Jun 27

Part 1: Making a match with timing, luck & the 1st salesman

 Making a match: Timing, Luck & The First Salesman  PART 1 OF 2

Entrepreneurs are always looking for insights into what investors are looking for. Investors are always looking for entrepreneurs they can win with.

They need a way to meet, speak the same language and relate to each other.

Enter Marc Kramer.

Kramer has a lifetime of experience, beginning with a startup at the school newspaper in high school. He is the executive director of the Private Investors Forum and now runs the Angel Investor Fair.

When it comes to making a match, it’s about the sales pitch.

For entrepreneurs:

“I’m always looking for someone smart, with good sales skills, not just good technical skills. The CEO is the main salesperson for the business. If they can’t sell their concept to investors, employees, the media and customers, the business can’t be successful.”

For investors:

“My biggest thing is only invest in things you understand and can really make a difference. Don’t invest in anything where you can’t help sales. Go into something where you can pick up the phone and call people. That will help drive sales, enhancing chances of success many fold. Just going to sit in a room and give them advice on how to manage isn’t going to do very well. Your investment’s not going to do well.”

Kramer has seen his share of success as well as missteps. For every opportunity that came through with sales at the perfect time, there’s one that seemed like a good idea that didn’t. One of the biggest factors that determines the difference: good old fashioned luck. And timing.

He said that for people starting out, the best advice is to take a job with someone who is more successful in the business to learn as much as you can. Build off of that knowledge, take a few small steps pursuing it part-time until you can show results and dive in full-time.

Don’t worry about being first, he said. Many people will jockey to be the first ones to show up with money, but often times it pays to take a more reserved approach, watch the first round and make adjustments.

COMING SOON   Part 2

 

Read the rest of this entry »

Jun 13

Top 3 Things a CFO Looks For In An Investment

cfo

Top 3 Things a CFO Looks For In An Investment

 

Below are some key takeaways from my interview with Vince Leusner, angel investor for the past 7 years and CFO for hire. Be sure to check out the recording below for the full un-edited interview.

What is a CFO for hire?

A CFO is like a quarterback, bringing together all the information and expertise gathered by lawyers, tax specialists, the controller and integrated systems. He offers financial consulting work for multiple companies at once, doing the same things a full-time CFO would do, only instead of working for a corporate employer, he covers what is needed at small and medium-sized enterprises up to $50 million a year.

What are the most common scenarios for a company to hire a CFO consultant?

  • When a company is growing quickly and navigating new, more complex territory. If a company grows from $5 million to $7 million in revenue, new challenges arise. The owners don’t speak the same language as their banker and need someone with expertise to help them navigate that path of demanding stakeholders.
  • When someone is planning to sell their business for maximum profit. If an owner is planning to exit the business, they want to lay the groundwork to maximize the company’s value and that process begins at least 18 months prior to the sale. Wisely, they reach out to people like a CFO as well as other advisors such as tax and business brokers to stage the business and make it look as valuable as possible to a potential acquirer.

3) When establishing processes to avoid or overcome fraud. If the top accounting person at the company doesn’t have the expertise or is involved in some fraud or impropriety, they bring in a higher level expert to coordinate finances.

What’s the biggest mistake a company makes without a CFO?

  • Profitability analysis: Many companies don’t access the various levels of profitability with each type of client. If they cut out the least profitable client — the labor intensive, demanding clients — they could generate a higher level of profit on lower revenue. Most small, privately-held companies don’t do that sort of exercise.

How did you get involved in Keiretsu?

“Keiretsu was very successful on the West Coast. A few of us were interested in getting it started in the Mid-Atlantic and first sketched out a plan for opening our first chapter in Philadelphia on the back of a napkin. Six years later, we have four chapters and 80 members.

Our members are investing in deals and helping to strengthen the community. We meet monthly, look at 3 or 4 companies, driven by members. Active angels in the community dictate what deals we should look at and pitch them to members. It results in a company moving beyond the presentation stage, where members collaborate and work together to carry out due diligence negotiation exercise to term sheet, resulting in an entrepreneur getting funding.”

 

What does an angel investor need to know?

  1. You’re probably not going to miss out on the next Google. Maintain a high level of discipline, and put in place constraints on the type of deals to invest in, and metrics on deals you want to consider.
  2. Be patient. The average investment is $25,000 on a venture ranging from $500,000 to a few million. Maintain discipline and patience and don’t rush into anything.
  3. It’s a gut feeling. Analyze the risk-reward; if the valuation is too high, it’s harder for a high return to be achieved. Start from a reasonable base. Knowing that difference is a gut feeling.

What are you looking for in an entrepreneur pitch?

  1. Someone who has been successful before. That experience is very valuable.
  2. A company already generating modest revenue. That’s a very good sign.
  3. I want to be the last dollar in a round, instead of the first dollar.
  4. Reasonable statements. Anyone claiming unreasonable growth potential or comparing this opportunity to the next Google is a turnoff.
  5. An IPO as an exit plan. It’s reasonable except it’s really really hard to do an IPO. Even if you build a company that can, you have to rely on market conditions.

If you’re in need of a CFO or are interested in Kiretsu, you can contact Vince at vleusner@keiretsuforum.net

Jun 07

The mistake we make reading body language

We asked business psychologist Merom Klein for that subtle clue people reveal about their nature through body language: the head nod, rushed speech, eye contact.

His answer: “The big myth is that you’re going to be able to read body language or an intonation, or someone says ‘um’ or they gesture in a certain way and there’s the magic thing that will tell you if this is an entrepreneur that you can believe in or not. The fact is, many of us have these kinds of biases of what we look for. If you look at the research they are incredibly unreliable predictors of future success.”

If it’s not a wink, a cough or crossed arms, then what is it? So many entrepreneurs come in with great ideas and vision, but only some are prepared for a successful run.

Here are a few things Klein looks at:

  • Can you have enough of a dialogue with this individual that you can open the door and do a good assessment of what they’re about?
  • What’s their skill set and their experience? Not just their background, but what have they actually done and achieved?
  • What hurdles have they faced and how have they overcome those?
  • How do they negotiate?
  • How do they meet timelines?
  • How do they understand your requirements as an investor?
  • Can you tell me where you’re going to need other people with greater know-how than yours and show me how you’ve hired and relied on talent like that in the past?

“I think that’s magical thinking. It concerns me that we choose presidential candidates based on that. ‘I liked his tie’ or ‘I didn’t like his toupee’ or ‘I thought he was too slick.’ Instead, look at the plan this entrepreneur is telling you they’re going to execute in order to create wealth and ask questions like: ‘Show me where you’ve done this.  Tell me about an experience.  What hurdles do you anticipate?’”

Like everyone, he has passed on good opportunities and invested at times when he shouldn’t have.

“It always came down to the people. It was hardly ever the technology.” He invested in one company whose technology couldn’t be supported by the market. But the team was agile, used their resources to pivot and came up with something that is better adapted to today’s market. As a result, he doubled down on his investment.

“That kind of agility, that kind of learning, that kind of looking reality in the face, saying, ‘it is what it is,’ and being excited by the possibility rather than defeated and frustrated and put off because the market isn’t what you thought it was going to be, that’s going to make that company a success.”

Thank you, Merom, for your insight.
Merom Klein PhD, business psychologist and serial entrepreneur, wrote the book about Courage to PowerUP Brilliance™ for real innovation. For 30+ years, he has equipped C-level teams to delegate, empower, trust and ennoble their best and brightest stars to Lead from the Middle, accelerate post-merger integration and drive innovation. And he’s equipped mid-level leaders to step in, reach out, take charge and seize big new opportunities in matrix structures and cross-functional global innovation, talent management and M&A integration teams.

Jun 02

About

Startup2angel.com is dedicated to helping startups and Angel professionals grow business and wealth by facilitating introductions and sharing how successful people work and how they have failed. That’s right: Failed. Every investor we’ve talked to says they learn more from failures than successes and we are here to aggregate that knowledge and help you navigate the landscape.

Read the rest of this entry »

Page 3 of 3123