Tuesday, May 27, 2008

Right Action, Right Time for Funding

At the Bootstrap Growth Subgroup meeting in April, two knowledgeable local executives presented their experience and tips on Funding....

Henrik Johansson, co-founder and COO of Boundless Network
Michael Wilson, founder and CEO of Small World Labs

Our speakers' experiences spanned the gamut in why, how, and the lessons learned in getting investors to pony-up for the growth of their venture. Three wise principles stand out:
  • Proceed with the end in mind
  • Go for the money before you need it
  • Choose your investors wisely
Before you go for the money, know where you eventually want to be with respect to the venture. What becomes of the founder in the future? Of course, whatever you want is ok. It's your business – for now. Remember that once you bring in investors you will be accountable to them, and depending on the terms of your funding and how much you raise, you may eventually lose control of your company, and if you don't perform you may lose your job!

It takes a very long time to get investment money. The tasks involve: getting the connections; establishing relationships; negotiating the terms; and, working full focused to move things through. Not only do these steps occur over time, during this time you still have your duties in your business and could be looking at some very long days. Start this process way before you're ready for the money. The day you wake up and decide you need funding, you will be thankful that you started conversations in the right circles - long before.

Your investors become your left-hand, your shadow, and your conscience. You want to know well about their motives, their expectations, and their interests in your company because when you take their money, you become accountable to them.

When considering investment funding for your business, keep in mind right action right time. The implications of this funding will vary markedly, depending on the stage of your business. For example, if your venture is in Ideation, your investors are likely to become your bosses and you become an employee who can then be fired. When your venture is beyond the VoD and in Growth, you are likely to have more influence in creating the terms of that funding and control in the business afterward.

Nancy Schill
, founder, Executive Intelligent Coaching and co-lead, Growth Subgroup

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