The Profit Prophet

During my years of working at startups and trying to get funding, I have developed a pretty accurate guide on what it takes to raise money. The main reason why some startups are not successful with certain funding entities or organizations is because there is not a "rightness of fit." What that means is unless you have some incredibly compelling reason for someone to invest with you, that they will look for an excuse not to. I can appreciate that one of your founders may be a friend of one of the potential funding organization’s partners, but unless you are talking directly to the guy or gal who makes the decision to fund or not, you are just wasting time with a gatekeeper, and gatekeepers do not go outside their comfort zone. In addition, too many companies shop their business plans around too much. Yes, maybe you will get lucky, but in between, you are going to get rejected by lots of VCs. The one major potential downside is that the word gets out that your company is ...

The new-new in fundraising is crowdsourcing, and what makes crowdsourcing so powerful is a concept known as the long tail. Traditionally, the concept of the “long tail” was used to describe the declining part of the product life cycle (see below). It is usually called “end of life” or declining phase. It might have been used to describe the portion of product distribution that represents a period in time when sales for less common products return a profit due to reduced marketing and distribution costs. That would make a “tail” a period of time when sales are made for goods not commonly sold as standard products. The period could be short or long. This term was hijacked by Chris Anderson in 2004 when he coined the term “long tail” to describe a phenomena where products that are in low demand or have low sales volume can collectively make up a market share that rivals or exceeds the relatively few current bestsellers and blockbusters, but only if the store or distribution channel is la...

This is a question I have been asked dozens of times. I have been pretty fortunate and had a great deal of success as an entrepreneur in raising money, and many of my friends, colleagues, and entrepreneurs in waiting have asked me, what does it takes to get investment? Other that knowing someone or doing it once before (that is the easiest way), how can a “nobody” get somebody to invest in your bright idea? There are not a lot of things you can control when it comes to funding, but here are some tips YOU can do that seem to work for me, and hopefully for all those budding entrepreneurs out there as well! It’s all about the sizzle…you are selling smoke and smell, not steak! OK, being in Texas for most of my life (but not a native), I have learned a lot about cattle, steak and sizzle. You want to make their mouths water. When you are “selling” your idea, you have to think more like a televangelists and an engineer, CEO, or businessman. Essentially, you are selling somethin...