Software manufacturing, software programs to defeat spam, new business data technology and web services are all areas of opportunity for entrepreneurs, according to venture capitalists taking part in a panel on creative financing at a recent Wharton Entrepreneurship Conference. And those entrepreneurs who cut costs, sign on angel investors and find other creative ways to finance their start-ups will be rewarded with more equity in their firms, assuming they become successful.
"You would be amazed how little capital [it requires to get a company going] if you are creative about it," said David Flaschen, an advisor to Flagship Ventures, of Cambridge, Mass., and former chief executive of Donnelley Marketing Inc.
Flaschen advised entrepreneurs seeking venture capital to be willing to accept professional management. "Right from the start, make clear that you value the concept of 'foundership' much more than 'CEOship,'" he suggested. "What you should say is, 'I want to make this company interesting and strong enough that we can hire the most effective chief executive officer.'"
One way to help finance a company in the early stages is to get customers to pay up front, said Flaschen, and, if possible, get vendors to make concessions to help the company's revenue stream. "Even before you go out and raise money, ask 'How can I do this with as little money as possible?'" If an entrepreneur takes less financing, then investors have less control. "The dirty little secret is, it is not a lot of fun to have a VC partner in your business. It is a lot more fun to own a majority stake, or 100%. The more you strive for that, the happier you will be."
Flaschen sees opportunities today in software manufacturing, particularly with the growth of open-source software development, and is also interested in the idea of defeating spam by creating unique addresses for each Internet transaction.
Herding Cats
Bob Greene, co-founder of New York-based Oncore Capital, likes the potential of new business data technology.
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