Girlsrock.com presentation at Ultra Light Startups
Ultra Light Startups enjoyed its greatest turnout ever on Thursday night for the Bootstrapping vs. Venture Funding Forum at Sun Microsystems in New York City. The event kicked of with multiple entrepreneurs pitching their business models and concepts to a packed house.
Each company founder had 60 seconds to present to the audience with businesses ranging anywhere from dating sites to female gaming sites.
One company called siftsort.com helps people gather all of their critical personal information into one place electronically. The company rep says the idea came from seeing the desperate people who had no documents to prove who they were in the wake of Hurricane Katrina.
The moderator:
Owen Davis, the Managing Director at NYC Seed.
The panelists:
• Art Chang – CEO of Tipping Point Partners
• Brian Cohen – President of iFluence PR and Board Member at New York Angels
• Mark Davis – IT Venture Capitalist at DFJ Gotham Ventures
• Dennis Mortensen - Director of Data Insights at Yahoo!
There were definitely opposing ideologies on the panel that made for a spirited debate at times this evening.
Mark Davis with DJF Gotham Ventures began the discussion by saying, “If you need a lot of money to start a small business, you probably shouldn’t do it.”
Davis has written multiple articles about when people should and should not start a business.
As to the bootstrapping versus venture funding question, Brian Cohen pointed out that many companies bootstrap at first and then seek venture funding once they really get the company rolling and gaining strength.
Mark Davis cautioned that it’s very important for new company owners to be careful and save more money than you think you need. “It’s important to plan ahead and save a little bit of capital. Then raise the money you need when you need it.”
Art Chang says most new company owners have to go through a learning process when starting a company and that the majority of angel investors want nothing more than to see them and their new ventures succeed.
Dennis Mortensen from Yahoo made it clear that he believes in Bootstrapping over Venture Funding. He says that venture funding is not always the smartest the thing to do with your new business.
One person in the audience asked Art Chang about the risk of angel investors stealing company ideas during presentations. Chang indicated that he thought the risk was very low saying, “Ideas are a dime a dozen – it’s all about execution and follow through of the person putting the company together.”
{ 7 comments }
Mr. Chang may be right that ideas are a dime a dozen, but personally I experienced being literally robbed by angel investors, once, locally in Canada, and another time by a Korean businessman; even if I had a US patent I had no resources to defend my invention by legal means.
My two-penny thoughts on this: because as entrepreneurs we are 'wired' to take risks, I still follow my mother's advice when as a kid I had to always wait at the crosswalk until the driver made eye contact with me and only then to cross the road.
Hey Chris,
That's a great analogy and one that I think many entrepreneurs would be wise to heed. Thanks so much for sharing.
Is the implication of this to avoid angel investment, to secure IP rights (patents) first, to request potential investors sign NDA's first – or something else entirely? What is the practical implication of your mother's advice to tech entrepreneurship?
Graham.
Thanks for the appreciation, Graham. Unlike my father, my mother was a practical woman who sometimes applied management methods based on traditional wisdom. Her most pragmatic dictum was that you cannot get anything for free; there's always a payback.
NDAs have always been a proven effective tool, but again not like (a very costly and time consuming) patent one has to ponder its usefulness and not rely entirely on a document, no matter how well-written may be. To enforce any agreement you need cash, and as 'start-upers' we don't usually have that kind of 'contingent dough'.
A simple advice is to do your homework: check out the background of the people you are willing to do a transaction with and/or planning to enter in a business agreement.
Angel investors, as the connotation implies, are supposed to be God-sent(s) and, as such, to help us the entrepreneurial folks who have ideas, enthusiasm, willingness to work hard and long hours, but have not enough leverage. I met great angel investors in the film business who had plenty of money, but needed ongoing strokes to their ego (titles, recognition, fame, etc).
If it's too easy to get funding from angel-funding groups/individuals there are generally some scenarios to contemplate:
1. They want total control over your valuable idea (intellectual property/asset, already-started venture based on bootstrapping, etc) and you may end up as a quasi-employee;
2. They help to start up your company/project with a small advance; the rest is pending on your contribution to the 'development pot' by selling some assets that you didn't want to forfeit in the first place; then might as well go to a bank;
3. Some of them are not what they claim to be; so mind very clearly what you put your name on, and have a lawyer-friend look at the draft-agreement (after you buy them a great dinner).
4. Stay away from easy deals; businesses built on good-luck do not usually last long. Excitement is good in creativity, but not in business relationships; sleep on every important decision you have to make. Tomorrow is another day with a different reality. But never give up.
Thanks for the appreciation, Graham. Unlike my father, my mother was a practical woman who sometimes applied management methods based on traditional wisdom. Her most pragmatic dictum was that you cannot get anything for free; there's always a payback.
NDAs have always been a proven effective tool, but again not like (a very costly and time consuming) patent one has to ponder its usefulness and not rely entirely on a document, no matter how well-written may be. To enforce any agreement you need cash, and as 'start-upers' we don't usually have that kind of 'contingent dough'.
A simple advice is to do your homework: check out the background of the people you are willing to do a transaction with and/or planning to enter in a business agreement.
Angel investors, as the connotation implies, are supposed to be God-sent(s) and, as such, to help us the entrepreneurial folks who have ideas, enthusiasm, willingness to work hard and long hours, but have not enough leverage. I met great angel investors in the film business who had plenty of money, but needed ongoing strokes to their ego (titles, recognition, fame, etc).
If it's too easy to get funding from angel-funding groups/individuals there are generally some scenarios to contemplate:
1. They want total control over your valuable idea (intellectual property/asset, already-started venture based on bootstrapping, etc) and you may end up as a quasi-employee;
2. They help to start up your company/project with a small advance; the rest is pending on your contribution to the 'development pot' by selling some assets that you didn't want to forfeit in the first place; then might as well go to a bank;
3. Some of them are not what they claim to be; so mind very clearly what you put your name on, and have a lawyer-friend look at the draft-agreement (after you buy them a great dinner).
4. Stay away from easy deals; businesses built on good-luck do not usually last long. Excitement is good in creativity, but not in business relationships; sleep on every important decision you have to make. Tomorrow is another day with a different reality. But never give up.
Mr. Chang may be right that ideas are a dime a dozen, but personally I experienced being literally robbed by angel investors, once, locally in Canada, and another time by a Korean businessman; even if I had a US patent I had no resources to defend my invention by legal means.
My two-penny thoughts on this: because as entrepreneurs we are 'wired' to take risks, I still follow my mother's advice when as a kid I had to always wait at the crosswalk until the driver made eye contact with me and only then to cross the road.
Hey Chris,
That's a great analogy and one that I think many entrepreneurs would be wise to heed. Thanks so much for sharing.
Is the implication of this to avoid angel investment, to secure IP rights (patents) first, to request potential investors sign NDA's first – or something else entirely? What is the practical implication of your mother's advice to tech entrepreneurship?
Graham.
Thanks for the appreciation, Graham. Unlike my father, my mother was a practical woman who sometimes applied management methods based on traditional wisdom. Her most pragmatic dictum was that you cannot get anything for free; there's always a payback.
NDAs have always been a proven effective tool, but again not like (a very costly and time consuming) patent one has to ponder its usefulness and not rely entirely on a document, no matter how well-written may be. To enforce any agreement you need cash, and as 'start-upers' we don't usually have that kind of 'contingent dough'.
A simple advice is to do your homework: check out the background of the people you are willing to do a transaction with and/or planning to enter in a business agreement.
Angel investors, as the connotation implies, are supposed to be God-sent(s) and, as such, to help us the entrepreneurial folks who have ideas, enthusiasm, willingness to work hard and long hours, but have not enough leverage. I met great angel investors in the film business who had plenty of money, but needed ongoing strokes to their ego (titles, recognition, fame, etc).
If it's too easy to get funding from angel-funding groups/individuals there are generally some scenarios to contemplate:
1. They want total control over your valuable idea (intellectual property/asset, already-started venture based on bootstrapping, etc) and you may end up as a quasi-employee;
2. They help to start up your company/project with a small advance; the rest is pending on your contribution to the 'development pot' by selling some assets that you didn't want to forfeit in the first place; then might as well go to a bank;
3. Some of them are not what they claim to be; so mind very clearly what you put your name on, and have a lawyer-friend look at the draft-agreement (after you buy them a great dinner).
4. Stay away from easy deals; businesses built on good-luck do not usually last long. Excitement is good in creativity, but not in business relationships; sleep on every important decision you have to make. Tomorrow is another day with a different reality. But never give up.
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