Studying the Entrance and Exit Strategies of Your Favorite Companies

Just like it’s easier to find a job when you already have one, procuring early-stage or start-up funding is a lot smoother if you’ve already demonstrated the ability to raise funds. Likewise you should be looking at a VC firm with a track record for creating success stories as we’ve discussed previously.  Also consider digging deeper and taking notes on other start-up’s entrance and exit strategies.

This is true whether you’ve maxed out your own credit card to buy supplies, or subscribe to directories for funding leads, or networked by going to conferences and slamming back drinks with the who’s who.  Coming from the old adage, you must spend money to make money, financial resources, both nominal and pricey, must be put toward seeking out who you plan to hit up for dough.

If you make widgets, you should be spending time and sometimes money looking at venture capital firms that have a history of funding widget makers, widget wholesalers and even widget retailers or widget service providers.

You may ask, what’s a widget but the greater question is what your widget is.

How do you plan to market it, how do you plan to sell it and at what level of the supply chain of that widget slinging do you plan to get in where you fit in.  Maybe your widget isn’t a product but a service. Thus your financing quest should match your business objectives.

Once you’ve found the group of VC companies that specialize in say, consumer widgets, green widgets, Web Widgets, business-to-business widgets, start doing the equivalent of a background check on these companies.

They’re sure going to do one on you and the important thing to remember is that your relationship with your VC firm may evolve to interactions fraught with both friendly and malevolent strife – in other words, a marriage of money and ideas.

So before you get all will-nilly about the what-nots of widgets, study the performance of that VC firm that is funding, taking a stake in or becoming an angel investor in widget companies like yours.

And even before you type one key-stroke on your business plan, think about what you want out of your business. Remember, for every Salesforce.com, a hot juggernaut of e-commerce, there is a Geo-Cities.com, a cold juggernaut of zero-commerce that was once both a hot and a positive juggernaut.

Get on track to do a informational interview by studying the entrance and exit strategies of your favorite companies as well as the trajectories of the venture capital firms that funded them.

Then and only then, will you be ready to pick up the phone, hit send on that introductory e-mail, tie a scroll to that courier pigeon or however you plan to make first contact with a perspective seed-fund investor.

About the Author
Jabulani Leffall, 33, is an award-winning journalist and writer who attended Journalism School at the University of Missouri. His work has appeared in the Financial Times of London, Dow Jones Marketwatch, The Baltimore Sun, Investor's Business Daily, Variety, CFO Magazine, Compliance Week, Redmond Magazine, Black Enterprise, the Los Angeles Business Journal and the Los Angeles Daily News among other publications. He has been a George Washington Williams Fellow for the Independent Press Association where from 2002 to 2004 he studied the effects of subprime lending on poor communities. After what happened in 2007 and 2008, he feels vindicated as a journalist for having called what was going to happen. What else? Yeah, he also contributed vital research to the 1998 book University of Missouri History Professor Robert E. Weems, which is titled "Desegregating the Dollar." Additionally, he has appeared numerous times on ABC World News and CNN as a commentator of business and world affairs, again pretending to know what the heck he is talking about. Mr. Leffall is currently a the Associate Editor of Special Projects and content with FactSet Research Systems News and Media Relations Group. Lastly for the part where Mr. Leffall lives, he resides in a four cornered room where he stares at candles and his mind plays tricks on him. Read his articles and blogs please lest he go completely mad.
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