Team, Team & Team are the 3 most important characteristics for an early-stage start-up right? Then why isn’t there more practical advice out there to help look after you valuable entrepreneurs? I’m not talking of course about finances but rather the things that may properly cripple your ability to execute on your business plan: mental and physical health. There is loads to discuss with mental health but let’s start off with some basics about physical health, specifically food. Whether you’re an entrepreneur, corporate lawyer or gardener, if you want to perform at your peak, you need to look and feel your best. Getting the right nutrition is key.
Forget Tesla, Space X and Hyperloop. I’m talking about something more exciting. I’m talking about the Cape Town start-up that managed to shake up the global F1 and leisure boating industry.
In its life, Caudwell Marine received between $80m-$100m in funding. That’s well over one billion Rand. In South Africa, that goes a very long way so it might as well have been one billion US dollars. This was no ordinary start-up!
Most good company ideas are stolen. Success is all about timing and execution. How do I know this? Because I’ve spoken to countless wealthy entrepreneurs who were not ashamed to admit it. I might have also done it myself once before. It worked brilliantly except for the tiny yet pivotal fact that the product didn’t lend itself to repeat business...
Case in point, before Facebook there was Ringo. It launched a full 8 months earlier, in June 2003. After only 3 months it had 200,000 users with a weekly growth rate of 10%.
We have all heard that some of the best businesses start in a restaurant with some rough notes scribbled on the back of a serviette. If that is the case, then why are countless people studying entrepreneurship and going back to [business] school to learn how to write business plans?
Thinking around entrepreneurship has evolved. Historically there was belief that it was not possible to teach entrepreneurship. That has changed. Not only is it possible to teach, it has a positive correlation with success!
Entrepreneur: “Nailed it! I’ve found an Angel investor who’s agreed to invest £10k at my £5m post-money valuation and is willing to let me have a 6-figure salary.” Friend: “But that only gives the angel a 0.2% equity stake in your business…plan. How will they ever make a return?”
This is one of those cases where if it sounds too good to be true…(you know the rest). Ok, so what’s the catch?
Starting a new business is an exciting time with many questions to be answered and decisions to be made.If you are a founder, you will most likely be working for free, perhaps alongside an existing job, until you can take the plunge to go full-time when the business starts bringing in money, whether that’s through investment, debt finance or early sales.
However, in addition to the founders, many businesses will need other talent and skills to take the business forward.
For anyone working in the corporate world, there’s a book I highly recommend by Albert Bernstein called Emotional Vampires: Dealing With People Who Drain You Dry. As it turns out that not everyone has your best interests at heart and you need to know how to identify these sociopaths in order to protect yourself, your mental health and your career. The book has helped me tremendously.
In the start-up world, there are other types of vampires. This time they’re looking to get their fangs into your equity. Here’s some tips on how to ensure you keep the bloodstains off your shirt.
Fancy trying to catch a falling knife? There's probably no better analogy to describe distressed businesses. They are not for the feint at heart.
I admire people who take on the challenge because ultimately they save jobs and help the economy grow.
If you decide it's for you then please make sure it's not your first investment and make sure it's not your last dollar!
Private Equity has become an increasingly attractive asset class. Unfortunately due to its success, lots of capital has poured into the sector. More capital chasing the same number of opportunities has increased prices and reduced returns.
Nonetheless, there are still some very good opportunities and many VC-backed businesses will exit to PE so its still a very exciting time to be investing.
Yes, we would all like to invest in the next Facebook, Snap, Instagram, but if presented with the business plan at the outset, would you have taken the plunge?
I think VC is as much about gut feel as it is about rigorous investment criteria. In fact, many very successful VCs will tell you that they've turned down investments in some of the world’s greatest companies. Is this proof that VC investing is much as an art as a science?
With Angel investing, I think the main question you need to ask yourself is: "Do I have enough follow-on capital if their estimates are not quite right?"
This list is by no means exhaustive and there are plenty of other factors that you should consider so this is a starting point for those looking to get into the industry.
During a finance interview you will often be asked: “What is your investment thesis?”
The interviewer will tell you that there are no right or wrong answers and that they just want to get an idea of how you think. This is not entirely true as some answers are probably more right than others...
Great business idea? Check. Shiny pitch deck? Check. Investor meeting? Check. What's next you might be asking? Turns out it’s a very good question.
All VC-backed entrepreneurs will tell you that fundraising involves a steep learning curve, requires resilience and lots of work. It is unfortunately a large business distraction and can occupy your life for the best part of six months. Being prepared both mentally and administratively is key to success.
You started your own business because you have a great talent for providing a particular service. You make a decent living, but you never feel as if you are getting ahead. Why is your experience not being reflected in your bank balance?
In the business world, they often talk about ‘levers’ that you can pull to improve profitability. For most service providers, there are 3 key levers:
Lost? Confused? Frustrated? Navigating the investment landscape as a new tech start-up can be a big challenge for budding entrepreneurs. For investors, evaluating start-ups is often considered more of an art than a pure science.
However, that said there are a number of relatively concrete criteria that need to be in place first for an investor to take your start-up seriously.
I feel very fortunate to have experienced a live talk from the motivational speaker, Rob Moore. Rob’s speech stands as one of the most inspiring and educational speeches I have heard to date and I suspect will continue to do so for a long time.
As Rob taught me, when you share your knowledge with others, magical things happen, so here you go. P.S. It turns out, there is a formula for success…
In the blog post on Finding Business Ideas we said that buying a business is often the quickest and easiest way to become an entrepreneur. Well, like buying a house, you don’t want to pay for fancy fixtures or a fresh lick of paint. You want the cheapest house in the best area. This typically means you’ll buy something beaten up that needs loads of TLC. The same goes for businesses and so being able to execute a turnaround is a key skill.
Disclaimer: Views expressed here are solely in my private capacity and do not in any way represent the views of organisations I might be affiliated or associated with.
Copyright © 2020 The Tippy Top
Copyright © 2020 The Tippy Top