What VCs Want to See In Startup Founders

VC_InvestingHow would you know if you have what it takes to launch a business? One sure way to tell whether you have the makeup of an entrepreneur is when an investor is willing to finance your startup.  For some venture capitalists and angel financiers, that investment won’t happen unless the startup founder also shows some promising personality traits.

Here are three attributes discerning VCs want to see in founders before they invest in their startup.

1. Startup founders who understand the risk of being too early to market.

Having an amazing idea is not enough. Founders should have vision, as well as a clear understanding of their target market. Otherwise, they risk running out of money before consumers are ready to adopt their products.

2. Startup founders who plan for tomorrow and five years down the road.

An emerging company has different needs than an established one, and startup founders have to be prepared to address both sets of challenges and opportunities.

3. Startup founders who know what they want.

This is an important characteristic for entrepreneurs who are seeking funding. As founders develop their expertise, they need to understand what to do with that know-how. Preferably, they should pursue a business they really enjoy doing. The founder’s passion serves as a vital foundation for a successful startup.

“Entrepreneurs need game-changing ideas in order to stay alive in their markets. But great ideas are not enough,” says Shlomo Kramer is an angel investor and founder and CEO of Imperva Inc. “When it comes to attracting investors, founders need to demonstrate they offer all of the qualities required for long-term success.”

To see the complete list of seven attributes Kramer wants to see in a startup founder, read his article, What Do Investors Look for in Start Ups?

Source: Globes

Entrepreneur and VC Mark Suster lists the qualities that he believes marks a successful entrepreneur.

Execution Always Trumps New Ideas

Idea_vs_ExecutionIdea versus execution. It’s an on-going debate in the business world. Nevertheless, there is no shortage of experts who say coming up with a great business idea is not enough, it’s the actual execution that matters. Since I agree, it’s always nice to read another article that supports that side of the argument, especially one that cites good examples to make the point.

In her recent article, Execution, Not New Ideas, Give Startups Edge, ZDNet’s Jamie Yap joins a growing chorus who believe that an idea is not enough. Yap gets right to the point by saying, “Startups should be less hung up over how to reinvent the wheel with new ideas, and focus on execution because that is critical for overall success…”

She also cites Casey Lau, co-founder of StartupsHK, an open support group for Hong Kong startups, to support the argument that execution, not new business ideas, is what makes startups successful in the end.

Facebook and Android are both examples of execution trumping new ideas, Lau notes. While it was not the first mobile platform, Android deviated from the “walled garden” approach of iOS, which contributed to success of the now ubiquitous platform, he points out. As for Facebook, it copied various ideas from social networking of MySpace to break into the consumer mainstream.

In both cases, and fortunately for us, entrepreneurs found ways to execute a creative transformation of ideas that had already been done. Proving once again that coming up with a great business idea isn’t the hardest part of doing innovative things.

Source: ZDNet

Learn By Example from the Startup Playbook

Startup_PlaybookLaunching a startup is a never-ending learning experience of what to do and what not to do when starting a new business venture. Aspiring entrepreneurs will never know what to expect unless they either start from scratch and learn by themselves or look at what others have already done and hope to profit from their experiences.

The “learning from others” approach is the premise behind a book called The Startup Playbook: Secrets of the Fastest Growing Startups from Their Founding Entrepreneurs by David Kidder.

In the Startup Playbook, Kidder, who is an entrepreneur, offers his own success formula for starting a business by relying on the experiences of highly profitable ventures that started from very modest beginnings.

Kidder demonstrates his lesson-learning approach by illustrating famous success stories from entrepreneurs such as Chris Anderson, who became famous through a publishing startup that built an important niche with broad online support; Charles Best, who made money by developing a philanthropic marketplace where people could meet to raise money; and Tom Gardner, who launched Motley Fool to make tons of money by charging a modest flat fee for high quality investment advice.

The Startup Playbook delivers plenty of examples of how to take a product from concept through to full implementation while making money on practical ideas that work. Overall, the book serves as a helpful resource for anyone with a new idea that seeks to commercialize it and reap the benefits of happy customers and large profits.

Source: BlogCritics.org Book Review: The Startup Playbook by David Kidder

Developing Mental Habits for Business Success

Street_SmartsWhen it comes to starting a business, you always want to follow the proper guidelines to make sure your startup will grow and become a successful venture.

The truth is, there are no set rules to follow, according to Street Smarts: An All-Purpose Tool Kit for Entrepreneurs, a business strategy book written by Norm Brodsky and Bo Burlingham, columnists for Inc. magazine.

Brodsky and Burlingham say there are “mental habits” that can help street-smart entrepreneurs grow their business, resolve problems and pursue opportunities as they arise.

For example, many new business owners start out with the primary goal of growing their company, usually for no other reason than believing that’s what they are supposed to do. However, the book’s authors say, “You don’t have to grow at all if you don’t want to… there’s no rule of business that says you must.”

Street Smarts includes many helpful ideas and concepts for would-be entrepreneurs who are in the process of honing their ideas, and establishing a direction and goals for their own business.

In her review, Palletenterprise.com’s DeAnna Stephens Baker explains how the book does a good job of avoiding abstract ideas. Instead, the authors modify their best advice in the form of a comprehensive guide for managing a variety of businesses.

The book delivers a worthwhile read that’s full of real stories, examples and details that explain how anyone can apply their business ideas in real-life situations.

Brodsky is a veteran entrepreneur who has founded and grown six businesses. Along with Burlingham, he has chronicled his entrepreneurial journey in his column in Inc.com.

Source: PalletEnterprise.com

New SBA Platform Lets Small Businesses Tell Their Stories

Everyone has a story, and now the U.S. Small Business Administration (SBA) is giving entrepreneurs a new online platform to share their stories and showcase their successful and thriving businesses. SBA has launched “Small Business Owners Speak,” an interactive platform featuring videos by entrepreneurs from across the country who have started or grown a business with the help of the SBA. The videos will be featured at www.sba.gov/stories.

Read the full story on SpecialtyFabricsReview.com

“I have the great privilege to meet with many amazing small business owners across the country,” says Karen Mills, SBA Administrator. “I get to hear their stories – stories about why they started a business, how their business improves their community, how business ownership has enriched their life, and often how SBA was an important resource to make it happen.”

In this SBA Small Business Owners Speak video, Cupcakes A-Go-Go co-owner Laura DeVries explains how her business grew with funding from the SBA.

Questions To Ask Yourself Before Pursuing a Business

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Becoming a successful entrepreneur requires thorough planning, creativity and hard work. But how will you know if you have what it takes to be an entrepreneur? To consider whether you possess the characteristics and skills to become a successful entrepreneur, there are key questions you must ask yourself.

Remember “Twenty Questions,” the parlor game where a person chooses a subject but does not reveal this to the others? All other players, who are questioners, have to figure out what the subject is by taking turns asking questions that can only be answered with a simple “Yes” or “No.” The premise for this game can be used to examine your natural aptitude at entrepreneurship.

In fact, the U.S. Small Business Administration sets the stage for a realistic set of 20 questions you should answer to make sure you’re ready to start a business:

  1. Why am I starting a business?
  2. What kind of business do I want?
  3. Who is my ideal customer?
  4. What products or services will my business provide?
  5. Am I prepared to spend the time and money needed to get my business started?
  6. What differentiates my business idea and the products or services I will provide from others in the market?
  7. Where will my business be located?
  8. How many employees will I need?
  9. What types of suppliers do I need?
  10. How much money do I need to get started?
  11. Will I need to get a loan?
  12. How soon will it take before my products or services are available?
  13. How long do I have until I start making a profit?
  14. Who is my competition?
  15. How will I price my product compared to my competition?
  16. How will I set up the legal structure of my business?
  17. What taxes do I need to pay?
  18. What kind of insurance do I need?
  19. How will I manage my business?
  20. How will I advertise my business?

Jason Feffer, Co-Founder of SodaHead.com lists questions to ask yourself before developing an idea. Be sure to ask yourself these questions before investing time in kick starting a business.

Success Begins With Opportunities

Three years after the recession officially ended, the economy remains stagnant. At this rate, we’ll probably experience this tough economy for quite a while. In order for aspiring entrepreneurs to succeed in such difficult times,  they must actively seek out and respond to business opportunities that this economic downturn is presenting to them.

Entrepreneurs don’t just start any business; they seize the great business opportunities, says co-authors Reid Hoffman, investor and co-founder of LinkedIn, and entrepreneur Ben Casnocha in their best-selling book,The Start-Up of You.”

Hoffman and Casnocha believe that success for a startup is all about seizing those unusually consequential opportunities — those breakthroughs, deals and discoveries that rocket their company forward at an accelerating rate of growth.

When One Idea Leads to Another

During a meeting last year, entrepreneur Ben Mappen acted quickly by seizing a business opportunity that eventually convinced a venture capitalist to write a $250,000 check for him on the spot. The turn of events resulted in the launch of LeanLaunchLab.com, a tool that helps entrepreneurs define and test key business model assumptions.

Mappen began his meeting with Menlo Ventures managing director Shawn Carolan to pitch his startup idea about a site called Techcofounder.com which is a lot like a dating site for entrepreneurs. Carolan invited Steve Blank, an eight-time serial entrepreneur and Stanford professor, to help evaluate Mappen’s concept.

The meeting took an unexpected turn when Blank began sharing his own business idea with Mappen. Here’s how the meeting evolved, according to Mappen:

“So the three of us sit down for coffee in mid-May [2011] and I give the best elevator pitch I can. Steve really liked the idea. He offered up some advice and asked if I needed any intros. Perfect!

But then, for the next 20 minutes Steve started talking about his own ideas, and they were fantastic. He told us about how startup board meetings were broken and how he may have stumbled upon an innovative solution while teaching his class at Stanford.

I casually asked Steve if he was going to pursue this idea and he said ‘well, no, I’m retired.’ I look at Shawn, and then I look back at Steve and say ‘I’ll build it.’ Steve says, ‘That’s great! And…you should demo it with me on stage at the Startup Lessons Learned conference.’

Whoa! Within one hour I had gone from pitching Steve Blank an idea to starting a company based on his idea. A week later Shawn’s  investment hit the bank and a week after that I got on stage with Steve and launched a product with nothing more than a Powerpoint deck.”

In February 2012, after several months in beta, LeanLaunchLab opened for business.

Make-or-Break Career Opportunities

Reid Hoffman and Ben Casnocha point out that careers, like startups, are also punctuated by breakout opportunities. Our professional lives are not a sequence of equally important jobs. There are always breakout projects, connections, specific experiences and, yes, strokes of luck that lead to unusually rapid career growth.

Here are their tips for finding and generating those kinds of breakout opportunities. These work equally well for a startup as they do for an individual’s career.