Tag: entrepreneur (page 1 of 2)

A 30-Year Veteran Investor On the Mistake He Wishes You’d Stop Making, and Why He Prefers Younger Entrepreneurs

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Russell Tweeddale
Former Managing Director, Investments

 

 

 

Doug-Roth-Headshot

Douglas Roth Director, Investments

Russell “Russ” Tweeddale, an engineer, Marine, and investor with Connecticut Innovations for more than three decades, sat down this week to talk shop with Douglas Roth, CI’s director of investments. Over the course of their hour-long chat, during which they covered everything from fuel cells to the importance of strong advisory boards, Russ imparted some hard-won pearls of wisdom he gained while investing more than $75 million in numerous Connecticut companies. Russ’s notable successes include many of today’s industry leaders, such as Affomix, AxioMx, Proton Energy Systems, CuraGen Corporation, Genaissance Pharmaceuticals, Bio-Plexus, International Telecommunication Data Systems, Open Solutions, and Ipsogen.

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VET Your Investor: Three Reasons Why the Source of Your Funding Matters

Doug-Blog-Circle

 

Douglas Roth
Director, Investments
Connecticut Innovations

Capital is the lifeblood of any startup. Because of this, too many entrepreneurs blindly charge forward raising money without understanding the importance of the process. Raising capital is generally not a skill that most startup executives have. Why? Well, for starters, fundraising is not something an entrepreneur does every day. It’s also a distraction from the important effort of launching and operating a business. A young company needs money and generally needs it now, but many entrepreneurs fall victim to the belief that four quarters from one funding source is the same as one dollar from another. But smart entrepreneurs aren’t so cavalier about something so important! Not all money is green. The sources from which you raise capital can make all the difference between success and failure.

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Help Us Put Together the Best List of Small Business/Startup Blogs Ever

Brandon Gearing
Marketing Coordinator
Connecticut Innovations

One of my favorite things about the internet is its vastness. There is so much out there just waiting to be explored; so much to read, so much to watch, so much to look at and through all of that, so much to learn. It’s amazing, impressive, scary and overwhelming all at once. There are over four billion webpages indexed by Google and Bing. Four billion…with a “b.” 20 years ago, at the dawn of the internet, there were a whopping 130 websites. Now, just look how much is going on per second.

With so much out there, it’s easy to understand why there are no shortage of places to turn to when you want a little advice or inspiration. And that’s the beauty of the internet—anyone with a connection can publish something. The majority of the platforms that people publish on are free. People that were once voiceless now have a voice. There are very few barriers. That in itself is great.

But it’s also a bad thing. Why? Well, from the standpoint of someone who consumes that information, it leads to a whole lot of clutter, a whole lot of noise and a whole lot of junk. Getting to the good stuff is sometimes hard.

A lot of us start our mornings reading some of our favorite blogs. They teach us, inspire us, make us laugh, make us happy, and even sometimes make us upset or sad. At least the good ones do. The ones that don’t—they’re the junk.

As an entrepreneur, constantly learning is a part of your daily routine. You need to have a pulse on what’s new and what’s hot.

This post from Bplans has a lot of great suggestions for blogs that will keep you up-to-date on just that, and it’s what inspired this post. I read many of them. But as I was scanning the list, I also got to thinking. What do Connecticut entrepreneurs read? Who are their teachers and motivators?

So, I’m hoping I can make a deal with you.

The deal:

I’ll give you a list of my favorite blogs first, and then I want you to tell me what your favorites are. If I get enough responses, I’ll publish a list right on our blog for you to refer back to. These blogs can be about anything (within reason). If you think a fellow Connecticut entrepreneur or small business owner can benefit from reading it, leave it in the comments below. Deal?

Here are my nominations (full disclosure, I am a marketer, so I tend to read mostly marketing blogs. That’s why I need you!):

Marketing

Dannybrown.me

Danny Brown’s blog is chock full of useful marketing and social media advice, but that’s not why I love it. He also peppers in posts about life. He writes about family, life lessons and “not giving a crap.” His added personal touch brings it to the next level and gives me the inspiration that I’m looking for.

Canva Blog

If you don’t want to or can’t afford to spend money on an Adobe Suite license, Canva is an amazing free alternative for designing. Best of all, you don’t need any design experience to make it work. The Canva blog is your source for design inspiration and tips so you can make beautiful graphics for all of your marketing efforts.

CopyBlogger

CopyBlogger is a content marketing company that started years ago as a simple one-man blog. Today it’s a full-fledged content marketing operation that produces one of the most valuable content marketing blogs out there. If you want to get a grasp on how you can become a better online marketer, this is a good place to start.

Buffer Blog

For pros and newbies alike, Buffer does an excellent job teaching you how to make social media work for your business. I’m subscribed to the email list so great blog posts come to me every day. Buffer’s primary business is its social media management software, so these guys know what they’re talking about.

Discovery

Product Hunt

Product Hunt has come a long way since its humble beginnings in November 2013. The company just announced $6.1 million in funding thanks to its fast-growing audience. But why is it so great? Simplicity. It’s extremely scannable and I find something new and useful almost every day. And from a business aspect, Product Hunt could help you launch your product:

Photo Credit: https://medium.com/on-startups/the-artifacts-of-product-hunt-11682e9e01dd

Venture Capital

First Round Review

VC or not, this is one of my favorite blogs. First Round does an amazing job of mixing storytelling with actionable insights and advice. No fluff here. You need to subscribe to this blog right now.

A16z

Marc Andreessen is one of the most outspoken people in the VC industry. He’s well known on Twitter for his “tweet storms” where he sounds off on current issues in startup/entrepreneur/VC culture. His firm’s blog is also well known and well worth subscribing to.

Business

Penelope Trunk

Penelope Trunk realizes that there is an important connection between work and life and echoes that in all of her blog posts. No shallow business advice here. Just real stories and real opinions.

Seth’s Blog (Seth Godin)

Want quick reads that really make you think? Seth’s blog is for you. He’s a marketer by trade but writes about all sorts of business and life topics. Some of his posts are as little as a paragraph with one idea. One of my favorites is this:

Is the goal to get people to notice what we make?

or

Are we setting out to make something people choose to talk about?

If you don’t know your boss’s answer to this, find out. If you do, act accordingly.

Pretty thought provoking, huh?

Now it’s your turn.

What are your favorite blogs and why? It’s time we helped Connecticut’s entrepreneurs break through the clutter so they can find content they actually want to read. I’ll feature your answers in a future blog post and will, of course, give you credit. If you prefer to send them to me via email, you’re more than welcome: brandon.gearing@ctinnovations.com.

Also, invite your friends in the Connecticut entrepreneurial community to do the same. Go ahead and click the box below and share the challenge with your followers:

Thanks for your help!

What Young Companies Can Learn from Hiking the Adirondacks

Doug-Blog-Circle

 

Douglas Roth
Director, Investments
Connecticut Innovations

I recently took my 12-year-old son, Patrick, backpacking in the Adirondack Park near Lake Placid, New York. We plotted a course that would take us two days through Avalanche Pass and up Algonquin Peak – the second highest peak in New York. Avalanche Pass and more notably, Avalanche Lake, are tucked between two mountains whose sheer rock walls rise directly out of the water on both sides of the lake. According to the Adirondack Mountain Club’s trail guide, this is “…probably the most spectacular route in the Adirondacks.” This was also my son’s first trip carrying a full backpack – his share of the load. It was during this hike that I realized that many young companies would benefit by recognizing that the peak is not the ultimate goal.

Although the morning started with everyone energetic and upbeat, as the trail began to wear on Patrick’s feet and the weight of his pack seemed to get heavier, I had to encourage him along the way. I found myself trying to convince my son that the steep climb was going to be worth it, that the views from the top would be spectacular, that we didn’t have much farther to go and that we were almost to the top. As we climbed above the tree line into what is referred to as the arctic alpine zone, the weary hikers felt a sudden sense of rejuvenation. The peak was within sight!

Once we got there, the reward was instant. The top was beautiful; you could see breathtaking 360-degree views of the Adirondacks. We felt an immediate sense of accomplishment. We made it.

This is not unlike the feeling an early-stage company gets when it reaches its first peak – whether it be launching version 1.0 of its product, securing its first paying customer, reaching a specific usage metric, etc. It’s a worthy accomplishment, for sure; but not the ultimate goal.

At the summit, after a brief rest, a drink of cool water pumped from a mountain stream and posing for several pictures, we started our descent.

In many respects, traversing down the side of a mountain with a full pack can be more difficult than climbing up. It was on the way down the backside of the mountain with increasingly sore muscles and tired legs that I remembered that really accomplishing our goal meant not just summiting Algonquin Peak, but rather summiting it and returning to our car at the trail head.

There is a similar dilemma with startups. Many entrepreneurs have their eye on the wrong prize – the peak – but haven’t thought through how the company is going to get down off the mountain; and completing the journey is really the true goal for either the hiker or the entrepreneur. This mindset manifests itself in many ways, none of which position the company for success.

When backpacking, the peak is when you are most exposed and vulnerable. The same is true for early-stage companies. Reaching the summit is a notable achievement worthy of recognition, but it isn’t the ultimate goal. Reaching this point without knowing the path back down can leave the company dangerously exposed. This is not the time to realize the company does not have the right team in place or enough resources to take advantage of the opportunities that “bagging the peak” have created.

For example, some early-stage companies have a “build it and they will come” attitude. They rely too heavily on building the perfect product and assume that the product alone – reaching the summit – will be enough to generate market awareness and revenue. With no regard to marketing and sales, pricing strategy, or implementation processes – no plan for getting off the mountain – too much is left to chance or to be developed later.

You hear the stories of the high-profile startup that does not have a revenue strategy and is only focused on the number of users or the number of messages sent via the platform, which neglects the high priority of the monetization plan. For an early-stage company, reaching the summit without a plan or adequate time to climb back down can end with disastrous results.

Fundable milestones – goals that, if achieved by a startup, position it for additional funding – might seem like the top of Algonquin Peak and the ultimate objective. For a young company, however, a delicate balance must be struck between achieving certain goals, leveraging those successes to achieve other goals, all the while maintaining the ability to continue hiking. Investors may be impressed that you summited Algonquin Peak, but don’t allow your company to reach the top of the mountain at dusk without your flashlight, nothing left to drink in your water bottle and without the energy needed to complete your mission.

…and keep your eye out for the bears!

Four Ways Entrepreneurs Can Increase Their Chances of Receiving VC Funding

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Mike Wisniewski
Investment Associate
Connecticut Innovations

Entrepreneurs are some of the most passionate people in the world. They care deeply about their ideas, believe wholeheartedly in their company and are extremely motivated to succeed. These are all excellent traits to have, but that passion can sometimes lead to tunnel vision, which can hurt your chances of securing funding. In my experience meeting teams and listening to pitches, I’ve noticed a few things that entrepreneurs commonly overlook or underemphasize. Because of this, I’ve come up with four areas you should focus on. While these things won’t necessarily turn your company into the next Facebook, making sure your bases are covered may increase your chances of securing venture capital.

  1. Be a Student Rather than the Smartest Person in the Room

    No matter the industry, it’s beneficial to develop relationships with people who are smarter and/or more experienced than you. Even if you’re the world’s foremost authority in your field, there are people who you can learn from. This especially rings true when it comes to entrepreneurship. It’s important to get out of the lab or office and reach out to mentors, subject matter experts and potential customers. These externals can not only help validate your idea, but can also become team members or board advisors that will help you understand customer pain points, formulate strategy and structure your business model. They may even contribute funding.

    Tip: Beware of “mentor whiplash.” You’ll have several business assumptions to test along the way and you’ll receive advice from multiple perspectives. Some of the advice may be contradictory and overwhelming. You should listen to all of it, but it is your job to synthesize the information and make the call.

  2. Build a Strong and Diverse Team

    Investors value a strong team just as much as they value your idea. Your team should be one of the main things you pitch to a potential investor. Are they experienced company builders with the necessary relationships? Experts in their field? Have they been there, done that? If not, it’s time to build. Where do you find these people? If you’re embracing mentorship and building relationships, the answer should be obvious: your own network. Doug Roth, director, investments at CI, covered this in a recent blog post. Building a team from your own network may reduce risk and increase the likelihood of success.

    Tip: Know thyself. Networking is not always a strong suit for technologists, but typically is for experienced CEOs. If your networking skills are weak, you’re going to need to either develop them or bring someone on board to do it for you. This is important not only for building your core team, but also for developing outside partnerships and collaborations. Partnerships are one of the core building blocks in a typical business model, and, if built correctly, will create value for your company.

  3. Do your Homework

    If you’re fortunate enough to pitch a VC or angel, don’t blow it! Doing your homework really shows. I always appreciate when the entrepreneur knows the business and slides inside and out and is prepared for Q&A. Anticipate and research common questions that VCs ask and be ready to answer them.

    Tip: Know the investment philosophy of the VC you’re pitching to. All VC firms have distinct missions, areas of expertise and industries of interest. Know the philosophy and speak to it during your presentation. In the same vein, know how the VC typically invests. How much do they usually invest per round? Do they prefer to work with other investors? What stage do they typically invest in? Understanding these things will help form your expectations before the pitch.

  4. Deliver on the Opportunity

    During your pitch, make sure you cover all the bases when it comes to your business. Come prepared to talk about your team’s experience, the technology and competition, your business model and financials, the realistic size of your market (and if it’s growing) and your go-to-market strategy. These things should all be a part of the story in support of the ask. With that, VCs will consider risk factors. Is there anything you offer that might mitigate risk? Things like experience, external market validation, another investor at the table, or significant sweat equity and skin in the game from the core team are all very helpful.

    Tip: Hone your pitch. When it comes to delivery, I like a mix of passion and expertise. Confidence and charisma don’t hurt, but don’t go overboard. The same goes for your expertise –do not get into the weeds of the technology unless asked. The best pitches are concise and underscore how we can work together and mutually benefit. After all, it is a partnership.

Have anything to add? Let me know in the comments.

What You Need to Know to Run an Effective Board Meeting

For entrepreneurial ventures that are pre-revenue to $5M, a board of directors is a critical team that can make a meaningful impact on the company’s prospects during an impressionable time in the company’s life. Board meetings evolve as the company matures and grows, but for young companies forming their first boards, the task can be daunting.

To give you insight and help you manage board meetings, Douglas Roth, director of investments at CI, talked with Brian Murphy, chairman of the board of Umbie DentalCare, to get his thoughts on effective startup board meetings.

Preparing

Setting a Foundation 

Roth: How often should a board of an early stage company meet, and does that change depending on how early a company is?

Murphy: At an early stage startup, the key to determining frequency is balancing the time commitment necessary to prepare and attend the meetings with the need for regular check-ins and guidance.

It’s difficult for a very early startup to devote time to board meetings and in the case of Umbie, I know they are all very hands on. I wouldn’t want to put pressure on them to have to spend days preparing board decks and things like that. But, they need the check-ins and they need the guidance and the board has investors that have a right to check in as well, so, I think six to eight meetings a year is right.

Roth: What about timing? For a pre-revenue company, there may not be a need to have a meeting past the end of the quarter so that accountants have time to put together the results from the quarter and be able to report on them.

But, clearly, once you’re generating revenue, I imagine it would make sense to time your board meetings around the ability to report on the previous quarter.

So, for a pre-revenue or very early stage company, is there a better time than others to hold a meeting?

Murphy: Yeah, even at our stage, the key topic for a board meeting will be some sort of financial number. With Umbie, it’s pipeline and deals closed and we’re looking at things like that on a monthly basis. I think it’s good to space the meetings out so that you can get the latest data. Generally speaking, if you’re looking at financials and a company takes a week to close the books, you might want to schedule the board meeting no sooner than the second week of the month so you can get that latest data.

Also, like you said, you might want to align some of the meetings with quarter-end results if that’s important to the company and the board.

Roth: You mentioned finding the balance between providing frequent enough touch points to report and advise and not overwhelming the CEO and the team with preparations. So, when the team does have to prepare for a board meeting, what kind of information should they gather?

Murphy: The CEO should prepare an agenda that includes a section for regular updates and also one for strategic discussion. The CEO should have a template that he or she follows so there’s no need to create a new deck each time. Regular topics or regular categories that you can touch on each time can be things like pipeline, sales, key hires, roadmap, etc. It’s important to follow that template for the update portion so that there isn’t a ton of prep.

The CEO should also think about the strategic topics they’d like to cover at the meeting. This is their time with the board to get that advice and feedback that will help move the company forward. It should be the key focus.

During-the-meeting

During the Meeting 

Roth: In general, how much time should be allocated to the various agenda items that you just discussed?

Murphy: The agenda’s going to differ meeting to meeting, so I don’t want to say that there’s just one kind of board meeting. Certainly, if you’re on a calendar year and you’re preparing a budget or an annual plan, your board meetings toward the end of the year are going to be about presenting your next year’s plan and your budget, so that can get pretty tactical in terms of looking at numbers, plans and forecasts. Otherwise, the two major parts are updates and strategic topics. There may be some approval items for the board like key hires, options etc., but, generally speaking, I think people agree that you should keep the updates to a minimum. That’s the reason you should send that portion out in advance – so the board members can read it and as long as they don’t have any questions, you don’t spend a lot of time on that part.

Roth: So the majority of the time is spent talking about strategic issues?

Murphy: Yeah, ideally. It’s going to differ depending on who you bring into the board meeting. The more people you bring in, the more time it’s going to take because you have to go through more presentations.

For example, at Moo Print, most of the meetings included the entire executive team. So, you had a marketing presentation, a tech presentation, a product presentation – and they weren’t all just updates. A lot of times it was proposals and directional things, so it’s hard to say. But in general, you want to spend more than half your time talking about strategy instead of reviewing results.

Roth: Who should come to board meetings? You have the board members and whatever that makeup is – the CEO, upper management, other investors and independents etc., but beyond the actual directors who sit on the board, is there anyone else that shoud show up either consistently or periodically?

Murphy: Certainly members of the executive team. As the company matures, they benefit from direct interaction with the board and direct advice from the board. It’s also good for the board to get a feel for how the executive team is performing. I think that can be very helpful.

Sometimes, though, you’ll want to have closed board meetings where it’s just the CEO and the board, especially if you’re taking up topics that are sensitive or strategic at a level that doesn’t involve the executive team.

Other times, you might want to bring in people who aren’t even on the executive team for something like a special topic presentation. For example, you might want your director of product to come in prior to a product launch for a demo.

You could even have presentations from the outside. For example, you could have a consultant come in if they’re doing a big engagement on brand so they can present their findings to the board.

It all depends. It depends on what kind of executive team you have, what kind of management team you have and what stage the company’s at. But early, early on, I think it’s typically going to be just the CEO or the founders and the board.

Roth: I like the point about outside guests – whether it’s to educate or help facilitate a discussion, or many times there’s a banker helping to raise money or to explore sales and even reporting on those efforts.

Murphy: Sure – or the accounting firm will come in to report audit findings.

Roth: Interesting point with the audits – that raises the issue of subcommittees of the board like an audit committee or a compensation committee. Is there a time where it’s too early to get down into that granularity? Or should every company have those kinds of subcommittees?

Murphy: Of the boards I’ve been on, including Moo that had 200+ employees, we never saw a need for committees. I can’t speak for every company but it just seems like a bit of overhead for a small organization.

Roth: Earlier you alluded to CEO and board member-only executive sessions. Who sits in on those sessions and what are the types of topics that are discussed?

Murphy: Well, you won’t need to have an executive session every meeting, but I do think that you should have them periodically. I think the idea of it is that the board, minus managers, the CEO or any executives, goes into a closed session and talks about how the CEO and the management team are doing. I think it should be viewed as something constructive and just good hygiene for the board to confer on these things. It should be an exercise that builds trust between the board and the management team and I think what comes out of it should be specific and constructive feedback.

And then the role of the chairman is to speak with the CEO as soon as possible after the meeting and distill that information back. Unless there’s a crisis or you’ve lost faith in the CEO, it should never be used as something to make the management team feel uncomfortable.

Roth: So, clearly it’s an opportunity for the board to talk about the performance of the CEO. But, typically an early-stage board will have a number of investors. Does the executive session, in your mind, double as an investor discussion as well?

Murphy: I think so. Early on, your board is typically appointed by your investors. Later on you start to bring in non-executive members who are also not investors. But early on, the executive session conversation is about how the investors feel the CEO is doing and whether they’re concerned or want to give feedback. The whole purpose is for the chairman to distill that valuable information back to the CEO in a way that you couldn’t really do in a meeting with the entire board.

Roth: Right, and I think having the chairman meet one-on-one with the CEO afterwards gives the chairman the ability to have that discussion in a non-awkward way. It’s not “I feel you’re not performing,” it’s “in executive session there was a concern…” It takes it off the shoulder of the chairman and it’s really just the chairman reporting what was discussed and takes that awkwardness away a bit.

Murphy: I agree. The chairman and the CEO should have the best board-to-management relationship and that’s one of the things that supports that.

Roth: That being the case, does it make sense to have a chairman who’s not an investor?

Murphy: Yeah, I’ve seen it a couple of ways. I’ve seen a chairman who’s not an investor and I’ve also seen a chairman who’s an angel investor, so, someone who hasn’t come in at the next round. The board members were from the series A, but the chairman was an angel investor – someone who had been with the CEO and had a relationship with the CEO from day one.

I think it could be tricky to choose a chairman from a board made up of several VC partners. One way or another, the chairman needs to be distinguished from the other board members.

Roth: Okay, so, if you’re having six to eight meetings in a year, how long should each one last? Does that change at different times of the year and at different stages of the company’s development?

Murphy: The duration of the board meeting is definitely going to vary. It’s going to vary depending on the time of year and the type of topics that you’re taking up.

Board meetings around annual planning where you’re trying to go through your plan and have a lot of people presenting are going to take more time.

I personally couldn’t see a startup board meeting taking more than three hours, though. I do understand that when you’re running the board of a public company and you’re flying people in from around the country, you might as well put the time in. But in a startup, I haven’t seen much of a need for that.

I have seen situations where you’re having an all-day, strategic offsite meeting and you invite the board member to participate, but I can’t see a board meeting lasting that long. A strategic offsite is different. It’s a whole different atmosphere. It’s meant to be creative, stimulating and fun.

Roth: I agree. I can see that when there’s a crisis or even a really positive point in the company and you need to really think things through. Or, if there’s some Outward Bound-type of team building that the board should participate in. But if you’re having 4-6 meetings a year, I don’t know how a meeting longer than three hours could be valuable.

Murphy: I don’t know either. And that gets to another point. The CEO should feel free to reach out to the board in between board meetings to discuss things. If there’s more to talk about, it doesn’t have to happen only at the board meeting. The only things that really need to be included in the board meetings are the governance-type things.

Roth: What about the formalities of a board meeting? Do you need to have someone taking minutes? Do you need to have company counsel sit in?

Murphy: Yeah, there’s a backdrop of formalities of course. A board meeting is a necessary and legally required element of governance so there has to be some formalities like minutes and votes on certain things, and it’s the role of the chairman to keep things legal and structured. But that said, at a startup, you want to keep formalities to a minimum and keep the emphasis on ideas and productive dialogue. I don’t think there’s any sense in acting like a public company before you have to.

after-the-meeting

After the Meeting 

Roth: What are some of the follow-up actions that typically occur after a board meeting?

Murphy: As soon as the board meeting ends, it’s really important for the CEO to be sure that he’s captured any takeaways and specific requests of the board for immediate follow-up or for presentation at the next meeting. A lot of times the board will ask for information that you don’t have with you and they’ll say, “Okay, I understand you don’t have this handy, but can you get it to us before the next meeting?” You definitely want to avoid showing up to the next meeting without having taken action on these things.

Roth: Do you typically see interim reporting in-between board meetings – whether it’s financials or product development or pipeline reports?

Murphy: Absolutely, if you’re on a monthly financial reporting schedule, it’s quite common once the management team approves the financials and has reviewed them internally to share them with the board regardless of the board meeting schedule. And you might agree to share other bits of information with the board as well whether it’s sales reporting, pipeline reports etc. I think that’s appropriate.

And then there are also special requests. They may ask for analysis – like if you’re running a TV campaign they might say, “Hey, can you send us the campaign analysis so we can see what the results are?” I think it’s typical for requests like those to be fulfilled between board meetings.

Roth: Earlier you alluded to the CEO reaching out in between board meetings and speaking with the directors either to give them updates or to seek advice on a particular topic. The board meeting is a unique environment in which all the people are together, can hear each other’s perspectives, can push on ideas that they don’t necessarily agree with, offer alternatives, build on ideas they hadn’t thought of that someone else brought up, etc. How do you balance not ruffling any feathers and the benefits of that dynamic with having individual conversations in between board meetings?

Murphy: Well, you don’t want to do something that undermines trust. If you’re going to be reaching out to board members in between meetings, you don’t want to just have to have a close relationship with one board member.

It’s good to have some level of contact and relationship with board members outside of board meetings and certainly there should be no surprises at the board meetings. I think an effective CEO should have a good idea where members of the board stand on issues before the meeting so that no one is surprised.

As with most things, it’s a balancing act. It’s fair game to reach out and say, “Here are some things we’re thinking about and here are some things I’m going to bring up at the board meeting, I wanted to get your input on this.” But it’s not meant to be an exercise of politics that undermines trust.

Did you like the topic? Did we miss anything? Got anything to add? Let us know in the comments section!

About Brian Murphy 

BrianMurphyCircleBrian is vice president, supply chain and customer experience at Teespring, executive chairman of the board of directors for Umbie Dentalcare and a mentor at Betaspring. Over the past decade, Brian has focused on the digital printing space as a founding manager at both MOO and Ofoto.com (which became Kodak Gallery). With a career best characterized as “bringing order to chaos,” he has helped early-stage companies overcome the special challenges and obstacles associated with rapid growth and constant change. His specialties include international e-commerce operations, product development, manufacturing and finance/analytics.

What CI Venture-Backed CEOs Think about Entrepreneurship

After a recent event, we asked Connecticut Innovations venture portfolio CEOs what they thought about questions related to entrepreneurship. In some cases, the CEOs seemed to share the same opinions. In others, the responses were much more divided. What do you think? Let us know your opinion on these questions in the comments.

Results

Recap of #InnovateCT

Why You Should Get FANCY before You Ask for Money for Your Business

RobertaRossi_Headshot

 

Roberta Rossi
Senior Program Associate, Small Business Innovation
Connecticut Innovations

So, you want to start a company and are looking for capital to get things going. Welcome to the joys of entrepreneurship! Before you do anything, here’s my advice (and I’ll keep it simple): Get FANCY. Confused? Let me explain.

My colleague Merrie London and I frequently have the opportunity to meet or talk to inventors and entrepreneurs that are eager to get their ideas realized and are looking for funding. One of the things that repeatedly surprises us is the lack of preparation prior to setting up shop or asking for money. Because of this, Merrie came up with a very clever acronym to help budding business owners prepare for entrepreneurial pursuits. She tells them to get FANCY.

The advice is so simple and so practical that it tickles my fancy, so I thought I’d pass it along. Here’s what it means:

Focus:entrepreneur
We often see inventors who have myriad ideas they want to implement all at once. Creativity and enthusiasm are great, but a clear vision and the ability to bring that vision to fruition trumps split energies and unfinished projects. Sure, multiple income streams are the goal in more mature companies, but focusing on getting the first one up-and-running will better position you to diversify successfully. Even multi-tasking has come under fire in the past few years. Douglas Merrill, former CIO and Vice President of Google, says multi-tasking just doesn’t work. Heck, it can even be harmful to your health. So, if multi-tasking isn’t effective and can be bad for your health, imagine the mayhem that can happen if you’re trying to start multiple businesses or product lines at the same time! Focus on one idea and see it through before moving on to the next one. I promise you’ll see better results!

Advisory Board:
Okay – these parts aren’t in chronological order, but if I said “Get FNCAY” would that make any sense?

Seriously. Let’s move on.

Have you ever heard of the benefit of someone’s experience? I know, everybody’s perspective is different, but including the viewpoints of seasoned veterans from the industry or a related field can save you a lot of rookie headaches. Look – it can be lonely at the top, so building trust in a group that provides ongoing, thoughtful guidance can help on so many levels. Great advisory board members can provide guidance, consistency, contacts, longevity and expertise in their respective fields, as well as the occasional cheerleading or kick in the pants that new business owners can so often use. Before you assemble your board, ask yourself why and to what end? If you’re not quite sure how to go about building an advisory board, consider these great tips.

These next 2 pieces go hand-in-hand.

Need (An Identified and Verified Need for Your Idea) and Customers to Purchase It

You might think your idea is the slickest thing since olive oil. In fact, you may be so sure that everyone will be as excited as you are about it that you’re ready to invest your life savings to get started. You might even have recruited a team, found a space to do business, and have a nest egg that you’re willing to tap. Hold on – just because you can, doesn’t always mean you should! Is there a compelling need for your product or service? Are you sure? How have you checked? Even if a need exists, if nobody cares enough or is willing to pay enough to address that need, your time, money, heart, and whatever else you’ve invested can disappear pretty quickly.  It’s so important to make sure you have customers willing to pay enough for what you’re selling to make it profitable. And while I’m on the subject, don’t ask if people like the idea – affirmations are cheap. Ask if they would buy the product or service or even how much they’d be willing to pay for it. If you’re not sure how to go about testing the waters, no worries. It just so happens that we have two very handy evaluation tools to help you sort things out: Technology Assessments aka Go/No Go Reports and Market Assessment Reports. Before you raid your rainy day or retirement fund, check them out!

You:
Guess what? You’re the final piece of this FANCY pie. You have the inspiration, but are you willing to supply the motivation, dedication and perspiration necessary to start and grow a business? Without them, the business won’t get off the ground, regardless of how many other resources are available.

I’m betting that you are. And remember – we want you to succeed. If you’re an innovative small company in Connecticut, bring us your ideas and we’ll help you get down to business. FANCY that!

Do you have any tips? Share them with us in the comments!

Burn Rate: A Heavy Backpack Will Leave You Short Of Your Goals

Blog Photo

 

Douglas J. Roth
Senior Investment Associate
Connecticut Innovations

It’s hard work raising money for an early-stage company, and as the cliché goes, once the company is funded, that’s when the work really begins. Some of the first decisions an entrepreneur makes can be the most important. It’s a lot like backpacking…

In July 2009, I hiked the Wild River Wilderness area nestled in the White Mountains of Eastern New Hampshire. This is one trip where I definitely had packed too much; a fact that became abundantly clear to me as my hiking partner and I humped up the 4,833 foot Carter Dome.

I should have realized my pack was too heavy before even leaving the house. When I tried to sling the pack onto my back, it nearly knocked me over and the shoulder straps came close to tearing off. Clearly I was trying to bring too much stuff. Now on the trail, each and every step was a chore and the weight on my back – causing the straps to dig into my shoulders, collarbone, and hips – sapped me of energy faster than was necessary. By carrying too much equipment, every step along the trail used up my limited strength and energy at a rate that would leave me exhausted far before we would reach our destination.  It is dangerous to hike fatigued, and I was ill prepared for the unexpected.

Packing Smartly? Carrying too much on the trail is no different than burning through cash faster than achieving those milestones needed to raise the next round.

Packing Smartly? Carrying too much on the trail is no different than burning through cash faster than achieving those milestones needed to raise the next round.

After most of the day hiking in the beautiful sunshine, torrential downpours for the next several days waterlogged everything – I literally had to wring out my sleeping bag before climbing into it at night. With everything wet, what had been a heavy backpack now became nearly unbearable. As a result, I was not able to hike as far each day, I had to take more frequent rests, and I was not able to summit all the peaks I had hoped to accomplish. This is a lot like the burn rate of an early-stage company.

Fred Wilson of Union Square Ventures succinctly defines burn rate as, “the speed at which your cash balance is going down.” An entrepreneur will want to give himself enough time to make real progress, achieve meaningful milestones, and still have time to pull together the next financing. The burn rate of your company helps to determine a rough estimate as to how long you have to accomplish these objectives. Spend too much money each month, and it’s like having a heavy pack that limits how far the company can go.

Funding an early-stage company is a lot like packing for a lengthy hiking trip. Seed stage funding, for example, is usually not a whole lot of capital and must be allocated strategically, much like carefully choosing what and what not to bring hiking. There is tremendous pressure on entrepreneurs to choose wisely how the company spends its money and how much money to spend on each budget item, yet still achieve its goals and do so before the cash runs out. Generally, the goal of seed funding is for the company to demonstrate some critical aspect of its business, de-risking it sufficiently such that an investor is willing to fund the company in a larger round further accelerating the business.

Sometimes difficult choices need to be made. It would be great to have a larger tent or a more functional stove, but there is not enough real estate in my pack and literally every ounce counts when you are carrying everything twelve miles over some of the most unforgiving terrain.

Burn rate –> Burn out: Rain soaked tent is heavy enough, but notice my dad’s old Army shovel – what was I thinking packing that?

Burn rate –> Burn out: Rain soaked tent is heavy enough, but notice my dad’s old Army shovel – what was I thinking packing that?

Similarly, it would help an entrepreneur to have additional headcount or more functional office space, but increasing the burn rate leaves the company with less time and flexibility to achieve the goals of the funding round. All of these decisions have consequences, and like backpacking, once they are made, it is very difficult to make changes late at night, deep in the woods, when it starts raining.

So my advice to entrepreneurial teams that have raised a round of early-stage financing: pack your backpack smartly. You have a lot of ground to cover over difficult terrain and unexpected challenges will likely surface. If you have the right resources readily available and are not burdened with extra weight that merely weighs you down, then you are more likely to reach the summit and enjoy the views from the top.

…and remember to bring a compass.

Note: This was originally posted on Doug’s blog.

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