Owner: Sid Mohasseb URL:http://sidmohasseb.blogspot.com Join Date: Thu, 05 Apr 2007 16:35:50 -0500 Rating:0 Site Description: This is an unedited running commentary; a collection of thoughts about Angel and venture investing. A random brief of what experience has shown to be important to entrepreneurial success. Site statistics:Click here
The truth about Venture Capital and Angel Investing is … 2007-03-29 04:35:00 Last week, I was on a panel with other investors discussing the “do’s” and “don’ts” of angel and venture capital investing some one from the audience fired a series of intriguing compounded questions ” why are the VC’s so illusive?, why don’t they have all their information available? Why don’t they disclose how they come up with their valuations? Why are the selection criteria’s so undefined????”All valid questions and valid statements – the event made me think that entrepreneurs view of the equity investment community is entirely different than that of the inner circle and this mismatch of perceptions is not disruptive and unhealthy.So let’s talk about the truth about the Angles and the Venture
Capital firms; here is a few points to start with:1- Looking for Money Vs. looking for a partner: investors look for a partner that they can invest in and help grow a business. Entrepreneurs look for money and often feel (although they may claim otherwise) that if t Read more:Investing
What kind of an entrepreneur are you? 2007-04-23 01:40:00 In my days, I have met with many many entrepreneurs. We have agreed and disagreed on things, learned from each other, and experienced disappointments and successes together.Here is “one” way to slice and dice the group.The Pure DreamerThe pure dreamer is filled with new and novel ideas -- innovations and schemes that will make a lot of money -- for some, every once in a while they see their pictures on the front page of the Time magazine . Despite their potential, majority of these folks never cross the bridge and get to the “doing side.” They are always waiting for the right time and almost always regretful (if only, I had that idea a long time ago, ..). My advice to this group is to either admit that you are a dreamer (get it over with) and then enjoy the dreams and the innovations without regret, frustration and the feeling of failure OR “just do it” as the saying goes; the short cut to results may be finding a partner with a different character profile! The “no
My Education 2007-04-23 01:21:00 I am quickly learning that writing a blog requires a lot of discipline. You need to be thoughtful and quick - My apologies for being a slow learner - I’ll get there. It would be great, however, if you could help me with topics – what interests you? Here are some topics I am looking at: Weekly tips on effective execution, this is not a how to work harder guide! but a how to be more effective series of thoughts.A session with and entrepreneur -- documenting a conversation or two every week with some of the entrepreneurs I meet and discuss funding with (naturally, the name of the company & founders, as well as, the business details will remain confidential) – the good, the bad and the ugly. The idea here is to take real life interactions and turn them in to a learning experience – this is NOT an interview, but rather a one sided (my) perspective. Random Tips on valuation, term sheet, trends, concerns, etc.ALL from the Investor’s perspective.Any thoughts? Read more:Education
Real Entrepreneur Story #1 – What to do next? 2007-05-07 06:53:00 Over the weekend, I met with a very hardworking and smart entrepreneur. He operates a business in the medical devices space. He is the founder, has over 20 patents to his name and yes, they are making money! The dogs are in fact eating the dog food. He has successfully raised over $5 million and has managed to put the company on the path to make close to $10 million in revenues this year. The company was in a terrible shape a year ago as he had hired a very ineffective CEO and was dealing with a weak Board of Directors (a story for another time!) – no questions asked the man can execute and deliver!We spent a few hours together and he and his partner outlined their strategy of raising about $20 million from VC’s at a valuation of over $40 Million (because they thought it was worth that much!) – after discussions it became apparent that that they really did not need that much money to further increase revenues by over 5 fold and they just wanted to be safe! Not considering th Read more:Entrepreneur
Real Entrepreneur Story #2: It is about making money NOT raising money 2007-05-23 00:54:00 The entrepreneurs were clearly fatigued when they waked into my office. They had raised close to a $1,000,000 at a whopping valuation of close to $10,000,000. The friends and family investors were joined by a couple of angels who were fortunately (as the entrepreneurs claimed) very hands off. Unfortunately, the bank balance was almost $2000. The product is almost there they claimed and the patent was almost approved. The product a video / picture tool was indeed slick, but I had to scratch my head as how to make money from it. The exit was rather unclear and the deal was over shopped; as almost every VC had looked at it and passed – the problem; the valuation was too high for the progress made, the exit was not clear, and the had no idea as to how to making
money.Nice tool! How have you tried to monetize? the answer was “we are trying to build a community” also, “we can offer the tool as an ASP model to enterprise customers”, “we have a customer that uses the tool on his we Read more:Entrepreneur
Why bootstrap your business? 2- Some Good Reasons 2007-06-18 20:14:00 There is just too much to say about the topic and I have been warned about being too verbose with lengthily postings so this is a 3 posting series. Following is the first posting:Some Good reasons to Bootstrap1- Bootstrapping ensures that you build your business on legitimate, real world value propositions. You truly focused on customer value from day one.2- Bootstrapping initiates the critical sales learning process sooner, not later.3-Bootstrapping does not waste money: the focus here is on the early and closer customer contact. 4- Bootstrapping accelerates time to market and time to profitability – if you can not possibility wait for the next version to get ready, you compromise and try to make money from what you have.5-Bootstrappers are less likely to make big, fatal financial mistakes. Being alert about survival makes people much more alert about catching fatal mistakes.6- Bootstrappers are forced into unconventional thinking – necessity is truly the mother of invention. 7- Read more:Reasons
Why bootstrap your business? 1- The big picture, 2- some good reasons, and 3- a few negatives 2007-06-18 20:05:00 There is just too much to say about the topic and I have been warned about being too verbose with lengthily postings so this is a 3 posting series. Following is the first posting:The big picture of bootstrappingBootstraping, in my opinion, is not about conserving cash or paying out of your credit cards (although those may become ways to achieve it). Bootstrapping is about taking the right action at the right time. It is about making quick and timely decisions. And it is about being focused on cash flow and incremental progress.There are a few key elements / drivers that make bootstrapping generally lead to better results:1- When in Bootstrapping mode, the margin of error is much smaller and more importantly the entrepreneur knows it. This causes decisions to be more focused on generating results and on making money, and that is a very good thing.2- The risk is personal and decisions are reduced to absolute “value” delivery. Being the one who would hold the bag if things
Why bootstrap your business? So when is bootstraping not a good idea? 2007-06-30 18:47:00 There is just too much to say about the topic and I have been warned about being too verbose with lengthily postings so this is a 3 posting series. Following is the third and last posting:So when is bootstraping not a good idea? Almost never!However … there are times that injection of external funding is crucial to the delivery of value and no revenues can be generated unless significant investments are made. In these cases the bootstrappong duration may be shortened but not eliminated. When things are not in your control or costs are very high:1- You are in the pharma or medical devices business and an FDA approval is needed before you can sell – these ventures usually involve significant upfront research and multiple scientists , require expensive lab equipment and need to have trial results from hundreds to thousands of people. In this cases the SBIR and other grants are critical and should not be overlooked – not only they are non-dilutive, they help provide credibili
Entrepreneur Story #4: Dreams vs. Reality 2007-07-10 20:45:00 The Mobile market is HOT. At a conference in the valley (silicon that is), out of every three entrepreneurs I talked to two and half had the next big mobile application. The biggest idea is the next ubiquities operating system. A system that is running all mobile phones, allow transportability of applications, improves the development process of new applications, etc. etc.I had a conversation with one these operating system companies yesterday – the fifth or sixth company in the same space I have spoken to in the past couple of months. Naturally, each one has few strengths and some weaknesses and each one has some unique angle and approach. Without a doubt the idea is big and if one could become the standard operating system – the next DOS is conceived and the next Microsoft born – a very nice dream. What I found as common between all of the entrepreneurs I talked to was the underestimation of the power of the big OEM’s (Samsung, Nokia, and Motorola) in controlling their o Read more:Entrepreneur
, Dreams
Entrepreneur Issue! The viral marketing mystery 2007-09-14 20:33:00 These days almost every business plan has a viral marketing component to it.How do you get customers? Viral marketing to the rescue; there seems to be an “understanding gap”.I have made it a point in the past few weeks to ask every entrepreneur that brings up the issue “what do you mean by viral marketing?” The diversity of answers and interpretations are fascinating. The responses include, funny videos on Youtube, a page on Myspace, putting definitions on wikipedia, planned message board entries, and of course having a blog. What is interesting is that the definition of viral marketing is reduced to the channels of distributing a message vs. the message itself.To have a viral marketing campaign, you must first have a message that is viral and contagious like a virus, a message that contaminates others as soon as they hear it, to the point of passing it to others. 93% of all sales are initiated through word of mouth, and viral marketing is intended to ignite this process. BUT, Read more:Entrepreneur
Entrepreneur Issue! Nothing wrong with a Life style business! 2007-09-10 18:26:00 Speaking to entrepreneurs everyday has lead me to believe that most entrepreneurs really like to build a Life Style business and are not in tune with what motivates Venture Capital firms or Angels to invest.So what the heck is a Life business?1. You build it to operate for many years to come2. It will generate good income for you and you absolutely love doing the job3. you want to be in control – who needs a boss!4. This would be a great business for my children to get involved withIf your answer to any of the above questions is yes … well you are on your way to build a Life Style business. Where you do not need a very very large market sizes, you do not need disturbing technology, you do not need a proven management team from Ivy league schools, you do not have to report to a board who is pushing for faster and more aggressive results all the time, and most importantly you do not need to exit (sell out).So what is wrong with starting a Life Style business – well absolutely nothi Read more:Entrepreneur
, Nothing
Entrepreneur Issue! - Why do many startups fail? 2007-10-02 21:43:00 I got the following question from an entrepreneur and I thought I share it with everyone.“Why do many startups actually fail? In my observation, i have felt that there are many a startups which have a brilliant idea, a genuine team to execute that and also a good support for the product they intend to build, but still the companies fail to break even. I would love to hear from you your views on why startups fail? cheers, Vaibhav”There may be a thousand different reasons, but here is an attempt at simplifying a clearly completed question. Here is a stab at a few common reasons:1- Chemistry: often entrepreneurial teams fail to have the winning chemistry together ; it is a combination of reaching for perfection and greatness and ability to work together to compromise their way to success.2- Too much Brilliance: a lot of companies fail because the market is not ready for the innovation yet and the entrepreneurs focus on their vision as opposed to what the customer wants or needs – th Read more:Entrepreneur
Entrepreneur Effectiveness alert - The curse & bliss of emails; mundane but important 2007-11-02 19:26:00 This topic may not be sexy or intellectually challenging, BUT, I think it is important. As emails go, I think we are confusing effectiveness and speed.I get in excess of 250 emails a day. So often important issues may be ignored due to volume and unimportant matters may take a lot of time. And I am not the only one inundated with so much volume.The problem is that simple issues that can be resolved in minutes with a quick personal conversation actually take multiple emails. Important issues that require real discussion is boiled down to snippets of responses – the result is that decisions are most likely not as comprehensive and often based on either partial information or influenced by the desire to quickly get to a yes / no answer. We achieve speed of exchange but in a lot of situations lose effectives. I can’t count the number of occasions when efforts are duplicated because some one acted on partial information exchanges in emails and had to re-do things. Now, add the complicat Read more:Entrepreneur
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Entrepreneurial Case Study: A true failure story. 2007-11-07 17:46:00 … and it happens everyday - different people and different businesses.A year and change ago, I was asked me to make an investment in a venture – a couple of smart technologist with previous management experience creating a VOIP related company. I knew the entrepreneurs and was absolutely convinced that they are smart and dedicated. The business model, however, did not make sense to me and I did not invest.The company raised around $500K. A few months later, they are looking for money and are considering a change in the business model… and later, a new angel investor with another $500K or so has influenced the team to focus on an originally tangent mobile technology to create a novel consumer application.The new business model and technology was intriguing and reached for my check book! But before signing, met with the two founders and the recent addition to the team, a brilliant new CEO with big telecom and carrier experience.So, I met the team and my check book was quickly back Read more:Study
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Open Discussion on early stage funding options 2007-11-29 15:58:00 Recently, Dave Berkus, Frank Peters and yours truly participated in a round table style podcast on the the Frank Petes Show -- click here to listen. http://www.thefrankpetersshow.com/You may find it interesting.Additionally, Graeme Thickins did a nice summary of the podcast on his blog at: http://graemethickins.typepad.com/graeme_blogs_here/2007/11/raising-startup.html Read more:Discussion
Follow-up discussion: more on channels for raising equity 2007-12-09 20:17:00 In follow-up to the Podcast discussion Frank Peters, Dave Berkus and I had a couple of weeks ago (http://www.thefrankpetersshow.com/), a few entrepreneurs wanted to learn a little more about the various channels
of raising equity and particularly the characteristics of each channel.Following is a 10,000 foot level, but focused discussion of the various equity sources:Friends & FamilyYour dad, uncle or a rich body - almost always non-strategic, almost always come with confused valuations and even more confuse structures that will be costly to clean-up later, and often the money raised gets to be wasted on experimentation. It is however, the easiest money to raise since they know you and trust you the most. Raising Friends and Family round generally does give the VC's and the Angles the warm and fuzzy that at least your relatives and friends trust you.Angels (individuals & groups)An individual angles or group of angles that pull together to invest - generally invest as indi
Entrepreneurial support – The conversation series 2008-03-02 20:13:28 So here is something new for interested entrepreneurs.Venture Farm Institute Web Conference YOU CHOOSE THE TOPIC & WE PAY FOR IT (IT'S FREE) First event : March 17,2008 8:30am-9:15 pstPick Your Topic & RegisterThe purpose of the series
is to inform and enrich the entrepreneur to understand the Funding Process and focus on Business Execution.The Conversation series is also a complement to our workshop Series with Rapid Fire , a 3hr Live Roundtable of providing early stage companies uncensored feedback, from the investor perspective, as well as a 2-Day Workshop on Effective Entrepreneurship .How to participate?: This series is online. You need a computer with web access.What is on the Agenda: The selected topic will be discussed. A short Q&A for you and your guests is also schedu
Entrepreneurial lesson: Ingredients of a failed presentation 2008-02-21 21:34:28 AND CLUES FOR A SUCCESSFUL PRESENTATION!In the past couple of weeks I have heard a few pitches and noticed some common ingredients. So in my humble opinion here is what did not work.1- Selling features and product capabilities as opposed to a vision and a company.2- Being in love with the idea and failing to see the need for a business model.3- Getting lost in details and going on tangents.4- Pretending to know it all.5- Failing to demonstrate how investors can get a return on their investment.6- Having a big salary for founders built into the projections.7- Too much animation (distracting) and too small of fonts (can’t read).8- Disagreeing partners9- Asking for too much money or not enough to get to the next milestone - winging it.10- Offering a pre-cooked deal – We have a private pla Read more:lesson
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Entrepreneurial Observation: yet another reason to be agile 2008-02-08 19:51:08 Just came back from the Always On event in NY; over 600 people packed into a couple rooms on the 36th floor of a fancy hotel – I was reminded of the events and conferences during the late 90’s – lot’s of buzz, loads of optimism and discussions of the perfect storm!This time the typhoon (as Tim draper from DFJ calls it) is centered around the digital media and what it is doing with advertising models incumbent distribution channels, production time frames, schedule, etc.Lots of acquisitions, big number valuations, bigger venture investments, and all that Jazz ! just like it use to be in late 90’s. Not that I mind it.Although I do buy the argument that things have changed since the 90’s; including better business models, proven models of monetization, etc. but a typhoon is a typh Read more:Observation
Entrepreneurial Consideration: Managing the ripple affect 2008-02-04 00:49:51 A non academic view of business change & improvementStating the sometimes forgotten obvious:A business is a living entity that embodies many functioning organs. It performs the best and is healthy when all the elements are working together in harmony. The physical components of this living organ includes sales, marketing, IT, logistics, accounting, etc. and its psychology is represented by the core values, cultures, and beliefs. A pain or a dis-functionality in any organ influences the effectiveness of the business entity as a whole – if you are ill mentally or physically you can not be fully productive.An illness maybe addressed by a better diet or some vitamins or a few pills a day for a few weeks (process improvement, overtime, incentives, etc.) or may need more drastic measures s Read more:Consideration
Sales lessons – my souvenir from Mexico 2008-01-18 00:42:42 During the holidays I had a chance to take a short vacation in Cancun Mexico
. Upon arrival I quickly was forced to deal with various types of sales people with a diverse range of techniques. And as any good entrepreneur would (or should), I began to pay attention and learn.Imagine an endless row of stores all selling pretty much the same products, as a sales person how do you have a customer buy from you and not the guy next door? Now imagine you are selling a $20,000+ time share - and so are about a 100 other people in a 100 yard radius - and you have a few minutes while a tourist is walking by to open and no more than a few days to close. How do you do it?After observing a significant number of data points (and it is not difficult as you can … yes, imagine again), here is some key lear Read more:Sales
Entrepreneurial “procrastination” – easy to be a victim 2008-06-02 21:29:14 The first proof of the preacher himself committing the sin is my inability to do a Blog in recent weeks – shame on me for procrastinating!Now back to preaching… Procrastinating on getting to revenue equals sudden death. Recently an entrepreneur passionately indicated that they have potential customers that are willing to buy their product NOW, but they are holding back until they raise more ca Read more:victim
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