Blog

Recently I’ve had the chance to talk with two different entrepreneurs that have moved on from their ventures and are looking for the next opportunity. In each of the conversations we talked about what went well, what didn’t go well, and general learnings. Then, we talked through a few different questions:

• What’s your ideal role at the next company?
• What size company? Seed stage? Early stage? Growth stage?
• What verticals or trends interest you?
• What’s your risk appetite regarding salary vs equity trade-off?
• What companies in town interest you?
• What else is important to know?
• Who else should I meet with?

Looking for a new opportunity? Use these simple questions to get the conversation going.

What else? What are some other networking questions to use when looking for the next opportunity?

Tonight I had the opportunity to hear the pitches from the Braves App Challenge (think hackathon) at the Atlanta Tech Village. The goal was to reimagine the experience at the new Atlanta Braves stadium, SunTrust Park, complete with multi-terabit internet access.

Here’s a brief synopsis of most of tonight’s ideas:

• Stadium access driving direction app that takes your current location and all the potential ways to get to the different stadium entry points while optimizing for traffic (think Google Maps/Waze integration checking several different routes)
• Stadium experience customization based on preferences like shade/sunny, first date/romantic, rowdy/noisy section, etc
• Referral rewards app (e.g. tweet a picture with your Braves hat on in the stadium and get a free Coke)
• Image overlay app where you can swap out the text or plug in a Braves player digitally (think Snapchat filter)
• Meet like-minded people in stadium and make new relationships
• Virtual trading cards where you can only get certain ones by attending games (think Pokémon Go but for digital baseball cards)

Congratulations to the winner Mixle:

Thanks to all the teams that entered and the Braves for sponsoring the event.

What else? What are some more ideas for sports venue apps?

From a sign on the wall at a Jimmy John’s comes a great little tale titled How Much Is Enough:

The American investment banker was at the pier of a small coastal Mexican village when a small boat with just one fisherman docked. Inside the small boat were several large fin tuna. The American complimented the Mexican on the quality of his fish and asked how long it took to catch them.

The Mexican replied, “only a little while.”

The American then asked why he didn’t stay out longer and catch more fish?

The Mexican said he had enough to support his family’s immediate needs.

The American then asked, “but what do you do with the rest of your time?”

The Mexican fisherman said, “I sleep late, fish a little, play with my children, take siesta with my wife, Maria, stroll into the village each evening where I sip wine and play guitar with my amigos, I have a full and busy life.”

The American scoffed, “I am a Harvard MBA and could help you. You should spend more time fishing and with the proceeds, buy a bigger boat, and with the proceeds from the bigger boat you could buy several boats. Eventually, you would have a fleet of fishing boats. Instead of selling your catch to a middleman you would sell directly to the processor, eventually opening your own cannery. You would control the product, processing and distribution. You would need to leave this small coastal fishing village and move to Mexico City, then LA and eventually NYC where you will run your expanding enterprise.”

The Mexican fisherman asked, “But, how long will this take?”

To which the American replied, “15-20 years.”

“But what then?”

The American laughed and said that’s the best part. “When the time is right you would announce an IPO and sell your company stock to the public and become very rich, you would make millions.”

“Millions?” asked the fisherman, “Then what?”

The American said, “Then you would retire. Move to a small coastal fishing village where you would sleep late, fish a little, play with your kids, take siesta with your wife, stroll to the village in the evening, sip wine and play your guitar with your amigos!”

(Author Unknown)

Recently an entrepreneur reached out asking for help around raising money for his startup. I obliged and requested a list of questions. Here are the questions and my answers:

1. What is the deal structure normally put in place?
   Investors typically want preferred equity where they get their money back first in the event of a sale along with protective provisions (more on common vs preferred stock, learning startup investor speak, and the current market for liquidity preferences and dividends).
2. How much equity should we expect to give up?
   Startups typically sell between 20 and 35% of the company in each funding round (I’m a fan of selling less and minimizing dilution). Also, you’re selling an asset, not giving it up.
3. What are acceptable funding targets in this day and age (it’s a B2C social app)?
   There’s very little appetite for consumers apps unless they have traction. On the consumer side, investors want to see at least 100,000 active users (see five categories of initial traction milestones for startups). If you raise money, it’ll be from friends and family that believe in you, not your idea.
4. How much influence do investors have over the product or is that still pretty much ours?
   None. Investors will offer up advice but have no influence.
5. Is there care and feeding of investors involved, and what form does that take – a newsletter/group email about progress, etc.?
   Yes, you’re potentially taking large sums of money from people. They should be updated at least monthly on your progress via email and a few times per year via a meeting.
6. Is there anything I should be looking out for in terms of red flags in deal structures or people?
   Yes, understand what’s common in a term sheet and what’s not. Stay away from the uncommon stuff. On the people front, check references and only do business with people that you like working with and see a long-term future of collaboration.

Raising money is a serious endeavor. Treat fundraising like an important milestone and learn as much as you can about it. Read Both Sides of the Table, Venture Hacks, and The Macro.

What else? What other advice do you have for a first-time entrepreneur raising money?