Make Sure to Research Before Choosing Crowdfunding

As a quick history lesson, before the JOBS ACT was passed in 2012, the Securities and Exchange Commission limited private company investments to accredited investors – folks with an individual or joint net worth with a spouse that exceeds $1 million (not counting the primary residence).  But soon nonaccredited investors will be able to back private companies via crowdfunding – the raising of capital in small amounts from multiple backers. Lawmakers are currently hashing out the rules.

Previously, nonaccredited investors were prohibited from investing in private companies because the SEC seemingly assumed that such individuals could easily end up losing their life savings. The counter argument was that startup investing wasn’t any riskier than investing in penny stocks or gambling at casinos. What’s more, with proper controls and the convenience of Web-enabled tools, crowdfunding could help stimulate the economy by making it easier for startups to succeed.

Read the rest of this post in the Wall Street Journal, which I guest authored this week.

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Top 4 Traits VC's Desire in Startup Founders

Having a great, defensible business idea in a scalable market is only part of the puzzle to attracting venture capital.  A more important part is having a backable management team that can pull off the execution of the plan  Below are the top 4 traits VC’s desire in their startup founders.

Read the rest of this post in Forbes, which I guest authored this week.

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How to Calculate Equity Split Between Co-Founders in a Startup

There are a lot of variables that go into calculating a fair equity split for a startup team. These key factors must consider each employee’s role(s) within the company, the compensation they receive for their work, the people investing in the company, and the people behind the idea of the company. Let’s tackle each of these points below.

Read the rest of this post on The Next Web, which I guest authored this week.

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What Type of Entrepreneur Are You?

The other day I read an interesting book called Entrepreneurial DNA, by Joe Abraham, the founder of BOSI Global, an operating partner to venture-backed and owner-operated companies. The book is based on Joe’s study of over 1,000 entrepreneurs. The research confirmed the discovery that all entrepreneurs are not all wired the same way. The book suggests entrepreneurs fall into four distinct types of entrepreneurial DNA’s that leverage unique strengths, weaknesses and tendencies typical in each specific type of entrepreneur.

Read the rest of this post on Entrepreneur.com, which I guest authored this week.

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Chicago's Startup Scene Is On Fire

When I started iExplore in 1999, Chicago was jokingly referred to as a “flyover city”, as the big venture funds in Boston or Silicon Valley would fly back and forth to each other looking at deals, ignoring Midwest startups altogether.  And, even worse, they would insist that any startup that wanted their funds, would need to relocate their business to their city in order to close a financing (which many aspiring entrepreneurs did, having no other choice), in order to leverage their expertise and tap into their local ecosystem.  But, that was a different time for Chicago, before it started to build a robust startup ecosystem of its own. 
Read the rest of this post on Forbes, which I guest authored this week.

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Try to Kill Your Startup, Before You Start

Earlier this year, I was sitting on a venture capital panel with Joe Dwyer of OCA Ventures, who made a very interesting comment.  He was counseling the startups in the room to try to kill their startups.  My initial reaction was: that is strange guidance to give to a room full of aspiring entrepreneurs trying to successfully get their businesses off the ground.  But, as he went on to explain it, he said “if you have done everything you could have done to kill your startup, and were unsuccessful in doing so, then you are truly on to something that is defensible and worth building.”  Which I thought presented very interesting pearls of wisdom.

Read the rest of this post on Forbes, which I guest authored this week.

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Lesson #160: Don't Be Overly Infatuated With Your Own Startup Idea

Back in Lesson #50, we talked about the importance of being passionate about what you are building at your startup.  And, that passion would be the key driver to successfully get you through both the good times and the bad times of your startup's growth.  This is still a very true assessment.

But, the other day, I heard a great quote by Mahendra Vora, the successful founder of Intelliseek (which he scaled to over $100MM in revenues and sold to Nielsen).  He said, "in everday life, passion can often lead to unwanted children, and entrepreneurs should never be so infatuated with their own idea, that their narcissism blinds good business judgment".  I thought there was some really good wisdom shared here.

We have all seen it.  That one entrepreneur who is so in love with their own idea, that they either: (i) tune out all reasonable guidance or suggestions of others; or (ii) they fail to make a pivot fast enough, riding their "passion train" right over the edge of a cliff.

The key point here is: although passion is a must-have for any entrepreneur, don't let it get to the point that it clouds reasonable business judgment or has you perpetually looking at things through rose-colored glasses.  Take in all signals the market is telling you, either thru advice from successful mentors, or lack of traction around your business, and adjust your sights accordingly.

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If You Build It, They May Not Come. Budget Ahead for Startup Marketing.

I am not sure how many of you remember the 1989 film, Field of Dreams, starring Kevin Costner, who plays a farmer who builds a baseball field in the middle of an Iowa cornfield, after hearing a voice tell him “if you build it, he will come”.  And, sure enough, despite people thinking he was crazy, people did end up coming, to watch a bunch of baseball legends of years gone by, reunited for a modern-day baseball game.

I often feel that startup entrepreneurs are building their own Field of Dreams, when launching their startups.  But, unlike the Hollywood script, often times the sad reality is:  “if you build it, they may not come”, especially without any foresight to building a sales and marketing plan and budget to help get initial users engaged with your product.

Read the rest of this post in Forbes, which I guest authored this week.

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Why Startups Run Out of Money Too Fast--And How Excubators Solve The Problem

Over the last five years, Red Rocket Ventures has consulted or mentored more than 500 startups -- nearly all of them suffering from the same problem. They are typically so focused on building their product, they don't raise enough capital to cover essential sales and marketing activities that will allow them to better attract additional venture capital down the road. As a result, many startups run out of money soon after launch, stalling out before they reasonably had a fighting chance.

Read the rest of this post on Entrepreneur.com, which I guest authored this week.

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[NEWS] Red Rocket's "101 Startup Lessons"--Now a Downloadable eBook

Red Rocket started writing its "101 Startup Lessons--An Entrepreneur's Handbook" back in March 2011.  Over two years later, it has evolved into a comprehensive, one-stop read for entrepreneurs who want actionable learnings about a wide range of startup and digital-related topics. The book is a startup executive's strategic "playbook", with "how-to" lessons about business in general, sales, marketing, technology, operations, human resources, finance, fund raising and more, including many case studies therein. We have demystified and synthesized the information an entrepreneur needs to strategize, fund, develop, launch and market their businesses.

Thanks to all of you 100,000+ readers who have already benefitted from these lessons via our blog, which we will continue to update with new lessons in years to come.

To download the full eBook into your eBook readers, visit your favorite eBookstore website:

Amazon (Kindle) - $0.99
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Blog Into Book - Free
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iTunes - Free

Thanks for sharing this editorial adventure with us.  We appreciate your readership, and your sharing these lessons with your entrepreneurial colleagues in need.

For future lessons, be sure to check back weekly on the Red Rocket Blog, or follow us at:  www.twitter.com/RedRocketVC.