What I would do if I started today... And Why...

[Ity]

This message is in response to a private message from @inputchip but it will likely be valuable in the open... It is short and sweet.

Let me start with what I do... I own 4 individual businesses in 3 very different industries, at least one of each B2C, B2B and B2G. I own a few cash-flowing assets and I am a semi-active investor that appreciates the control of managing my own money. Entrepreneur above all else. I have a lifestyle that doesn't strangle my finances or time. I own my life. I have my own worries and concerns, but it is never if the bills will be paid.

This conversation started with a question about my change of heart. I was once someone who thought Amazon was a great way to make ends meet for new entrepreneurs. I never considered it the one and only ticket, but it was hard not to recommend with most of us making a few grand in profit month one. Today is a different story with almost bubble like saturation. Extremely competitive brands racing to the bottom, cutting each other's throats and running up paid advertising to over 100% of ACOS to "prime the pump". It’s a dirty whore's market. Not to say there isn't still money to be made, but it isn't my kind of business any more.

So... With that said... If I started all over again with absolutely nothing.... I would think unbelievably bigger. Who the hell says you have to go in it alone with your first 2 or 3 grand to grow some consumer brand? Who says you have to bootstrap and hustle flipping bullshit and finding arbitrage strategies? Who says you have to be a onepreneur shop owner? You don't.

What you do have to be able do is competently explain your value to investors. Make them fight for you. If I were to start again I wouldn't touch a business without at least $500k in resources. Over and over again we see the biggest and most hyped over businesses were the ones that went after a lot of investor money in the beginning. (and 500 grand is far from a big investment)

Just think... No more budget websites. No more learning to code. No more giving stock away to resources. No more doing your own photography. No more trying to figure out the f*cking tax code once a year. You won't be fighting tooth and nail for the small stuff. Large investments are out there, available and ready for the taking. It is an investor’s job to give money to solid entrepreneurs. Businesses with huge resources make huge money faster.

So if I were to start today... I would think bigger. I would come up with a damn good plan. I would use that plan to raise a ton of money. I would use that money to buy every damn resource I always wished I could afford. I would take a stranglehold of the bottom line and make my investors as well as myself rich.

It’s not one size fits all, it’s not the only way, it’s just how I would do it.

Ask me anything...

WOW, loved your POV.
Thank you for sharing, really appreciated here.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[ZF Lee]

My products are unique. Nobody else offers what I do, so in a sense I have no competitors. But, then again, my product is one of many, so it is not necessary. Think of offering apple pie in a restaurant. They can get by without my product, even if I'm the only source for it. But having my product would definitely be beneficial for them.

Yes, everyone in this business offers net 30. It used to be that the distributor of the product - me - would also get net 30 terms. But I don't, because the market dynamics have changed so much. I don't like the fact that the dynamics change on my end for me, but not for anyone else. Isn't that the way it always goes, though.

I am reinventing the way I do business. Nothing personal, it's just business. I'm stacking the odds in my favor, for a change. I've done things the old fashioned way. I don't want to keep track of accts receivable. There's no need to - that's not my job. I'm not a lender. The way I see it is, if they want my product, get a business loan and buy my product. That's what I do with my suppliers.

I know some will balk at this idea and be insulted. Balk away. I am, instead, approaching this from a radically different perspective. If I can get only 200 customers, buying 50 products a month, then all will be well and good. Is that better than 500 customers buying 20 a month? Maybe not. But I'll go with the sure thing - and be guaranteed that I'm going to be spending my time in a profitable way - not chasing money or billing.

This is a radically new age we're in. The internet can showcase my product - I can instantly communicate with thousands of customers through a web site - funds can be instantly received. Wow. Talk about a hot bed incubator for business to grow!

AND, the speed of packs of dogs chasing me to steal my product also greatly increases, as well. Everything is increased by a factor of ten or more - wait, except my inventory turns - because I'm waiting weeks to be paid? If at all? Been there, done that. Too many times.

No, I'm taking control. I have superior products that will be very profitable for everyone involved. I want a superior business model that will grow 30 times FASTER than the old way of doing things.

I really can't see me doing this any other way. I'm totally gaa gaa and in love with this business venture. When the dogs do catch my scent and are on my trail, I will be 60 TIMES ahead of them. That means the sixty days I have invested in growing my business will actually be equivalent to 60 MONTHS of growing my business under conventional rules of engagement. That's five YEARS of growth in two MONTHS, because my sale ratio cycle will be one DAY instead of 30 days. Rinse and repeat. Let em catch me and fight over the scraps. I'll be cruising at 5,000 feet by that time. Then, by the time they do catch my scent, I will have SCALE that they won't be able to come close to.

Oooops - I've said too much. If MJ sees this, I've given him the outline for his next book. Fair enough, I guess. I got my outline from his first book...

That must be some progress thread.

I'm hearing that his next book in the UNSCRIPTED series will be a fiction one though. UNSCRIPTED in story form.

 

[G-Man]

Tagging @Scot because you're at the point @Kak talking about in the first 3-4 posts.

Esp. RE: well capitalized product launch

 

[Scot]

After having a long conversation with @G-Man about this over the weekend and having some major developments happening in my business, suddenly the idea of taking on capital doesn’t seem crazy and like I could use to it get some major action in my category.

Thank you @Kak for making this thread Rep++

For investment in the $100-500k range, do you recommend angel investors or VC?

Do you look for just cash or cash + value add (expert in your sector)?

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Lucid Tech]

After having a long conversation with @G-Man about this over the weekend and having some major developments happening in my business, suddenly the idea of taking on capital doesn’t seem crazy and like I could use to it get some major action in my category.

Thank you @Kak for making this thread Rep++

For investment in the $100-500k range, do you recommend angel investors or VC?

Do you look for just cash or cash + value add (expert in your sector)?

In general, you are going to have a tough time finding VC interest in deals that size unless they are a smaller VC firm. The big names with several hundred million or a billion+ sized firm are typically looking at deals involving $1 million or more.

It's just math: even a 50x home run return on a $100k investment is only $5mm which is a drop in the bucket for a fund starting with assets under management in the nine figures.

Under $500k I've found angels to be your best bet. Above $1mm, you're in VC territory.

$500k-1mm seems to be a somewhat difficult range to be in, as you're too big for most angels but you're too small for most VCs. Usually better to either aim a bit higher, or find a way to get started with less. (Or find an angel with very deep pockets, or a consortium of angels, etc. There are always options.)

If you are set on professional investors in your 100-500k range, there are always startup accelerators that invest in the range you're looking for (just over 100k) while still providing access to lots of resources to propel you forward. Examples Y Combinator and Home - 500 Startups .

For your second question, value add is always a plus. If your round is oversubscribed and you can pick and choose your investors, you always pick the one(s) that have experience and connections in your area. If you don't have that option, well, a dollar is still a dollar no matter where it comes from.


Just my $0.02.

 

[Lucid Tech]

@Scot I made a thread a while back about generating interest in a fundraising round before you even open the round. It did not get much traction but you may find it useful for your situation:

Fundraising tip: Raise the round before it's even open

EDIT: Oops, you are already in that thread. But it is on topic so I'll leave it for now.

 

[Kak]

After having a long conversation with @G-Man about this over the weekend and having some major developments happening in my business, suddenly the idea of taking on capital doesn’t seem crazy and like I could use to it get some major action in my category.

Thank you @Kak for making this thread Rep++

For investment in the $100-500k range, do you recommend angel investors or VC?

Do you look for just cash or cash + value add (expert in your sector)?

In general, you are going to have a tough time finding VC interest in deals that size unless they are a smaller VC firm. The big names with several hundred million or a billion+ sized firm are typically looking at deals involving $1 million or more.

It's just math: even a 50x home run return on a $100k investment is only $5mm which is a drop in the bucket for a fund starting with assets under management in the nine figures.

Under $500k I've found angels to be your best bet. Above $1mm, you're in VC territory.

$500k-1mm seems to be a somewhat difficult range to be in, as you're too big for most angels but you're too small for most VCs. Usually better to either aim a bit higher, or find a way to get started with less. (Or find an angel with very deep pockets, or a consortium of angels, etc. There are always options.)

If you are set on professional investors in your 100-500k range, there are always startup accelerators that invest in the range you're looking for (just over 100k) while still providing access to lots of resources to propel you forward. Examples Y Combinator and Home - 500 Startups .

For your second question, value add is always a plus. If your round is oversubscribed and you can pick and choose your investors, you always pick the one(s) that have experience and connections in your area. If you don't have that option, well, a dollar is still a dollar no matter where it comes from.


Just my $0.02.

I can second @Lucid Tech post

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[GetRichODT]

Yes I would. A well capitalized product launch is better than a lean one.

Your primary objective when seeking investment is to explain what you are going to do with the money and why using it that way will make everyone involved more money.

Keep it simple... Why do VC investors exist? To make money with money. Help them with the vision. Prove the concept to them.

Well capitalized you can go right to distributors, get in front of buyers and accept orders that would otherwise smoke your cash flows.

How do you go about finding VC? Living in the dallas area I'm a far cry from Silicon Valley. I've redid about series 1 etc but never actually done it.

What are the basics?

 

[Kak]

How do you go about finding VC? Living in the dallas area I'm a far cry from Silicon Valley. I've redid about series 1 etc but never actually done it.

What are the basics?

Silicon Valley is far from the only place with VCs. Not to mention most phones call Silicon Valley pretty easily if you wanted to go that route. Also airplanes can fly out there.

I don’t mean to sound like a smart a$$ but I’m sure a quick google search would yield you several VC firms in and around Dallas. Austin, 2 hours down I35 from you is probably the second biggest VC hotbed in the country.

I would pick up the phone... not email... and I would ask what kind of deals they typically do and if it looks like you could provide value to them and they can provide value to you... ask to come out and pitch.

The value MUST be BILATERAL. I can’t stress that enough. If you are the only one getting value out of this you won’t be raising any money.