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Competition is the very essence of the business world. While this might be advantageous for customers who are looking for and choosing a company that serves them well, this is quite tedious and difficult for entrepreneurs. To...Read More
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by | Mar 30, 2016 | 0 |
There are plenty of ways to turn people off. Most of them don’t require much effort.
All it takes is one look at your social-media activity or a casual in-person introduction to make someone realize they just don’t want to spe…
by | Mar 23, 2016 | 0 |
Most of us aren’t getting enough sleep. Yet everyone seems to have an opinion about the best ways to fall and stay asleep.
But how do you sort through that noise and find the methods that work for you?
by | Mar 21, 2016 | 0 |
When I first tried to raise money — in 1998 for a company called 360merch — a handful of plucky angel investors agreed to trust me with one million of their dollars. I wore my fingers to the bone in that business, hawking lenticular stickers and logo’d baby doll t-shirts using affinity marketing models — and then promptly lost them all of their money when the market crashed.
The next time I tried, for BzzAgent, nearly 200 investors told us to go screw. Most thought using real people to generate word of mouth about products and services was a generally dumb idea (this was a pre-social network world, after all) so we had to build the company to nearly $3 million in revenue before anyone would give us a dime. We went on to raise $14M from General Catalyst and Flybridge Partners — and returned $60M to investors in 11 years.
My next attempt was with Smarterer, and I now had the perception of success on my side plus a deeper network of contacts to pull from. It took us about 160 days to raise $1.2M from Google Ventures, True Ventures, and Boston Seed. In 3 different rounds, we raised a total of $4M. Turns out that was a pretty solid bet, and we returned $75M to investors in just under 4 years.
Venture fundraising is a funny thing. It’s a sophisticated game with teams and rules and failures and victories; there’s a lot of skill, sure, but much more luck. All sorts of things can impact a raise: the idea, the team, market conditions, fund dynamics, competing raises. Hell, even the damn weather has an effect.
Each fundraise is like creating a painting: experience doesn’t make it any easier, but you’re certainly better at knowing the aesthetic, the weight of the brush and how much color to use. And — as evidenced by Mylestoned’s current raise — understanding which paint to lay down and when certainly makes the art at the end nicer to look at.
So how did we make this painting? Here’s what we did, with some lessons along the way:
1. Be Loyal
Istarted this raise by going directly to angels who had backed me before. Shikhar Ghosh and Guli Arshad have backed almost all of my companies, even the ones they didn’t like! I went to them first. They’re loyal to me, I’m loyal to them (Mylestoned they liked, for what it’s worth…).
Next I went to Mark Gerson and Scott Kurnit, NYC residents who are accomplished entrepreneurs of ridiculous caliber. Generous with their time and advice and friendship. Invaluable in Smarterer’s success; and loyalty comes first. With their commitments, I now had momentum with others.
2. Don’t Be Desperate
I’d made a number of angel investors 15x their money, and reached out to the best of them next. You’d figure they’d be easy to land, but a few of them didn’t bite to invest in this company. Why? Could be they’re over-invested elsewhere or their model of investing is changing or their kid had the flu when I asked.
Or the damn weather again.
It doesn’t really matter, but what does matter is I didn’t push beyond the first request. If immediate interest wasn’t apparent, I just moved on because you can’t look desperate. Desperation smells like body odor, and other investors can smell it like horses can smell fear.
3. Get a Big Chunk Early
After a few solid angel commitments, it was time for a big whack of support. I find it much easier to get your first institutional capital with a few good angels in hand. But after a few angels, other angels become harder to close without something more substantial. So time for the big guns.
The lowest hanging fruit was Boston Seed Capital — they backed Smarterer, and I happen to now be a Venture Partner there. Plus, they’re awesome (full disclosure: me saying they’re awesome is akin to me saying I’m awesome, which is only really awesome to them and me). As the first institution they played an even more critical role in validating the terms of the raise, and agreeing to “lead”. The first angels can show their support but can’t really define the raise for others to join. Boston Seed committed, we have a lead, now we’re rolling.
4. Be Local
Ican’t emphasize enough the importance of raising on your own soil. It’s where you will spend 20 hours a day building over the next few years and your investors will become your advocates, recruiters, connectors, future fundraisers — but mainly the blankie you cuddle in your darkest hours. Jeff Glass, Jere Doyle, George Bell, Joe Caruso and Larry Silverstein are all exceptional Boston-based investors. They got priority over investors in other cities because I know they deliver, but also because you have to own your home court.
Deborah Quazzo is based in Chicago. But, well, she’s Deborah Quazzo and she’s brilliant and unstoppable. Also, see point #1.
5. Have a Firm Plan You Won’t Change — and Then Be Flexible
Istarted with a plan to raise $750k in 15 $50k increments. I’d focus on seed funds and angels only (no large VCs) with an uncapped note at a whopping 40% discount — double the standard rate. Beyond my rationale that it would drive incredible returns, I fed off of the curiosity about the unique structure and fanned those flames: by getting investors thinking, and by making something original, I opened the door to dialogue. The important part though wasn’t so much the terms, but that there was a clear, crisp, unwavering plan.
Screw “I’m waiting for someone to set the terms,” which I hear over and over. Lay out your terms and then qualify them with logic.
On these terms, the $750k was fully committed. We were done, that was that. Then things started to evolve. A few more investors, many in my Gang of Loyals, wanted to come in, so the round opened to $1M.
Then things really started to change. Our raise was all done, it was a pretty little painting. Then David Frankel and Founder Collective showed up. I’ve been dying to work with FC for ages. They’re local. They’re smart as hell. David’s reputation is outstanding. Their DNA completely fit this company and this round, and I believed their involvement would be valuable for the next round (see point 7). But there was a problem. They didn’t like the uncapped note. There are times in a raise when you bend, and this was one of them.
With a commitment to work through and flexibility on all sides we reconfigured the terms and then started calling all of the previously committed investors. A few had already wired money under the previous terms, but with hat in hand — and clearly articulating the rationale for switching — everyone agreed to the new structure. Boston Seed remained flexible as well (they actually upped their investment as the round progressed), Converge and Maia Heymann added a little to the pot, and now we were at $1.5M total.
6. Close The Crap Out of It
This is where many entrepreneurs tend to flail, but it has to be a core strength. Forget “always be closing” and focus on “knowing when to close” (Guessing this won’t catch on because I’m not Alec Baldwin, there are no steak knives and KWTC is not nearly as cute as ABC).
Nothing good can happen between commitment and signing, so you need to move fast. I set a date two weeks out, and emailed every investor clear instructions regarding what they had to do to “confirm their spot”. I ensured there was pressure: Without commitment, others would take the spot (True. Never ever lie in a raise); of fearing they’d be the only investor holding up the close. Then I pushed my legal team to update the funding documents and pushed everything to 5th-grader-simple online signature via docusign. If anyone didn’t seem responsive within 12 hours, I called them. Damn it people, use the phone to close!
7. Plant the Seeds for the Next Raise
All throughout the fundraising process I met with a number of non-seed Venture Capitalists — who would never, ever fund the business at this stage. The truth is most raises happen long before you start raising, and this was a key moment to start building relationships. Also, VCs — for the most part — are really smart and are a wealth of information and experience. Consider this free advice from palm readers with lots of money.
If any of the meetings started to feel like pitches (“I’m going to have a few other folks join us,” or “do you want to send over the deck in advance”), I backed out. This wasn’t a time to pitch, we were too raw and it would only end up as a “not right now”. I actually mistakenly ended up in one meeting that turned into a pitch, and the VC called me later to tell me they wouldn’t invest. But I wasn’t asking for an investment! The dreaded “no” without even asking for a yes.
All in all, I’m super proud of this raise, but not because we got it closed. I’m proud because it’s my damn job. Fundraising isn’t a one-dimensional equation, and during the whole raise, I was also in the fat, sweaty swing of building the vision and recruiting the Mylestoned team. People were quitting their jobs, they were changing their livelihoods — and there’s no way in hell I wasn’t going to succeed for them. An entrepreneur’s job is to capitalize the business, and you can’t delegate that to anyone else.
So now we have 1.5 million dollars to turn our vision into some form of a reality. That equates to exactly 78 weeks. Every week counts. And you can sure as shit bet that I know exactly which of those weeks I’ll fire up the fundraising engines again.
This article originally appeared on Medium and has been published here with the author’s permission.Read More
by | Feb 28, 2016 | 0 |
In today’s work-obsessed society, we have this belief that we have to constantly be doing something in order to be successful.
But what if the opposite were true? As Stanford psychologist Emma Seppala argues in her new book, “The Happiness Track: How to Apply the Science of Happiness to Accelerate Your Success,” we can be more effective if we take time to do more of nothing.
It’s a radical idea, but one that’s actually backed up by research.
We’re most creative when we’re less focused
For a 2011 study, researchers gave 428 students questionnaires to classify them as either a morning or an evening person, and then gave them logic problems in either the morning or late afternoon. To the researchers’ surprise, the morning people performed better in the late afternoon, whereas the evening people scored highest in the morning — times when both groups were supposedly less alert.
These findings backup the idea that we’re actually more creative at times when we’re relaxed or unfocused. And that’s especially interesting for employers.
A 2010 survey conducted by IBM of more than 1,500 CEOs in different countries and industries found that creativity is the most crucial factor for success.
As Seppala writes in her book, some of the most creative people in history had their biggest breakthroughs when they were idle. For instance, the inventor Nikola Tesla supposedly came up with an idea that led to his discovery of alternating current while on a walk with a friend. And Albert Einstein listened to Mozart to find inspiration.
But even though downtime is clearly important, many of us feel — ironically — that we simply don’t have time for it. Luckily, Seppala has some tips for making time.
How to do more of nothing
- Diversify your activities: Alternate between tasks that require a lot of focus (like writing a report or preparing a presentation) with more mindless tasks (like entering data or filing papers). If your job involves a lot of mental focus, try something physical as a break, and vice versa.
- Take some quiet time: Unplug from technology and try meditating or taking a walk. Being alone with your thoughts may be uncomfortable at first, but don’t worry — it gets easier.
- Play: As kids, we play all the time, but many of us have forgotten how. So try out a board game, go see a comedy show, or spend some time cuddling with your pet. It doesn’t matter what it is, so long as you’re having fun.
- Age Is Just a Number: 7 Young Innovative Entrepreneurs That Made a Difference
- How to Prevent Burnout and Enjoy the Journey of Entrepreneurship
- It’s Time You Know the Truth About Mental Health for Entrepreneurs
- Earn More When You Adopt These 7 Habits of Successful Entrepreneurs
- (Infographic) 9 of the World’s Most Influential Female Entrepreneurs