break down barriers
getty
guess what? It is said that 2% of VCs earn about 95% of VC profits. Very few venture capitalists are successful because they need a home run to succeed. Home runs are few and far between, and he has about one in every 100,000 ventures.
Entrepreneurs are hitting it big with rare home runs that make “everyone” (early venture participants who owned stock) millionaires with venture capital-funded home ventures. Entrepreneurs can still do well as CEOs. However, when a VC hires a professional CEO, the entrepreneur's stake is significantly diluted.
Entrepreneurs face four hurdles to increase their chances of hitting a home run and staying in the CEO position. Here are his four hurdles and strategies for jumping over them.
Barrier #1: Lack of Entrepreneurial Credibility. Strategy: Demonstrate Leadership Ah!
VCs need proof of possibility, or Aha! A product is “aha” when the potential of the product is clear. Strategy aha is when the potential of a strategy is clear. In these stages, VCs replace entrepreneurs with professional CEOs, and entrepreneurs are significantly diluted. This means that entrepreneurs need to delay VCs until they have proven their leadership potential in order to attract VCs who want to invest in not only their venture. VCs find professional CEOs for up to about 85% of the ventures they fund. Bill Gates, Jeff Bezos, and Mark Zuckerberg acquired VCs after proving their leadership abilities, stayed on as CEOs, and controlled VCs.
#2 Barrier: High VC dilution. Strategy: Focus on reducing needs until leadership emerges.
If an entrepreneur acquires VC too early or seeks too much VC, the value of VC can be significantly diluted. Of the $22 billion entrepreneurs, those who got VCs early and replaced them as CEOs retained about 7% of the wealth they created. Those who delayed it remained at 16%. So if you want to stay CEO and reduce dilution, you need to reduce your VC needs and number of VC rounds. Become finance smart to use the funds you raise wisely. Joe Martin smartly built his Boxycharm.com from $375 using his bootstraps.
#3. Barrier: Finding the right growth capital. Strategy: Fund wisely to take off while in control.
Various financial sources and means exist. Learn about them and use the appropriate ones. Financially smart entrepreneurs use a variety of sources to find the best financing for their business, maintain control and reduce dilution.
· Sam Walton (Walmart) and Dick Schulze (Best Buy) used customer and lease financing in addition to operating cash flow.
· Michael Dell (Dell) used family capital along with customer advances.
· Gaston Taratuta built Aleph Group using customer payments and unicorn bootstrapping.
#4. Barrier: VC needs to exit. Strategy: IPO or subordinated convertible debt.
VCs need to exit at the highest possible valuation, primarily through an initial public offering (IPO) or a high-value strategic sale. Obtaining VC from the top 20 VCs can help you get a high-value exit due to the credibility these VCs bring. It may not be 98% of the time that you can get VC from the lower tier. This means that if you want to be in the top 2% of VCs, you need to make sure you have high potential, and if you want to remain a CEO, you need to make sure that you have leadership potential. To delay or avoid VC, use the right financial strategy and smart financial skills. Pitching skills and pretending until you make them skills may not be of much use.
To jump the VC hurdle:
· Obtain appropriate financing (see) Financial Secrets of Billion Dollar Entrepreneurs www.dileeprao.com).
· Get the right skills to grow with or without VC.
· Find the right strategy (“ Nothing ventured, everything gained.).
My take: There is no easy way to build a growth venture. Relying on pitch and VC is like relying on luck and crutches. To succeed, add skills, strategies, and efforts.
follow me twitter Or LinkedIn. check out My website and other works can be found here.
