Why Every Entrepreneur Needs a 2nd Startup
When your side project becomes your day job, pick up another side project
click an icon above to see more posts on that topic





In Episode 6.1 of The Startup Show, Joe Procopio (Automated Insights, ExitEvent), Andy Roth (RocketBolt), and Jon Colgan (Veeto, Cellbreaker) propose that all entrepreneurs need two things to work on at the same time.

A lot of entrepreneurs get started by building their own business on the side while still working at their day job full time. This is a hard path to walk, but for the sake of creativity and motivation, every entrepreneur should continue on with a 2nd thing, something between a hobby and job, once their startup becomes their full time job.

Read the rest
MORE STARTUP CONTENT BELOW

Join Teaching Startup Now


More motivation. More education. More interaction. Sign up here to get a free beta account for Teaching Startup.

Email Address
Caveat: By joining, you'll opt-in to our weekly email update. It's valuable, and it's MailChimp, so you can cancel at any time with one click.


How To Start a Business Without a Good Idea
You may not have a good idea, but you've got problems
click an icon above to see more posts on that topic





In episode 5.3 of The Startup Show, we dive into how to do startup without having a good idea, a question posed by one of our members at teachingstartup.com. Current entrepreneurs Joe Procopio (Automated Insights, ExitEvent), Andy Roth (RocketBolt), and Jon Colgan (Veeto, Cellbreaker) talk about how get started without an idea, how to generate good startup ideas, brilliant ideas that don't make money, why your first idea won't be your best, and alternatives to starting your own company right away.

Read the rest
MORE STARTUP CONTENT BELOW

Be a Better Entrepreneur


More content. More interaction. More education. Sign up here to get a free beta account for Teaching Startup.

Email Address
Caveat: By joining, you'll opt-in to our weekly email update. It's valuable, and it's MailChimp, so you can cancel at any time with one click.


A Startup Culture of Entitlement and Sexual Misconduct
The Startup Show - Episode 5.2
click an icon above to see more posts on that topic





In Episode 5.2 of The Startup Show, we get three dudes together to talk about sexual harassment, because how could that go wrong. But in all seriousness, this discussion should be uncomfortable, and it's necessary, for everyone, including these three dudes, to push the conversation forward.

Read the rest




Why West Coast VCs Won't Fund Your Business
The Startup Show - Episode 5.1
click an icon above to see more posts on that topic





In Episode 5.1 of The Startup Show, entrepreneurs Joe Procopio (Automated Insights, ExitEvent, Intrepid Media), Jon Colgan (Veeto, Cellbreaker), and Andy Roth (RocketBolt) talk about everything from beer to religion to creative writing to west coast venture capitalists and how they can influence and impact local economies.

Read the rest




Five Funding Sources for Startup: Venture Capital
Accelerators & Incubators, Seed Stage, Early Stage, Expansion, Exit
click an icon above to see more posts on that topic
There's so much to talk about with Venture Capital funding, so here's what I won't be talking about.

I'm not going to discuss all the varieties of financing that can be a part of VC funding, like bridge financing or down rounds. I'm going to stick to the basics and compress a few things. I like to cover the entire universe at a high-level, so you know what the game looks like. There will be plenty of time to drill down into specifics here and elsewhere.

I'm not going to give any advice on how to find, contact, or pitch VCs. That's been done to death and, in my opinion, there's no single right way.

I'm not going to talk about the funding process, i.e. term sheets, preferred shares, amended articles of incorporation, and so on. Why? See the previous two things I'm not going to talk about.

I'm not going to tell you whether or not you SHOULD focus on VC, but I will tell you this:

Fundraising, especially when it involves VC, is a long, painful, time-sucking process. It is a full time job. It will drain your resources and your sanity. It is not a measure of success, but it can pave the way to success. It can be dangerous, depending on who ends up with their hands on which control levers. It can be life-changing, when it comes at the right time for the right reasons.

If you don't know whether or not you need VC funding, you don't need it, because you're not ready. You should know exactly how much you need to raise and exactly what you're going to do with the money. You should already have relationships in place at a handful of Venture Capital firms before you make the decision.

But if you've already run the investor gauntlet of Customers, Self, Friends and Family, and Angel, and if you know you need VC funding, and if you know who you're going to reach out to first, second, and fiftieth, then it's time. Here's what the universe looks like:

Funding is the most complex part of startup. How, when, and why you get funded is an individual series of choices, and every startup will take a different path. No one strategy is better than another, but you should definitely have a strategy in place before you raise a dime.

Venture Capital investors are firms that manage funds that invest in startups. VC is what we think of when we think of traditional startup investment, and their money is often referred to as institutional capital (which mostly means the money is not coming from a single individual).

VC firms are usually staffed in a chain with Partners at the top. Limited Partners are investors in the fund, while General or Managing Partners are investors in the fund and also run it. Venture Partners and Principals find and make deals for the fund, and may or may not be invested. Associates are at the bottom of the chain. They create relationships and do research, but often don't have the authority to green light a deal on their own.

Some VCs will invest small amounts as early as the Seed Stage, alongside the founder, Friends and Family, and any Angel investors. However, most VCs won't invest until there is progress beyond the Seed Stage, what's called a Series A round. From there, additional rounds will be called Series B, Series C, and so on.

VCs are always looking for a return on their investment, either through the sale of shares in an Initial Public Offering (IPO) or via merger and acquisition, where the company is sold to another company or to another financial entity like a Private Equity Fund. Sometimes VCs are bought out in future Series rounds when new VCs come in.

In almost every case, once you're in the VC world, you're not getting out until the company sells, which is called the exit. Oh, you're going to need legal and accounting help on hand during the fundraising process and retain that help through the actual funding.

Read the rest




Five Funding Sources for Startup: Angel
Established Angels, Angel Groups, Entrepreneurs, Retail Investors, Investment Crowdfunding
click an icon above to see more posts on that topic
In the prior three installments of the five funding sources series -- and I do recommend that you read all three -- the sources I covered share a common trait in that investing in your startup is not their primary role.

Customers, of course, play a much more vital role as your company's lifeblood. If an investor sours on you, you're in trouble. If your customers sour on you, you're done.

Self is you. And your role is to build the best product and best company that ever existed. Your investment, in terms of cash, will play its part in getting all of that started, but your time, your energy, and your leadership are the most valuable resources you can contribute.

Friends and Family bring their own issues along with their investment, and those issues will mainly revolve around managing your relationship with them as investors. That said, their existing relationship with you -- as friend or family member -- will, in most cases, come first.

With each of the final two funding sources, their primary role is as your investor. There should and most likely will be added value from these sources, in everything from connections to advice to even office space. However, when the documents are all signed, these investors are expecting a return on their investment.

So let's talk about who they are.

Funding is the most complex part of startup. How, when, and why you get funded is an individual series of choices, and every startup will take a different path. No one strategy is better than another, but you should definitely have a strategy in place before you raise a dime.

Angel investors are individuals who invest in private companies as a part of, or in lieu of, a portfolio of retail investments, like stocks or real estate.

Angel investors are actually kind of hard to pin down, and thus are sometimes the most overlooked source of capital in startup. This is not surprising though, because it's easy to get confused about the definition of an Angel, their role, and how to find them.

If you think of Angels as people with a lot of money and high risk tolerance, you're not too far off. They invest their own money. They can operate independently or as a part of a group. Some specialize in certain sectors or technologies, while others invest in whatever they think is cool. Some take almost no active role with the startup, others will want to be a formal advisor or even a part of the management team. Some make a lot of investments, others might make only one or a few.

So just about anyone with money can be an Angel, right? Well, that's close.

Read the rest




Five Funding Sources for Startup: Friends and Family
Family, Friends, Associates, Network
click an icon above to see more posts on that topic
"Hey Dad, can I borrow $50,000?"

I know. A single sentence that's so wrong on so many levels.

When we talk about Friends and Family investment, there are a lot of landmines to tiptoe around, and most of them have to do with personal circumstances. So let's look at that opening sentence again. We'll break it down and we'll start stepping on landmines. Together.

Funding is the most complex part of startup. How, when, and why you get funded is an individual series of choices, and every startup will take a different path. No one strategy is better than another, but you should definitely have a strategy in place before you raise a dime.

First of all, most people think of Friends and Family investment as an opportunity reserved for an elite few. This is not the case. You don't have to have wealthy parents or run with a Wall Street crowd to tap Friends and Family money. The fact is, a lot of people, including people you know, invest their money one way or another.

And that's what you're after. This isn't a handout, this is an investment. A sale. The exchange of cash for a piece of your company.

You're not likely to luck into a $50,000 windfall -- those dreams of fully funding your startup via a rich uncle or a friend of a friend of a friend are just that, dreams. With Friends and Family investment, you ideally want to raise just enough cash to get to your first customer.

But even if your family and friends have the means to invest, there's the gross part of having to ask. There's always something sketchy-feeling about asking someone you know for money, no matter how much you believe in your ability to create a return on their investment.

Finally, we're going to have to talk about relationships, and it's going to get sticky. If you've ever borrowed from or lent to a friend or family member, you know that the odds of your relationship changing are pretty high, especially during the time that the loan is active. The same relationship dynamics (the rules and the feelings) apply to investment, and you are beholden to these shareholders regardless of how much blood or water is between you.

So let's get started:

Read the rest




Five Funding Sources for Startup: Self
Out of Pocket, Day Job, Consulting, Co-Founders, Loans
click an icon above to see more posts on that topic
In the last installment of the Five Funding Sources series, we talked about getting money from your customers as your first, earliest, and preferably sole source of funding for your startup.

Now let's talk reality.

I'm kidding. But we're all aware of the fact that starting a company costs money, and if you're relying solely on money from customers, you're going to be restricted in how fast you can grow, especially in the beginning.

Let's face it. Everything costs money. Incorporating your company costs money, developing a product costs money, marketing that product costs money, waking up in the morning costs money. If reason number one why people don't become entrepreneurs is that they fail to act on their ideas, reason number two is that they're unwilling or unable to spend the money necessary to execute on those ideas.

I fall victim to this more often than I'd like. I don't enjoy spending money, even other people's money. I'm frugal by nature, just ask my notoriously under-privileged kids. This frugality has been more of a plus than a minus on my entrepreneurial journey, but it's also made things more difficult, and probably kept me from acting on one or more ideas that could have returned a lot on any initial investment.

So you'll most likely need some money before you get your first customer, or if your future plans cost more to implement than your revenue stream can support. That money is going to have to come from somewhere, and the best place for it to come from is you.

Funding is the most complex part of startup. How, when, and why you get funded is an individual series of choices, and every startup will take a different path. No one strategy is better than another, but you should definitely have a strategy in place before you raise a dime.

Self is the next best way to fund your startup after Customers, and self-funding is always going to be a requirement. An entrepreneur should always have some of their own money in their startup, and the more money they put in at the beginning, the better off they'll be at the end.

In fact, I'll go so far as to say you should never go after Friends and Family, Angel, or VC funding without having your own money invested first.

Read the rest




Five Funding Sources for Startup: Customers
Early Adopters, Licensing, Future, Strategic Partners, Crowd
click an icon above to see more posts on that topic
OK, let's talk about money.

No matter the reasons you embarked on your startup journey, you're going to need fuel for the engine. Ideas, talent, and technology are crucial, but if they don't lead to cash, you'll be wasting them.

It's money. Money is the fuel.

When I talk about funding, I'm going to ignore your intentions as a founder -- in that, I mean I don't care how noble and altruistic your reasons are for doing what you do. Startup street is littered with the burned out carcasses of enterprises whose founders had the best of intentions, but couldn't or wouldn't focus on making their mission sustainable.

Don't let that be you. You need to be funded.

Funding is the most complex part of startup. How, when, and why you get funded is an individual series of choices, and every startup will take a different path. No one strategy is better than another, but you should definitely have a strategy in place before you raise a dime.

Customers are your primary source of funds. I can't state this emphatically enough so I'll just repeat it a number of different ways.

I'm not leading off this series on funding with venture capital or angel investing or friends and family money or even self-funding. While all of those are certainly valid and important, and I'll get to all of them, the value brought by money from all of those sources is completely eclipsed by the value brought by money from customers.

In fact, you can start your company without ever raising money from any of those four other sources. You can't survive without revenue, and you should be in this mindset from the very beginning.

There. I think I beat that to death, and we can move on.

Read the rest




Five Roles of Startup: Growth
Investor, Advisor, Mentor, Service Provider, Community
click an icon above to see more posts on that topic
The five roles I'm discussing in this series are general, but intended to identify everyone inside and outside the startup's organization. You must have someone playing all five roles, and in the early days, two or more of these roles are probably going to be played by the same person.

Up until now, all of the roles we've discussed have been people you bring into the company. Here they are:

Vision -- Founding, Leadership, Management, Product, Future. These are your leaders, explainers, and decision-makers.

Build -- Design, Engineer, Perform, Deliver, Support. These people make the product.

Sales -- Salespeople, Marketing, Business Development, Public Relations. These people sell the product.

Operations -- Human Resources, Finance, Legal, Administration. These people make sure the company is running smoothly and efficiently.

If you lock down these four roles, you are well on your way to building a successful startup that has a very good chance of having a long life. I will say, in all seriousness, that you can stop there, as long as you keep the best people in these roles.

However, if you're building a startup with an intent to be not just good, but amazing -- world-changing, dominating, life-altering, that kind of thing -- you're going to need boosters for your rocket, so to speak.

Filling this final role is what brings a business up to the speeds that we normally associate with the startup stories we see and hear about in the press. But just because you chase growth doesn't necessarily mean you're going to launch your startup into the stratosphere, up there with Google, Facebook, Uber, and the kinds of companies that grow to be worth billions of dollars.

Ultimately, how far you go depends on both how good you are and what you want out of your journey. You don't have to hit a home run -- a triple or a double is what you might want to aim for -- but regardless of how far you want to get, you're going to need to fill this final role.

Growth is the role that propels a startup beyond the limitations of the talent and resources within the company itself. Most of this role is filled with people who don't work for the company directly, but partner with the startup as a key member of the extended team.

The Growth people provide additional resources, including money, advice, connections, services, education, and more, usually in exchange for something else. That something else can be a piece of the startup, a percentage of the revenue, or even cash payment.

Two things to remember about the Growth team. 1) It should be relatively small, no matter how big your startup gets. 2) The individuals on this team should be temporary. Those aren't hard-and-fast rules, but it should be in the back of your mind that almost every member of this team will eventually be replaced, either by someone new or by no one at all because you no longer need what they provide.

Read the rest




Pick a Topic
Get Educated


Teaching Startup has lessons -- written, video, and audio -- covering 25 important foundational areas of startup: Stages, Roles, Kinds, Funding, and Reasons.

Each lesson on the site covers at least one and up to five of these areas. Pick and choose what you need to know and how you want to learn it.

Click here. Choose a topic. Read, watch, listen, and learn