Funding is not easy. Be smart about it.

Getting funding is great but it is not easy. Before you even think about raising capital make sure you are certain you actually do need to raise some money. Raising capital is not easy, and it is expensive. Can you generate revenues and organically grow your company? If you can’t, then chances are you will need to raise capital from some source.

Capital raising is expensive. It will take a lot of time from the rest of tasks in the company. It also requires a bunch of documents to be prepared such as a business plan, presentations, executive summaries, and elevator pitch. You will also need to setup the legal structure of the company to sell stock and offering documents such as a Private Placement Memorandum (PPM) needs to be created. Raising capital can come from many different angles, or combination of. Before you start the process make sure you know what you need to raise. It should be enough to meet major milestones plus some extra cushion in case things are to take longer than expected.

Once you are ready to start raising capital it’s good to evaluate who you know, and see if there are ways you can raise the capital from within yourself or family and friends. Some creative ways to find money outside of savings and trust funds are credit cards, loans against assets, and second mortgages. The more you can invest at the beginning the more ownership and control you will retain moving forward. This is a great way of funding a venture, however, it also has its disadvantages.

Investors need to bring more than just money. Money is what you *think* you need, but in reality, you need experience and expertise. You need more brains believing in what you are working towards. You need more contacts, and a greater network of people. You need different perspectives, and you also need money. If you can get other people to co-invest with you that is the best option. This will reduce your investor’s risk, and increase your probabilities of getting to market quicker.

When looking for outside investors you can look for various types of angels such as family and friends. Super-angels such as very wealthy investors that will invest large chunks of money (typically over $200K) at an angel valuation. If you need more money and you do not have access to more angel based capital, you can then explore other methods of funding such as venture capital or institutional funding. These types of funding are great in respect to the resources that will come along with their investment, however, it will be very expensive. They will devalue your company and typically take control of the vision and management team.

So ask yourself and be honest to what you actually need. Take as much capital as you can get, however, know and understand the consequences. Study the different options and contingencies of each. Capital is essential for a company to stay in business, but it is not easy to get and can be very expensive.

Regardless of which option you go with, try to always have fun in what you’re doing and make sure you can preserve the culture you’ve created. Investors will be investing in the technology, management team and company’s culture.

Create a culture for success.

There are a million things that one has to think about when starting a company, however it is extremely important to not overlook the most important one of all, corporate culture. Corporate culture is set from day one, and it starts from the founders to top executives and down the chain.

A good culture is to be enforced daily and if done properly it will make all employees want to come to work, it will make them proud of where they work at, and make your company feel more personal. Setting up a culture is not an easy task to do. It requires communication, setting up guidelines, expectations, deadlines and contingencies. What time should I come to work? What is the dress code? Who do I report to? Can I work from home? Can I bring my pet to work? Can I take a longer lunch and stay longer at the office? Do I need to work weekends? How many sick days do we get? How many vacation days do I get? What happens if I don’t meet a deadline? What if I decide to work longer hours but come to work at 10am? Does the company give equity? If so, how does it work? These are few of the many questions that you should have an answer for when setting a culture.

When setting up a culture have one thing certain, not all employees will meet the requirements to sustain a healthy culture level. Sometimes it’s a good thing to have a trial period with new employees to see if they are a match or not. If you have doubts of a culture match, let that person go. He or she will will become a greater headache / liability down the road and it will be more difficult to get rid of them at a later time. One bad employee can spoil a company’s culture, causing miss communication and failure in accomplish goals and deadlines.

As a founder or top executive at a company you should remember that it’s better to have greater work load in a healthy environment than less work in an unpleasant place of work. If you are feeling that personalities are not interacting effectively and efficiently, take a look at it and fix it. Don’t let it drag, probabilities are that time will not fix personalities, and time is your most valuable asset, so cherish it.

One bad apple spoils the bunch.

Choose wisely who you go to bed with.

One of the most important choices when creating a company is deciding whether you should go at it on your own or bring others as partners. Creating a partnership requires hard work but most of all, complete trust. With that said, never go into a partnership unless you’ve disclosed in full what the responsibility and expectations are for each of you, and most importantly, you have that in writing.

A common mistake by most people going into business for first time is thinking they can worry about the legal side at a later stage… that’s a very bad way of thinking. You are going into business with the hope of making money by solving a present pain in the marketplace. This will require lots of time, obligations, and tons of stress from multiple angles; angles that most of the time are nearly impossible to predict.

What happens if your company gets acquired? What happens if you get funded and one of your new investors does not like one of you? What happens if time to market extends longer than financially possible, and forces one of you to not continue and has to leave the company? What happens if your goals and mission changes during the process and can’t see eye to eye? These are some of the many questions that unless you have things in writing prior to them happening things will go in a downward spiral. This will not be an easy situation to deal with and relationships once thought of being great can turn into nightmares.

Prior to going to bed with someone do each other a favor, talk, talk, talk, and then put things in writing. Once that’s done then do whatever it takes to execute your product to market. It is sad to know that some of my good friends have been burned for forgetting to exercise this simple, but yet important step. If you can’t talk about these subjects with your “future” partner, don’t even think about going to bed with them. Once money is involved (or lack of), people will change, I guarantee that. Choose wisely on who you go to bed with, because it is a marriage.

My girlfriend vs. Starting a new company

My girlfriend is always complaining about how little time we spend together… how can she not understand that I’m working very hard to getting this company off the ground? It’s not like I’m partying and going out with my friends without her… If you’ve ever started a company or you’ve been in a serious relationship you should know what the word “commitment” means. To become successful in life you need to commit to whatever that is you want to become successful at.

When you are in a relationship and you want to start a company, be honest to yourself, but most importantly, to your loved one. I made the mistake of thinking about myself and my company for many years. I worked non-stop around the clock, averaging 18 hour days, seven days a week. Myself being a workaholic and having OCD my entire life, it is easy to loose track of time and work non-stop…. seeing my product take shape and users using it was even more fuel being added to keep the adrenaline going… and working harder and harder every time.

This entire time I thought I was being successful, but in reality I was failing. What was fueling my body and keeping me going ended up being what was also slowing me down and killing me. I had forgotten about my girlfriend, my best friend. I was able to work so many hours but I had forgotten there are only so many hours in a day…. so how was the house being cleaned? How was food being made? How were chores getting done? How were the dogs being walked? How come I was feeling loved but yet I was not giving any love back? How was the infrastructure of the relationship being sustained? The answer is simple, her.

Life is not about “commitment”, it’s about finding a balance among the things you want to be “committed” to. I’m one lucky guy that I was able to be in a relationship with an amazing and beautiful woman that supported me but also cared enough to eventually talk to me and make me realize that a relationship will never work unless both people are committed to it. Having realized that was the best thing that could have ever happened to me. I still work more hours than the average person, but I now appreciate her and focus on quality time every day of the week.

Be honest to yourself, your loved one, and people that surround you. Work to improve your life and have a realistic goal in mind. I can now say that I was able to accomplish two of the hardest things in life at the same time, but it was not done alone. Nothing amazing is ever done alone, there will always be people around you that will influence you and keep you motivated enough to continue going…. so don’t forget about them, it’s an easy thing to do.

Cheers.

I have an idea but no money.

Having ideas is 20% of the battle, so congratulations! Now you have to execute them… but how do you do that? Do you write a business plan? Do you go back to business school to get an MBA? Do you buy books? Honestly there are a million answers and each answer can vary between markets.

I can only speak for technology companies since that’s what I’ve been part of most of my professional life. Starting a company is not easy, you need to come up with a million + 1 things to just get going in addition to money itself. So how do you do it? It’s easy, bootstrap, continue bootstrapping, and do as much as you can on your own and with family and friends that share your idea. Your initial goal should be to create a prototype and generate some traffic, then show it to potential investors and begin pitching your idea.

In this economy finding capital is tougher than ever, and competition is stronger and much more knowledgeable. My best advice is to work hard and set realistic goals that can be achieved with your current resources. Review your goals daily and don’t be afraid to talk to people. The number one mistake that people make is not talking to other on fear of their idea being stolen. If execution was easy there would be many more companies out there… so don’t be afraid to get feedback as you build!

Happy building.