Positioning Your Company to Raise Money (or not)

Sometimes, after a series of meetings with an entrepreneur who professes that he wants to raise venture money (as venture has moved further along the food chain, this is a misnomer), I just want to bang my head against the wall. This is especially true when I am dealing with a founder/entrepreneur that comes from a technology background. When will you guys realize that having the best technology means very little at the end of the day??? Really, have we all forgotten about the VHS / Beta example?

In this particular case, I will acknowledge that this Company has developed what appears to be a solid web-based publishing technology. This business does have  the potential of being the next big winner (10X) IF the business is positioned and executed properly. Unfortunately, the biggest hurdle to success is the entrepreneur himself.

Over the years, I have seen that the quality most entrepreneurs possess in greatest abundance is their ability to delude themselves into thinking that they know better. They know better how to go about raising money; they know better how to go about selling their products/services (even though this is not their area of expertise); and they know better how to make all the pieces come together, even if they have never had experience doing this.

If this is indeed true, why do money sources (smart ones, that is) focus so much time and attention in evaluating the quality of the management team? It’s all fine and good to have a great looking business model, but the trick is in execution. I would much rather see a strong management team successfully on their path to executing a “decent” business model than a less than a mediocre management team attempting to execute an “exceptional” business model.

Doubtless we have all been taught to prioritize somewhere in our lives, yet early stage entrepreneurs still go about grasping at straws, working 100 hours a week as if that is a badge of honor; quite often, they make very little progress. The saddest part of the tale is that these  they often end up running mediocre businesses (if they are lucky; or is it unlucky?) after they have let the window of opportunity pass them by.

On a practical level, entrepreneurs should create a Top 10 List for their business. List the highest priority items first (items with the potential to make greatest impact) and allocate the appropriate level of resources to this task; it’s always a good idea to pad the estimated amount of resources as you can always shift those around if you are luck enough to come under budget. Continue down the line until you get to a list of 10 “must-do” tasks in decreasing importance. Look at this list every day. Hell, look at this list 10 times a day to make sure that you stay on task.

Having said all that, you have to admire the optimism and tenacity exhibited by entrepreneurs. It’s just frustrating to see them make obvious mistakes time and time again and ultimately get in their own way of success.

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