From Houston TeXchange August 16th event recap:
Equity comes in a lot of flavors. My three (3) requirements for attracting useful capital include:
- A sizable market opportunity is defined. Depending on whether you are a “Blue
Ocean or Red Ocean” opportunity dictates available capital sources and terms. - Differentiation is more compelling than alternatives for both the product and leadership team. The single biggest failure is the inability to build the right team. The right team includes a professional CFO, CPA, and leg
al advisor. Also, founder’s most overcome the founder’s dilemma. If you want to have capital, you must be willing to give up control.
- Can you see the results/differentiation in the KPIs?
Every business faces inflection points. At each inflection point the business plan and capital plan must be re-aligned. It’s hard for founder’s to migrate from a bootstrapped mentality to a growth mentality. My advice: Don’t be a one-man band. Don’t be too focused on one employee or one product. Constantly bring in better people and create a portfolio.
- Focus on your business model attributes which are illustrated/demonstrated to investors via KPI metrics beyond financial reporting ratios and cash flow and EBITDA.
- Focus on attracting leaders and outside resources for assistance in developing the company before capital is required.
Download the full Houston TeXchange recap on Useful Capital Strategies for Growth here:
http://www.ephorgroup.com/download/UsefulCapitalStrategiesforGrowth-August2012.pdf
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