5 Lifelines for Your Startup
Entrepreneur's New Year’s Guide
Evan Solida was stuck.
Solida, founder of Cerevellum , which sells digital rearview mirrors for bicycles, had posted his business plan on several websites promising to connect him with investors in exchange for a few hundred dollars.
Time passed. Investors never came.
It's a familiar dilemma for many startup companies: Solida knew he needed help but didn't know where to find it.
"You almost feel like you're at a used car dealership," Solida says "You've got all these people who know you're out there looking for something--in this case, money from investors--and they prey on that."
Solida eventually found North Venture Partners, a consulting firm that helped him streamline his product offerings, set up an advisory board and take other steps to professionalize his business plan.
North is one of many resources available to startups seeking direction and funding. Here's a roundup of a few others:
Ultra Light Startups caters to "bootstrapping" entrepreneurs, says founder Graham Lawlor, who started Ultra Light by gathering a group of friends and fellow entrepreneurs in New York last year to brainstorm some business ideas. The informal gatherings morphed into monthly meetings in locations around the country that include pitch sessions and panel discussions on topics of interest to new business owners.
"The topics are all very practical," Lawlor says. "It isn't a blue-sky vision of 'What's going on in the world of technology?' It's 'How can I use this in my business today?'" Lawlor adds that the format makes Ultra Light an ideal networking forum. "Everyone's sharing their business plan, which puts everyone on an equal playing field," Lawlor says.
The Funded is an online networking group for startups seeking venture capital, following the same entrepreneurs-helping-entrepreneurs model as Ultra Light, with a focus on sharing information about investors. Founder Adeo Ressi says the free networking site lets its more than 12,000 members dish about specific investors anonymously. Resso adds that a thorough application process ensures members are actually business owners.
"Who better to ask about how good an investor is to work with than an entrepreneur who's already working with one?" Ressi says.
The Funded's sister company, the Founder Institute , offers a four-month, $450 program with classes on topics such as fundraising, branding and intellectual property. There's also a $50 application fee. Classes, taught by experienced CEOs, are held both in the San Francisco area and online.
"I don't think starting a company will ever be easy," Ressi says. "But I'd like to make all the mundane and bureaucratic aspects secondary to executing the vision."
Venture Architects , a business plan development firm, has helped hundreds of companies obtain more than $500 million in investment capital since 1998. But when entrepreneurs call Venture Architects looking for startup dollars, managing director Melissa Krinzman advises them to get back to basics first. In a world of get-rich-quick schemes Krinzman advocates slowing down and backing up.
"I often tell people, 'Forget the business plan; let's first make sure the business aligns with your goals,'" Krinzman says. She sticks with that step-by-step approach through the planning process. "Most entrepreneurs get an idea, get excited, and just plow ahead," Krinzman says. "I get a lot of calls asking, 'Who should I go to for venture capital?' when the reality is, they're at the friends-and-family round."
A business-plan review by Venture Architects costs $300, with full services starting at $5,000. Krinzman says the personalized approach is well worth the price. "We are not a business plan software that spits out an automated response," Krinzman says. "We really believe in our philosophy that there's no one business plan that works for every company."
North Venture Partners , the firm that helped Solida retool his business plan, helps startups compare themselves to their competition using data analysis tools.
"Venture capital is a secretive and unfamiliar realm to most entrepreneurs, and we wanted to give people a clear idea of how investors see their business compared to other businesses seeking the same funding," managing partner Alex Bernstein says.
Bernstein says many entrepreneurs come to North hoping to be connected immediately with investors, but leave with a revamped business plan enabling them actually to appeal to those investors. "A lot of business owners think the answer to everything is throwing money at it, and they spend months looking for investors," Bernstein says. "But if they had focused on the problem itself, be it changing suppliers or reducing the cost of infrastructure, they would be that much stronger in the eyes of investors."