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Venture capital certainly has its place within the entrepreneurial ecosystem. Some of our nation's largest companies (and employers), like Apple, Google and FedEx, have secured this form of funding. But plenty of Kauffman Foundation research tells us that VC funding isn't as mainstream in startups as one would gather based on its common place in startup news. In fact, less than 20 percent of the fastest growing young companies ever take venture capital money.
Chasing an entrepreneurial dream can be an all-consuming effort. Particularly in those crucial early days of a startup, founders seem to eat, sleep and breathe their businesses. This naturally occurring tunnel vision has a purpose, of course, allowing entrepreneurs to give their business babies the time and attention they need to mature. But this heads-down mode is not without its drawbacks, one of which is neglecting to stay up on current events--particularly the happenings that can impact the entrepreneurs who are inadvertently paying no attention to them.
Any entrepreneur who hopes to raise capital from individual investors, so-called "angels," should be properly prepared with a presentation, business plan, list of potential angels, and outline of the opportunity his or her new venture affords. The author explains that it's also important to avoid making such mistakes as allowing investors to have too large a stake in the enterprise. That could cause problems should the company fail, he writes, in an article filled with specific tips for dealing with these financiers.
William Sahlman is the Dimitri V. d'Arbeloff - Class of 1955 Professor of Business Administration at Harvard Business School. The d'Arbeloff Chair was established in 1986 to support teaching and research on the
entrepreneurial process. The Chair honors the late Dimitri d'Arbeloff (HBS '55), whose entrepreneurial skills helped make Millipore Corporation a world leader in its industry. Mr. Sahlman received an A.B. degree in Economics from Princeton
University, an M.B.A. from Harvard University, and a Ph.D. in Business Economics, also from Harvard. His research focuses on the investment and financing decisions made in entrepreneurial ventures at all stages in their development. Mr.
Sahlman was co-chair of the Entrepreneurship and Service Management Unit from 1999 to 2002. From 1991 to 1999, he was Senior Associate Dean, Director of Publishing Activities, and chairman of the board for Harvard Business School
Publishing Corporation. From 1990 to 1991, he was chairman of the Harvard University Advisory Committee on Shareholder Responsibility. He is a member of the board of directors of several private companies.
"If you truly believe in the potential of your company to change the world for the better, there’s no excuse for settling for an acquisition."
I was reading through this month's Inc. magazine earlier when this quote caught my eye. My first thought was to challenge the notion. There are specific occasions when an acquisition is exactly what a company needs to move forward or to move on. This is just how things work, but the bold words sparked my interest enough to turn the page. I flipped to Issie Lapowsky’s feature with Vimeo founder Jake Lodwick. Lodwick was fired a year and a half after selling Connected Ventures, the parent company of Vimeo and College Humor, to InterActive Corp, an Internet company that owns the likes of match.com, Urbanspoon, and dictionary.com. After the acquisition, he felt stripped of his creativity. Where innovation once dwelled, process was introduced. Lodwick was fired a week and a half before he planned to quit. This experience backs his words of advice to entrepreneurs who think an acquisition means nothing will change within the mission of an organization. Lodwick bitterly states that "in fact the mission was lost, and everything will change."
Beth joined Kleiner Perkins Caufield & Byers in May 2005 to work in life sciences. For the past 20 years, she has focused her career on introducing new innovative treatments for AIDS, arthritis, asthma, cancer,
psoriasis, cardiovascular, metabolic, neurological and renal disorders. Seidenberg has introduced 10 innovative products to market and achieved over 40 regulatory approvals, including new indications and formulations, worldwide. These
products have been successfully commercialized and provided benefits to millions of patients with grievous illnesses, and they have generated several billion dollars of revenue. Prior to joining KPCB, Beth was Senior Vice President, Global
Development, and Chief Medical Officer at Amgen, Inc., the world's largest biotechnology company. During Beth's three years there, her responsibilities included all stages of clinical research, regulatory affairs, safety, health
economics/reimbursement and medical affairs. During her tenure, five innovative products were approved for commercial use. Prior to joining Amgen, Beth was a senior executive in research and development at Bristol-Myers Squibb Company and
Merck & Co., Inc. She began her career in basic and clinical research at the National Institutes of Health specializing in immunology and infectious diseases. Beth received her BS from Barnard College magna cum laude, Phi Beta Kappa;
and her medical degree from the University Of Miami School Of Medicine, alpha omega alpha. Her post-graduate training was completed at Johns Hopkins, George Washington School of Medicine and the National Institutes of Health. She is a
member of the Johns Hopkins Bloomberg School of Public Health Advisory Board and Barnard College Science Advisory Board.
Physician turned venture capitalist Drew Senyei sees education as society's great equalizer.
New healthcare businesses in some medical cities may benefit from the Occupy Wall Street movement. Read more about how cities in areas without state incentives for investment could be better off in the near future.
Investments in digital health are on the rise this year, both in terms of the amount of dollars invested and the number of companies getting investment deals. Read more about this trend.
Venture capital firms consider key variables in your business plan before committing capital to the project. Prepare your management team to answer the questions discussed here. This article also explains the securities and documents that result from venture capital negotiations.
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