KNOW THY ARENA!
As an entrepreneur and engaged in the Ritz Group seeing over 120 companies pitching at Shark Attack, and reviewing 4x more applicants, one becomes immersed in the “ART” of Private Equity Funding. As an entrepreneur, I was fortunate to be self-funded and did not have to deal with shareholders. Banks were tough enough. But, that is not today’s entrepreneurial world.
It the next series of Blogs, I wanted to focus and share some issues related to managing a “Private” stockholder organization. The private securities capital business has really grown up since its humble beginnings in 1998-arguably earlier. We have recovered from the 2002 Dot-Bomb crash and the results are in. There are no more naïve equity round investors – only naïve entrepreneurs and fortunately the friends and family who unwittingly support based on passion, or to promote peace during the holidays.
Veteran Angels, Fund managers, Angel Pools and VC’s have their “act” together. They know their investment “Sweet-Spot,” as well as their expected returns based risks having done it before. Experience is a great teacher. I want to address this critical issue in a second blog called “Know thy customer” or “What’s on Second.” It is all about selling a sophisticated product (or business) to a buyer/customer who knows far more about it and its worth than the seller. How is that working for you?
But, before we go there, perhaps we should step back and attempt to define the entrepreneurial capital playing field. Our Arena. The common questions I am ask…. over and over is… am I Early Stage or later stage? Seed or Bridge? Is Bridge Debt or Equity if it has a conversion option? What’s between FF&F and Series A? I host an Angel Club and was startled when even the most veteran among us had different definitions for each stage. This encounter left me wondering if even I had the right interpretation.
Who’s on First?
The end goal was simple. Define the arena and let the Blog world tell you where you are wrong or maybe even agree. The challenge was – how to you do that? Rather than use a lot of words, I decided to use a chart from one of our Investment Accelerator Classes to see if we can get a consensus. Always exceptions, but your thoughts as we begin this journey?