Re: UKNM: On the VC trail...

[Ray Taylor]

<

Speechradaol [dot] com

> said:


> ......as a

> friend said to me tonight it's still hard raising money for an Internet

> business unless you are the son / daughter of someone alrready in the

> finance

> loop !


I talk to VCs and City financiers of one sort or another quite a lot. And I

believe that nothing could be further from the truth.



VCs, incubators, and all the other sources of investment money get piles of

proposals every day. Almost all of them (I am told) are badly presented

non-businesses with big ideas and little substance. When I asked a friend

who runs one net-oriented funding company why he doesn't just pay somebody

to sift through them and pick out the gems, he said that he would not want

to miss out on the real diamond because somebody else failed to see it.


Here are some of the common problems, in my view (not my financial

friend's):


1. Too much emphasis on the big idea. Ideas are cheap, everyone has loads of

them, and on their own they do not make a business. Clearly you need a

degree of vision to propose a new business. But my view is that the ideas

should be the fire that inspires you to do the work and get the thing going,

rather than the thing that you try to sell to a VC.


2. Conversely, not enough time and effort is spent on basics like research

and testing. I've said this before, but if you want to set up an ice cream

shop on Brighton promenade, how much effort does it take to count the ice

cream shops and stalls already there and to have a stab at the number of

people who buy ice cream? What would it take to set up a stall selling your

new brand of designer ice cream to test out market acceptance? For sure, you

might already have enough "gut feel" (and all that other machismo bollocks)

about it to not need to be convinced. If that's the case, go mug your granny

for the startup money. If you want someone else to cough up the dough, you

need to give a convincing case to an unbeliever.


3. "Entrepreneurs" ask for too much money too soon. People keep forgetting

that the new media (that thing that the magazine title "Revolution" refers

to) represents an opportunity for low-cost access to market, rapid time to

market, and rapid brand growth. That being the case, why not get the

business up and running in a moderate form to demonstrate the viability of

the business model? If someone asked me for a big chunk of my money (don't,

I haven't got any) I would be more impressed by an enterprise that was

already up and running and demonstrating success in small ways, than by the

grandest of ideas that still languished on paper at a time when the pace of

business change demands immediate action above all else.


And as to the charge of nepotism, I think that's a bit silly. Capitalists

traditionally don't like getting their hands dirty. Neither do they

traditionally expect their children to. What they thrive on is other people

getting dirty hands on their behalf.


If your folks have money, power, influence, etc., it will certainly do you

no harm should you ever want to pretend to be an entreprenuer. And if you

know someone like that, get them on your team however stupid they are

(highly likely in my view). Money does of course attract money.


And if you ever think it's too tough, or too much hard work, to go get

funding, then either:


(A) Work harder, be tougher, or

(B) Give up and get a safe job, while there are still some left


Ray Taylor



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