Category: Entrepreneurship

Five Lessons for Raising Money From Family and Friends

Category : Entrepreneurship
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I haven’t been writing much for my blog lately, but that doesn’t mean I haven’t been writing!  I’ve been asked to write guest posts for a few different outlets over the past month or so and they are just now starting to get published.  Check out an excerpt of Five Lessons for raising money from family and friends below and then read the full article over on Fast Company.  Thanks to the guys over at The Young Entrepreneur Council for helping me get syndicated.

 

It’s really easy to find information about raising money from angel investors or VCs, but many people don’t think about another important way to fund your startup: raising money from family and friends. I’ve raised money from friends and family twice and want to share what I’ve learned so that you can raise money from your friends and family and still be able to attend your family reunions. Raising money from friends and family can be easier and less complicated than raising money from professional investors, but is not without drawbacks.

There are certainly pros and cons to raising money from family and friends and when it came time to raise money with my first company, I had the choice to raise money via angel investors or from family and friends. We were able to raise six figures fairly quickly from a good group of investors, which helped us stay focused on running our business rather than raising money. Unlike working with an angle or VC groups that would have wanted to get to know us for at least three months, we were able to close our round in about six weeks. And four years later, we raised another round with significant friends and family contributions for Entrustet, a website that helps people find, access, transfer and delete online accounts when someone dies, in about eight weeks.

You can the rest of the article and all of the tips over on Fast Company.  Let me know what you think!

Money Saving Ideas for Startups

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I attended Alphatech’s Capital Savings and Raising event as part of the Forward Technology Festival on Monday night and it got me thinking about all of the ways we’ve hustled in our startups over the past six years.  In a startup, every dollar counts.  You you need to find creative ways to stretch every single dollar as far as you possibly can.  Most people know about the lean startup method, so I want to focus on some nonstandard ways to save money.  Here’s a few things we’ve done to conserve precious cash.

Share office space with other startups

We contacted a few startups in Madison and told them we were looking for office space.  One of our friends told us they had an extra room in their office that they would rent to use cheaply.  We ended up with prime real estate on the capital square in Madison for $200 a month instead of $600+.  The space was big enough for 8 people at a time.

Interns

Our best money saving idea was to hire University of Wisconsin interns.  We did not pay them a salary, but we gave them oportunities to earn money.  We also showed them that they had real responibility and could actually affect the company on day one.  People are not always motivated by money.  They can be motivated by responsibility, recognition, learning, entertainment and a ton of other things.  Search out what motivates your interns and give it to them.  We made sure that our interns were learning something new every single day and that they were contributing to the company from the very start.  One intern suggested a new features on his first day.  Two days later, we pushed it to production.  Another intern wrote a blog post her first day.  I’m most proud of our intern program over anything else we accomplished at Entrustet.

Play the startup card

Companies know that startups usually don’t have much money and that they need to stretch every single dollar.  They also know that if a startup grows and earns money, they might have a large client in the future.  We always asked if we could get a discount on services since we were a startup. We got all sorts of discounts simply by asking.  It cannot hurt to ask.   The worst they can say is no.

Services for Equity

I’m a big fan of services for equity deals.  I’ve done them in both of my startups and its worked out really well.  Find a service provider who believes in you and ask them if they’ll take some of their compensation as equity.  Saving money at the beginning on expensive professional services is key.

Use your Entrepreneurial Network

I am not a programmer, so when I have technology questions that I don’t want to bother my tech team with, I reach out to other entrepreneurs in my network who can give me advice.  When my tech friends have questions on PR, advertising, marketing, business models etc, I help them.  Instead of paying for outside help, share with people in your network. Make sure this is not a one way relationship so you are not taking advice for free.

Crowdsource

You can use design options like Crowdspring or 99Designs, but be creative.  Think of ways to crowdsource other aspects of your business.  We hired a copy editor who charged us about $1000 to read all of our website copy and a few of our blog posts.  It was expensive.  Next time we needed copy help, we told everyone in our office that they had to read the website.  We put a bounty of $5 or one free drink for each error they found that resulted in a correction.  We found around 30 errors on the site and paid $150 for copy editing instead of $1000.  Plus, it brought our team together.

Keep and active blog and use social media

Our blog on Entrustet generates over 40% of our traffic.  After we created the content, it’s completely free lead generation.  We also had two of our posts go viral, spiking traffic and getting us a ton of press.  Blogging takes time, but I think it’s worth it.

Play the Student Card

While I was a student, I always introduced myself as a student entrepreneur.  People love students who are running businesses and it opened doors that are now more closed to me now that I am not a student anymore.  Our student interns were still able to play the card from time to time and received discounts, extra information and benefits.

Buy in small quantities

It can be tempting to buy more units of something for a lower unit price, but in a startup it’s better to buy just what you need right now.  I still have keychains, schedule magnets and spray chalk from Exchangehut three years after I sold the business.  Complete waste of money.

What have you done to save money?  Do you have any funny stories?  Any techniques that really worked for you?

Forward Technology Festival 2011

Category : Entrepreneurship
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I’m excited to be working with Matt Younkle and Bryan Chan again this year to help put on Forward Technology Festival for the second year in a row.  Last year was a huge success, and I’m really excited for this years version, which runs from August 18th-27th.  The Forward Technology Festival is a ten day long series of events that showcases Madison’s entrepreneurship and creative community.  It starts with the 10th anniversary of High Tech Happy Hour and includes Madison Ruby Conference, Barcamp, a Capital Entrepreneurs meeting, an open networking event at Sector67, business pitches from Spreenkler Talent Labs seed accelerator participants and is headlined by the 2nd annual Forward Technology Conference (register here).

I’m most excited for the Forward Technology Conference, which is slated for August 26th at the Memorial Union.  Last year’s inaugural conference had more than 125 attendees and Fred Foster’s keynote was the highlight of the festival and I can’t wait for the 2011 version.  We’ll kick off the day with breakfast at 9am, followed by Madison Failcon, a session dedicated to lessons that founders learned when their businesses did not actually succeed.  I love this session, especially since I see the fear of failure as one of the biggest obstacles to Madison’s success as an entrepreneurial center.

Next, three successful Madison entrepreneurs will share their experiences starting and running a startup in Madison.  Justin Beck will talk about how he started and grew PerBlue and the lessons he learned doing it.  Greg Tracy of Asthmapolis will share his story as well.  I love hearing founders tell their stories, so it should be a great session.  After a lunch break, five up and coming Madison startups will share what they’ve been up to and ask the community for feedback and ideas on how to improve their business.  Last year’s pitch your biz participant Heidi Allstop of Student Spill ended up in Techstars and has since been featured in hundreds of publications, so this is your chance to hear about up and coming businesses before they make it big.

In the afternoon, Silicon Valley expert Brant Cooper will talk about customer development and the lean startup method and how startups can use it get started more quickly, while spending less money.  The customer development method is one of the hottest topics in the startup world right now and Madison hasn’t seen any of the top experts until now, so Cooper’s session is a can’t miss.

Laurie Benson will give our FTC 2011 keynote address, during which she’ll tell her story about how she started technology services business Inacom and grew it to one of the largest companies in her industry, leading to its acquisition.  Laurie has been extremely active in mentoring young founders and served on my MERLIN Mentor team with Entrustet (she’s awesome!).  She’s got a great story and I can’t wait to hear here tell it at the conference.  After the keynote, we’ll have a reception above the Union Terrace with snacks and drinks.

I’m really looking forward to the entire week of events and it’s been great to see Madison’s tech community come together to make the Festival a success.  If you’d like more information on any of the events, visit the Forward Technology Festival website or the Forward Technology Conference registration page.  While most of the events are free, the conference costs $50, but we have 50% off discounted tickets available until August 1st.  These events really showcase Madison as an up and coming technology and innovation center in the Midwest and I’m excited to be a part of it.

Hey Entrepreneurs! You Need To Talk About Your Ideas!

Category : Entrepreneurship, Startup Chile
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When I was in Chile, most of the Chilean entrepreneurs were afraid to talk about their ideas.  They would say “I’m working on a project in technology” or “I have an Internet startup that I think can change the world.”  I’m seeing the same problem in Madison, especially with young or first time entrepreneurs.  It’s a huge problem in places that would like to become startup hotbeds.  People are afraid to talk about their startup ideas, mainly because they think people will steal their ideas.

In the Valley, NYC, Boulder, Austin and other startup hotbeds, everyone talks openly about their startups.  It’s how you test your ideas and get feedback.  I can’t count the number of times I’ve gotten great from other entrepreneurs.  Or the times times someone has said “oh, that’s an awesome idea, you need to meet so and so” or “I’m a reporter for (insert publication), I’d love to cover your story.” or “I’m a programmer/biz dev/sales specialist and I’d love to work for you” or “you should partner with (insert company).”

I met the guys who acquired my first business, my first programmer, my attorney/mentor, my current business partner Jesse, got countless press interviews and tons of other connections just by talking to people.  Entrustet would be nowhere near what it is today if we refused to talk about it for our first year and a half until we were fully launched.

These connections and conversations ARE the ecosystem that people talk about.  If all of the startups in Silicon Valley suddenly stopped talking to each other, deal flow, partnerships and innovation would stop.  You need to make ideas run into each other for innovation to happen.  You need other smart people giving you feedback if you want to succeed.

So what are you scared of?  Do you think some other entrepreneur is going to steal your idea?  Do you think your idea is so special it can’t see the light of day?  I don’t remember which startup guru said it, but if your idea is 1 in a million, 3oo other people in the us are working on it.  For my Chilean readers, that means 16 other people in Chile are working on it!  Entrepreneurship is all execution, not the your idea.  As my friends at Planet Propaganda like to say, “I’d rather have a ham sandwich than just a good idea, you can at least eat the sandwich!”

If you think you wont be able to succeed because someone else knows a little bit about your idea, you probably shouldn’t be starting your business.  You need to out execute everyone.  You can’t be scared of someone copying your idea.  You need to get feedback and make connections.  The only way to do this is to talk to people!

Entrepreneurs who are already working on their own companies are the least likely people to steal your ideas and they are the most likely to give you actionable, valuable feedback that will help your business grow, or connect you with a partner or investor your need to grow your business.  The tiny risk that someone will steal your idea pales in comparison to the huge benefits you can get in feedback, advice, press and partnerships.   Entrepreneurs, for the most part, want to help other entrepreneurs.  They are smart and think like you.  What better way to challenge your thinking than to have another smart person think about your ideas with you?

It’s a problem in Chile, Madison, Milwaukee and other aspiring startup hubs.  The other week, I talked to a 20 year old UW student who wouldn’t tell me more than he was into “green technology.”  I can’t help you if you don’t tell me more!  Moral of the story: it pays to talk about your ideas!