Author: David Cummings

Whenever an entrepreneur asks me for advice about raising money, one of the first things I want to understand is what the money is going to be used for, and if they have a specific plan. After that’s out of the way, I like to understand if they want money with or without help. What I mean is do they want investors that will actively add value (smart money) or do they just want money and nothing else (dumb money).

Here are a few thoughts on smart money and dumb money:

• Some entrepreneurs actively want investors for the accountability that comes with having a board, and that should be part of smart money
• Most VCs want to be smart money and are actively involved
• When talking to potential investors explicitly ask how they like to help their investments and set expectations before closing an investor
• Check investor references from their other portfolio companies to see how much “help” they actually provide (are they really smart money?)

When raising money, it’s important to consider the smart money and dumb money question. Not all investors are created equal and entrepreneurs would do well to understand the types of value-add investors can provide.

What else? What are some more thoughts on smart money and dumb money?

Early today an entrepreneur shared with me how he was super worried that a competitor just raised $2 million. Being a bootstrapped startup still trying to find product/market fit, he felt that the competitor was going to build a large team and capture the market before he gets enough traction to become a player.

Hmm, I thought. At Pardot, we didn’t raise any outside capital and our main competitors HubSpot, Marketo, Eloqua, Genius, Act-On, etc. raised over $500 million in capital. You don’t have to raise money to build a successful business.

Here are a few thoughts on competitors raising money:

• Almost all B2B tech markets aren’t winner-take-all or even winner-take-most. How many successful email marketing companies do you know? Exactly. There are dozens of them. The same holds for most markets — find a niche and build a base of passionate customers.
• Raising money doesn’t equal success (see Quirky’s bankruptcy). Some entrepreneurs execute poorly. Some markets change. Heavy startups without product/market fit are a real challenge.
• Venture investors putting money into a company helps validate the market. Are the investors right about the market? Not sure. But, the fact they’re willing to put serious amounts of money into it is a good sign.

The next time a competitor raises money, understand that it’s commonplace and doesn’t mean there won’t be multiple winners in the space. The best thing to do: continue building a passionate base of customers.

What else? What are some more thoughts about competitors raising money?

With 2015 coming to a close, it’s a great time to review the year. After talking about the Personal Development Plan and Audit Where Time is Spent, let’s dive into some specifics from the year:

• 14 speaking engagements including the Mercer University Commencement
• 365 new blog posts (including this one) and 400,000 visitors to the blog
• Five new angel investments (includes two ideas incubated)
• Two failed investments
• Three seed investments hit $1M in ARR (Benefits of $1 Million in Annual Recurring Revenue)

Also, the Atlanta Tech Village continues to exceed expectations  (11 Takeaways and Year in Review).

Happy New Year! Here’s to a great 2016.

With the new year almost here, it’s a good time to make an updated personal development plan. A personal development plan is a simple way to define what you’d like to do on a regular basis across personal, family, professional, and community categories.

Here are some example categories and items for a 3 Year Personal Development Plan:

• Personal
  Workout 2x per week
  Meditate 2x per week
  20 tennis matches per year
  10 rounds of golf per year
  2 cool sporting events per year
  Financial savings (size defined for each year)
• Family
  Spouse date night every week
  Dinner as a family 5x per week
  Quarterly week-long vacation
• Professional
  Company size (size defined for each year)
  Read one book per month
  1 workshop/learning event per quarter
  2 conferences per year
  6 trips per year
• Community
  Donate $X per year
  2 non-profit boards
  Volunteer X hours per month

This format provides structure and personal accountability that is fairly broad while well defined. If you don’t have a personal development plan, I’d recommend making one using this format.

What else? What are some more thoughts on a personal development plan?

With the new year almost upon us, it’s a good time to do a simple exercise: audit where you spend your time. Now, it doesn’t have to be fancy — a simple pen and paper will do. Take two or three days during the week and just write down what you’re doing and the time spent on it throughout the entire day (not just 9-5). (Note: for an app that constantly does this, check out RescueTime). Once this exercise is done, compare where you spend your time against your short-term and long-term goals. How does where you spend your time stack up with your goals and aspirations?

Here are a few thoughts on auditing time spent:

• Most people don’t regularly calibrate what they’re currently doing with what they want to be doing
• Goals are often neglected for little things that constantly eat up time (like surfing the internet)
• When reviewing time spent, ask yourself what time of day you have the most energy and focus, and prioritize the most critical and creative tasks then
• Write out an ideal daily schedule and see if you can stick to it for a week

Entrepreneurs would do well to regularly audit where they spend their time and constantly calibrate it with their goals. Most people waste a significant amount of time that could be used for more important work.

What else? What are some more thoughts on auditing where time is spent?