problems by providing your start-up company with the necessary funding that you require to be successful.  Nothing can be further from the truth.  In fact, once you receive funding that can be your worst day as an entrepreneur of a start-up company, as third party funding money comes with demands, rules, and expectations. So, don’t approach investors expecting that their investment monies will provide you with the necessary heart, brains and courage to develop a successful start-up company.  If you did not have these characteristics before you approach investors, any amount of funding in the world will not provide you with these same characteristics.  Therefore, before you approach investors, you need to step out of the “Land of Oz” and first convince yourself that you have the necessary characteristics to be a successful entrepreneur. This includes having the “heart” to follow your vision, the “brains” to properly develop the investment opportunity, and the “courage” to cold call your customers and execute your plan. If you do, you will ultimately be a successful entrepreneur, and that securing funding from third party investors is just a bonus on the road to creating a successful start-up company.

You Must Have the Heart to Follow Your Vision

Most opportunities do not create themselves, as they are often a result of an entrepreneur having a “vision” based on experience and a set of market truths.  More often than not, at the beginning this vision is not very clear, but with time and effort, an entrepreneur can develop their “concept” or “idea” into a clear vision that addresses an underlying strategic opportunistic need in the market.  Hence, as an entrepreneur, you need to follow this vision with all of your heart.  And often along the road you will have many “naysayers” telling you that you cannot accomplish your goals or that you that there is not use in trying as other, larger competitors will crush your start-up company.  This is exactly the time when you need to believe in yourself and have the heart to follow your vision, as more often than not this is what will drive you to success. And often as things evolve your vision will allow you to create a technology, product or service offering that is truly differentiated from your competitors and provides your start-up company with a long-term, sustainable competitive advantage in the market.  So, as an entrepreneur you need to have the heart to follow your vision, as no investor with all the money in the world can provide you with this.    

You Must have the Brains to Develop the Proper Investment Opportunity

One thing is for sure, most investors are generally “smart guys”.  Whether they have been through the school of hard knocks or are Ivy League educated MBAs, they often have the necessary insight to properly evaluate and quickly discern an appropriate investment.  So, as an entrepreneur, you need to have the “brains” to put together a “cogent” plan that creates a necessarily attractive investment opportunity for these same investors.  This means that you need to do the hard work and use your brains to do the research to develop a well thought out plan that makes both logical and financial sense from an investors’ point of view.  In the “Land of Oz” too often, entrepreneurs believe that anything is fundable and that their investors will not only provide the money, but the “brains” to help them create a successful start-up company. Nothing can be further from the truth. With only three percent of all start-up companies receiving outside investor funding on an annual basis, it does take a fair amount of “intellectual” savvy to develop a well thought through plan that is fundable form and investors’ point of view. So, take the time and use your brains to develop a well develop business investment opportunity.  Investors will not help you with this.  You need to develop this investor appropriate investment opportunity on your own.

You Must have the Courage to Cold Call Your Customers

Many entrepreneurs have all both the “heart” and “brains” to develop attractive investment opportunity, but lack the “courage” to cold call their customers and as such, they will not be successful in the market or have the ability to execute their plan. Cold calling customers is often the hardest thing to do for entrepreneurs. Why, because this is where thinking and planning hits the pavement and there is the always the potential for rejection.  Hence, cold calling often paralyzes these same entrepreneurs.  Even if you have a great plan, you need to be able to execute this plan and in a definitive time frame.  So, as an entrepreneur you need to have the “courage” to cold all your customers and generally do what it takes to “press the flesh” to close the necessary number of deals to develop a successful start-up company. Remember, as an entrepreneur you are in business to secure customers and not to develop a cool technology, product or service offering.  So, buck up and have the courage cold call your customers and execute your plan. Nobody else will do it for you; especially your investors and all the money in the world will not help you with this task.

Many entrepreneurs expect investors to solve their problems.  They firmly believe that investors with their investment funds will provide them with the necessary heart, brains and courage to develop a successful start-up company.  This is not the case, as securing funding does not necessarily result in success in the market.  Therefore, as an entrepreneur you need to step out of the “Land of Oz” and decide that only you have control over the ultimate success of your start-up company, not investors and their funding sources.  To do this you need to have the “heart” to follow your vision, the “brains” to properly develop the investment opportunity, and the “courage” to cold call your customers and execute your plan.  If you take these steps you will go a long way toward ultimately securing funding and developing a successful a start-up company.

This information was taken from Robert’s new book: “Business Planning, Business Plans and Venture Funding – A Definitive Reference Guide for Start-up Companies”.  Available at www.amazon.com.  For more information on the book go to www.carlsbadpublishing.com.

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March 22, 2010 - Posted by | Venture Capital | , , , , , , , , , ,

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