Hail Entrepreneur!

That is what the tombstone of Edward Lowe reads.  Edward Lowe was a very successful entrepreneur in the packaged goods industry.  He conceived of kitty litter.  Made it into a very successful business.  Edward loved cats.  He also loved entrepreneurs. 

Upon his death the Edward Lowe Foundation was created.  The Edward Lowe Foundation has developed expertise in entrepreneurship and peer learning.  The foundation does two things. 

It hosts leader retreats for founders, owners, and CEOs of what they call second-stage companies.  Businesses that have moved beyond the startup phase and are focused on growth issues rather than survival.  They define this as more then $1 million in revenue or more then 9 employees.

It also holds retreats for organizations that support entrepreneurship and economic growth. That is why I was in Big Rock Valley.  To learn how to be a better facilitator of peer group meetings via their PeerSpectives methodology.

Big Rock Valley is a beautiful place.  Twenty six hundred acres of forest, farmland, and ponds make a unique background for learning.  Coupled with the boxcars and big men it creates quite the creative environment.  I was able to step away from the demands of electronic communication for a day (though the place is all Apple and has Wi-Fi).

During my time there I learned some interesting things.  Things that I think that can be put to work to extend the reach of ATDC beyond its traditional model.  That is all I will say for now but if you are a second stage entrepreneur ATDC may have a nice program for you in the future.

Boxcars & Big Men

Those that have been following my twitter stream know that I slept in a boxcar the last two nights.

Really. Real boxcars.  Here is a picture of the one I slept in.

And the larger box car yard is below.  You can see the bag man of Big Rock Valley, Casey Jones, on the left in the distance.  There are a total of five cars in the yard.  I would need a wide angle lens to capture them all.  Should have brought the big camera gear.

Here is a close up of Casey Jones.  He stands about 25'.  Notice the distinct left hand down right hand up characteristic.  It means something.  Like he is not a fake.  As if someone can fake a 25' tall steel dude holding an oil can.

The boxcars where not nearly as bad as I made them out to be in on twitter.  They were furnished.  And heated.  I did have to share a bunk room in one. 

All in all Big Rock Valley is a bit of a surreal place.  But if you make like $600 million selling Tidy Cat to Purina you could build one yourself.  It's a place where you could picture some combo of a scene of Garden State meets Fargo being filmed.

You heard it hear first.

Funding Risk

Back in December I started a brief series on the four categories of new venture risk.  Somehow I got sidetracked after writing about management, market, and technology risk types.  So today I thought I would close out the series with a brief discussion of funding or financial risk.

Funding risk is the likelihood that a startup will fail to raise sufficient capital financing to get the venture to a self-sustaining cash flow positive state (or to the point where it is acquired).  Funding risk manifests itself in two forms

First, many companies fail because they do not understand the amount of money that it will take to successfully grow their business.  Good well thought through business models that contain solid assumptions based on strong research into the business drivers are needed.  The operations levers that make a particular business go need to be known and understood.  If you don’t know how to make one of these models it is well worth your money to invest in someone to help you. And no matter how well you do this is it going to take a longer period or time and more money than you forecast.

Second, many companies lack a funding strategy.  It is quite common that entrepreneurs do not know what their companies need to look like from an angel investor or venture capitalist’s perspective in order to garner investment.  They thus set inapropriate milestones and are unable to secure the next round of funding.

From an early stage investor’s perspective, regardless if they state it or not, all startup milestones should be focused on reducing technology, management, and market risk.  You solve for those three, do your homework on business modeling, understand the profile you need to show to investors, and you reduce funding risk.