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Starting and growing a business takes more than a smart founder, Susan Keller talks about how she helps women scale multimillion-dollar businesses.
I interviewed Susan over the telephone on June 20, 2017, which is part of our Throwback series, spotlighting inspiring people and the work they do. This interview was edited and condensed for clarity.
When did you begin working with entrepreneurs?
About 25 years ago. I worked with an organization called the Center for Women & Enterprise. They focus on helping entrepreneurs have access to capital and to grow. I was on their board of advisors, and then I started working with women entrepreneurs in particular because I really felt the need to give back to women who were trying to start and grow their companies because they don’t have access to the same people and resources as men sometimes do.
When you say women sometimes don’t have the same access to resources as men do, could you explain that a bit more?
Yes, they don’t really have the same network. Men generally have a really good business network based on the fact that they work with people who are in similar industries. More women than men come from less traditional environments, and they don’t have the same network of people with the same business and financial acumen a lot of the times.
So what did you do to help the situation regarding women entrepreneurs?
Given the type of work that I did as a lawyer and the deals that I worked on, I had access to venture capitalists, private equity, and traditional debt, as well as the experiences I had working for various different companies, I helped create that network. And from that I started the Women’s Association of Venture and Equity, which is a national network for women in venture capital and private equity.
Is the organization based in New York City? And what does the organization do?
Yes, and we chapters in Boston, Washington D.C., and Chicago.
First and foremost, we are a network and organization. And then we also provide education and access to people in the industry. You can attend events as a non-member, [but] you just have to pay a higher fee for the event.
Do you have some success stories that have come out of this particular group?
Well, more women have access to venture capital and private equity. There was clearly a need for the organization, because when I first started, I would get emails from people all over the country saying “I heard about your organization from this person, and that person…” And you could tell there was a need for it, because it just snowballed.
We had our first event, and then in a short period of time women from all over the country heard about our organization and became members and came to events, and then we grew from Boston and New York to Chicago and Washington D.C., and we’ve partnered with a lot of private equity events too.
Do you have an annual event that you do with the group?
We do at least six events per year at each of our locations, including a lot of events in New York. Our most recent event was about investing in China. Out of the six events per year we have at each location, usually 5 are substantive and networking, and then we have one type of network event such a golf tournament for charity, but it’s also a networking event for the members of WAVE [Women’s Association of Venture and Equity].
You mentioned some of the challenges women face, such as a lack of capital and network, what are some of the things you do to help bridge that gap?
A lot of it is education, teaching them financial acumen, and showing them what they need to create a business plan. And then also hosting business plan competitions; this past year we hosted Innovate Her, which is the SBA sponsored business plan competition which focused on products and services that would help women and their families. And so we create networks, mentors, and help them have the experience to get out there and showcase their businesses.
When you look at certain professions, although its changing, women tend to be clustered in certain areas, in terms of professions such as teachers and things of that nature; do you see that as being a hindrance regarding seeking out private equity or angel investors?
Not necessarily. I think the biggest difference between women and men entrepreneurs is that women tend to start their companies because they’re passionate about something, so it doesn’t matter what industry they come from; which doesn’t necessarily translate into a good business model.
Men really focus on creating a business so that it is scalable, and that it makes sense so they can sell it. Women tend to hold onto their companies longer because it’s their passion, and I think that’s the big differential. I don’t think it matters what industry they come from, it’s the reason why they started their company and what they want to do with it.
So men are looking at making a business scalable, making it as big of a behemoth as possible, while women are holding onto their passion. How do you help women start thinking about the bigger picture, instead of just focusing on their passion?
By teaching them how to write a business plan, how to create financials and projections, and basically showing them the economics.
Saying you can own this forever, and that’s fine, but your opportunities are only this big. But if you really want to take this to marketing, you really want to help change or bring your passion to people, you need to get funding, you need to give up a certain amount of control, and you need to scale the business.
Other than these challenges that women face, is there anything inherent in women that could give them an advantage over men?
It’s funny you say that. I really believe that a lot of the traditional traits that women possess are better suited to run a company than men. Meaning being able to multitask, to be a good listener, to be extremely well organized, some of those traditional traits that if you use them in a business setting, should make you more successful.
Having said that, how do you get men to want to listen to women and make investments? As I’m sure you know, the VC and private equity industry is predominantly dominated by older white males. So how do you get them to open up their good ol’ boy network and let them in?
They need to see the economics. The women need to really understand the financial acumen associated with their business, and be able to talk about the numbers. Because in the end, any business that has a really good foundation with good numbers and a good idea, can grow.
They need to take away that whether it’s a male or female entrepreneur, they need to really look at the business. Having said that, you have to get them to look at the business. I would love to do the blind taste test with business plans.
The hardest thing is because the network is not as large or as natural for women, it’s harder to get in front of the VCs. There are some VCs that actually understand that a more diverse group of founders and teams has a higher likelihood of success in their companies. There are a number of studies that show that. There are some men that are purposely looking for a diverse group of founders in any company I invest in, because of the likelihood that that investment will translate into a larger investment in the long run.
But if you look at the types of businesses and the management teams that angel investors and the private equity people invest in, in many instances they tend to mirror those who are investing in them. That seems like a tough hurdle to get over in the long run.
Yes. I think it’s just a harder, longer road lots of times. And so organizations like WAVE are creating networks and access to the right people, who can then get them access to capital. It will take a long time.
But I think the more organizations and angel groups that are formed, such as Golden Seeds or Plum Alley and some other new ones, that focus on those types of investments and those types of investors will help.
And I think sooner rather than later, people just have to look at the economics. What makes sense in a deal? And not all of those good deals are twenty year old boys in hoodies.
I agree. So how do you help an entrepreneur assess a business opportunity?
I really sit down and go through the numbers with them. I provide an overall strategy, and we come up with assumptions based on research in the market. And we really sort of test the model, both from a financial and operational perspective.
And this is from how they’re going to market their business, to what sorts of operational challenges they will face, which is based on all my experience working with different companies.
What are some of the common problems that you see entrepreneurs make when growing their business?
They are too loyal to the people that started with them, and they don’t necessarily hire up to get the right talent. Next, they don’t want to give up control, so they wait too long to bring in the money that would allow them to scale it.
How do you help them early on to see that these things could be issues going forward?
It’s simple really. You ask them if they’d rather own 100% of a company worth a dollar or 10% of a company worth ten-million dollars. It takes a lot of education, explaining to them what the market looks like, and helping them find the right partners. So it’s not about losing control, it’s about gaining a partner that will help you get to the next level.
And at the same time letting them realize that they have a really good skillset, but that they need to get the right team. So if they have the right team, and the right partner, then they will be able to grow faster, and will result in a bigger, better, stronger company than if they do it alone. And some of them want to do it alone, so that’s fine.
When it comes to capital, what can entrepreneurs do to make their business investable?
I think what’s most important is for them to understand what type of investment is right for them. A very small percentage of businesses are actually VC backable, because they just don’t scale.
You can get other types of investors, or you can even get debt, depending on what your growth strategy is, and what your need for working capital is. So part of it is just baseline education, not everyone should get VCs, most people will never get VC funding.
But they might get angels, or they might get people that are really interested in them as people, because you usually invest in management. And then being realistic about what it is you need your money for, and how that money is going to help you grow.
What types of things are angel investors looking for in a business?
A business that will have a pretty good rate of return, and a management that can execute on it.
Is a ‘pretty good rate of return’ subjective?
Well it’s got to have some scale to it. It can’t just be about getting their money back and 2% over ten years. I mean even sophisticated angels want their money back plus at least 10-15% return— less than venture capitalists, but still a fair amount.
There are certain businesses, for whatever reason, that just aren’t scalable. If they don’t have growth opportunities, are they attractive for investment?
Not for venture capital and private equity investment. They might get some high net worth individuals who have some different end goals than VCs. VCs and private equity have to put other people’s money to work, so they have to get a return.
And a high net worth individual might like the person or may think it’s an interesting idea. So it comes down to different interests and goals. I tell people that they have to align the investor’s goals with the personal goals of their company. And then they have to find a partner that has those similar goals.
You’ve been involved with another group of women CEOs, could you talk a little about that and how you got involved?
Yes, the Women Presidents Organization. It’s an international organization for women-owned businesses, and it’s a peer-to-peer advisory group, in which I chair two of the chapters. Marsha Firestone started it almost twenty years ago, and it’s for second-tier entrepreneurs.
So it’s for women-owned companies, in the growth space, who peer-to-peer advise, network, converse, share ideas, and discuss issues with other women Presidents and CEOs.
It seems like your schedule is full.
I have free time, but I’m also very passionate about helping entrepreneurs. Small businesses are the backbone of the economy, they are the ones who are going to be disruptive, who are going to come up with the next great thing, it’s not going to be the big companies necessarily. And I really like working with people with passion in terms of what they do.
What are the two chapters that you oversee?
I do the Providence chapter, and then one of the chapters in Boston, in which there are two chapters. New York has six chapters in Manhattan alone. There are about 150 chapters internationally. There’s one in Long Island, they are forming one in Hartford that my friend is the chapter chair for, one in western Connecticut, and there’s one in western Massachusetts.
Who’s the person that’s going to be handling the one in Hartford?
Kathy Crosky, and she also chairs the Springfield chapter.
What do women have to do to get involved in the group?
They have to own their company, at least 51% of it. They have to be involved in senior management decisions, and they have to have at least $2 million in recurring revenues each year. Most of them have significantly more than that, but that’s the baseline. The average size of the companies are about $20-25 million in most chapters.
The world of financing businesses has changed in the past 10-12 years. Now you have even more ways of financing businesses, with Title 3 of the Jobs Act in terms of crowdfunding now being available, and there are different fintech companies that will come in and do accounts receivable financing. How do you feel about these new ways of financing a business?
I think that crowdfunding, where they don’t actually take an ownership interest in the company, is good for certain types of companies and to get them more exposure. I think too many people think it’s the perfect thing, and it isn’t.
Again, you have to have a strategy around it, you have to know why you’re doing it. You have to know who your audience is, and you also have to understand that you have to deliver something in the end. Too many times, people raise money on a crowdfunding campaign, only they have to spend all that money to deliver their product to the people, and they aren’t getting the money they actually needed or wanted to grow the company.
So it needs to have a purpose, and there needs to be a strategy behind it, otherwise it’s not any good. I’m not necessarily in favor of the crowdfunding sites where people actually end up owning a piece of the company, because I am a firm believer that money is available out there.
But what is most important is finding a partner who comes with the money and who will then help your company. Money alone is not going to make you successful. So that’s why I don’t like the crowdfunding where they go out and random people give money, and then own a piece of the company. I also think it messes up the cap table when they want to do some more traditional funding.
In terms of the experience you’ve gained over the years, is there any advice that you’d say to a woman entrepreneur looking to start or grow her business?
Yes, get a good team. Be willing to bring on people who are smart, who can help you, and who believe in whatever it is that you’re trying to create.
The road to access to capital is a long one. Is there any advice you’d give to a woman in regards to being persistent and understanding setbacks.
First of all, they need to understand their numbers. Even if they have a CFO or controller, they need to understand the numbers because no one is going to give them money if they don’t.
Secondly, yes you have to be persistent, creative, and you have to get out there and ask. Women are not good about asking for things, they try to do it on their own and make it work, when they should go and ask people for money.
You bring up a really interesting point. There are certain qualities that really make a woman successful in business, from being persistent to multitasking. When they show these qualities in the home, such as asking the doctor for things when they bring their child to the doctor’s office, why do they have trouble asking for capital?
Because it’s about them, it’s not about someone else. They tend to be really good for others but not so great for themselves. They’re just not used to asking, it’s the way they are brought up. I mean, most young girls sit around waiting to be asked out on a date. When you’re not used to asking, and then you ask that one time and you get rejected, it’s like ‘oh my God I can’t do this’. So they need to be advocates for themselves and their company, and they need to be truly passionate in everything that they want for their business.
Thank you your time.
Take care, have a great day!
It can be a challenge for a business owner to source patient capital.
Glenn Davis is the Vice President of Community Development/Community Reinvestment Officer at Liberty Bank, a community bank based in Middletown, Connecticut with over $7 billion in assets. Learn why he started the Academy for Small Business Lending program.
I interviewed Glenn over the telephone on June 16, 2017, which is part of our Throwback series, spotlighting inspiring people and the work they do. This interview was edited and condensed for clarity.
You started the Academy for Small Business Lending program at Liberty Bank. Could you talk about what the impetus was for starting the program?
Well, my role is community reinvestment act officer, so we are looking at ways to have a measurable impact, rather than do work just for the sake of doing it, but we want to make sure that across our footprint we are really having an impact and addressing the needs of the community, because that’s the whole essence of the community reinvestment act.
I had spoken with a colleague who’s a CRA officer up in Boston, and they had a similar type of program where they would do training for small businesses. And I was thinking of how to replicate their program, and do some tweaks. And the real catalyst for the program was from them, they provided the foundation; and then I took that, looked at our marketplace to see what the need was.
And having been in small business, I knew that the real gap was in individuals that could’ve been in business for 3 or 4 years just working out of their homes, and they never really had enough capital to launch the business into something substantial. And that was also the hardest gap to fill in order to come to the bank for financing.
Either they had credit challenges, or they didn’t have enough financial strength to justify a loan. And that also meant that they couldn’t go to the non-bank lenders. And when you put those two issues together, I think that really was the catalyst for starting the academy. One of the things we did was take credit, their FICO score, off the table, so that was a non-issue. And that’s really been quite successful.
When you say you took FICO off the table, what does that mean?
If you complete six of eight classes, you haven’t been bankrupt in the past five years, you can pass opening a Liberty checking deposit account, and you’re not currently under the criminal justice system such as any indictments or parole or anything of that nature; then these are the conditions for qualifying for the loan and the $5,000 line of credit.
If you do those things and you can pass the tests, you’re basically assured the $5,000 line of credit. If your business wants more, such as $10,000 or $15,000, then you’ll have to qualify based on credit. And then that’s when we’re looking at the revenues of the business, and also your credit score. But for that initial $5,000, the revenues of the business and your credit scores are non-issues.
What was the reaction in senior management when you brought this idea for the program back from Boston?
It was difficult, because it’s taking credit off the table. So essentially I was saying, this is a pool of money at risk, and that was the perception of it. But again, I guess no risk, no reward. So initially, management really liked the concept; they just had to get their arms around not dealing with the credit.
And in fact, that’s really how we came up with the five criteria regarding bankruptcy, the criminal justice issue, and being able to open up a Liberty deposit account. Because in good faith and consciousness, you really couldn’t give someone a $5,000 line of credit if they aren’t able to open a deposit account because they failed to pay an obligation at either our bank or another bank.
So to a certain [extent], this is a credit criteria, but not in the same context that you’d think about going to a bank and applying for a small business loan.
What was the business owner’s perception when you told them about this program? Were they waiting for the catch?
The business basically had to be around for 1 to 3 years, which was the market we were looking into. Business owners were cautiously optimistic, but they were very welcoming to this approach.
And in fact, the first class was in Meriden. Then we had New Haven, and Willimantic. And the response was incredible. Even this year we oversubscribed the New Haven class, and I’m constantly getting applications and registrations. I think business owners, as they go through it, appreciate the things they learn that are valuable to their growth.
What kinds of businesses are going through the program?
It’s across the spectrum. Hair salons, beauty shops, restaurants, metal shops, really across the spectrum.
It’s great knowing that everyone from all these different businesses feel comfortable applying.
Absolutely. From an instruction standpoint, the business curriculum that we use is the FDIC’s Money Smart for Small Business curriculum. And the instruction is applicable notwithstanding the industry or business type. So people have been receptive to the instruction. And I’ve tried to compress it.
In Meriden, I did it in eight weeks; and that was a little taxing. And then I started doing four-week commitments. So we did it twice a week, the people really liked that. There were also sponsors on the ground. In Meriden I worked with the Community Economic Development Fund, in New Haven it was the city’s economic development department.
And we found that you always need to have someone on the ground, because it’s a high-touch environment. And I find having that having that partner on the ground is key.
In terms of what the reaction has been from the students after going through the program, how have they reacted?
Very positively. I’ve gotten great comments and compliments from the participants, they’ve been very receptive.
When they go through the program, they learn different things, or maybe they relearn some things and now they’re applying again, how do the nuts and bolts work for the account they receive. When they graduate, then what happens?
Typically, what I do is around the sixth or seventh class; I’ll go in and explain the process. And the process is essentially that we have the line of credit agreement, the documentation is very limited because we try to streamline it.
I go in and provide them the templates, so on the last class, they come in with all of their business certifications, their employer identification numbers, all their organizational documentation, and then they sign the agreement.
I take that, bring it back to our small business lending center, and probably within ten days they have a line of credit. And I explain to them that this isn’t a grant; we are not giving you $5,000. We are making a commitment to you in believing that this money will help launch you to the next level.
In Meriden, I had a jeweler who needed $3,500 to buy a piece of equipment that would help him attract more business. I told him that $5,000 might not seem like a lot of money, but it’s a way to start building your business’s credit. I think people really embrace that, and some say they’ve never seen a bank do something like this.
After having said that this is a loan, have some people had the mindset that this was free money?
I think you’ll always have that. And unfortunately I think some individuals have that mindset even in the academy program, and they come to the class with that impression.
Which kind of gets back into preparing entrepreneurs for traditional capital. What can you do to prepare entrepreneurs for capital? And letting them know that this is a loan is an important part.
Absolutely. I think along the way, structuring the training program so that they’re thinking. Ideally, you’d want everyone to be diligent and conscientious about their business. It’s serious business as an entrepreneur.
The reality is that not everyone will be. So you provide the information, you provide the opportunity for them to learn, and you hope that they’ll grab and take hold of it.
For me, and obviously the success of the program isn’t just having a lot of participants, the real success is to allow all this information resonate with them, and to make a difference in how they do business and how they proceed with their operation.
I think that’s really the success. And as you teach and go through the program, people really begin to see that. So for me, I’m already starting to think about what the next level is for the academy. I’d like to continue to do the academy as is, but if I want to have a long term, sustainable impact; I can’t just continue to do the academy. I have to do the academy plus other things.
So even though this is the second round, we have five classes this year, we had three last year; so the next level is probably to take the individuals who’ve already successfully completed the class, and bring them back into another cohort of business education that’s a little higher than what they’ve experienced in the first stage.
You mentioned preparing people for capital, and letting them know that it’s not a grant. In lending there are the 5 C’s, including Character. How do you address that issue of character?
I think the character issue is addressed by having the partner on the ground. To a large extent, I’m relying on the non-profit or the agency that I’m working with to say, “Yes, this is a person I really want to recommend”.
Because notwithstanding their credit score, that doesn’t necessarily dictate their character. In many instances, circumstances could impact their credit score. So that partner on the ground is critical.
I think the other thing about character is about how attentive they are, and the discipline they bring to the class. If someone is erratic, or I’m constantly getting calls saying they can’t make the class, then I kind of know that it’s not going to work and that the person isn’t that serious.
In terms of measuring success, after the eight classes you’ve done, what are some of the metrics that you’ll use to measure the success of the program?
GD: The first metric is just the number of participants. Last year, I had 20 participants per session, which was the class size. This year, based on the funding allocation, and after looking at the markets that I wanted to address, I had to scale back due to limited funding.
And the success is obviously always our defaults; we want to make sure there are low defaults. Even if we have 100 small business academy loans out, we don’t want to have 10% defaults.
Typically this is a high-risk pool, and the bank understands that. So the success is really if I can limit that default, because that means the individuals came through the class and really understood and tried to implement what they learned. So clearly the default is key.
And then I think success is how someone is able to take the $5,000 and leverage that to create greater opportunities. For example, the jeweler that I talked about; if we’re giving him the $5,000 loan that he probably couldn’t have traditionally gotten, if that piece of machinery enabled him to expand his business 20%, 30%, or even double his revenues, that’s success.
From a practical point of view, you have a partner on the ground that’s vetting these participants. Once they graduate, and they get access to the line of credit, are they fully responsible to Liberty Bank in terms of monitoring the loan?
Because it’s a credit product, it actually becomes part of our small business loan-servicing platform. So they receive monthly interest payments, they receive past-due notices. And if a default happens, then they go into our special assets. It still falls back into our operational platform that we would do for our traditional small business lending.
Most banks have to be responsible to the communities that they are lending in. Are you just gearing the program to communities that you’re actually operating in?
Yes. The tenants of the Community Reinvestment Act are that we identify our assessment areas, so from a compliance standpoint, we are responsible for making capital accessible in our assessment areas. So that’s our primary focus.
For Liberty Bank, it’s all of New Haven County, Willimantic, Groton, New London, Norwich, West Hartford, Bristol, New Britain, Waterbury, and then all of Route 8. So that’s our assessment area from a regulatory standpoint, and the regulators will look to see what we are doing to these marketplaces.
So part of the strategy around the academy was to look at key low- and moderate-income census tracks, such as New Haven or Waterbury, in our assessment area, and that’s really where I tried to focus and start the classes there.
In terms of capital and making it available, do you feel that the markets you’re reaching have enough options for people who may not be ready for traditional financing these days?
Absolutely, I mean there are a lot of traditional and non-traditional sources of capital. Because you have your non-bank lenders, and then you have your hard moneylenders; so I know that’s a reality in the community.
I do think there are enough options for entrepreneurs to grow their business. If the entrepreneur is serious and committed to the principles of running their business, they can find money. What my experience has taught me is that every entrepreneur that I’ve engaged with is an expert in his or her trade. That is never the reason why they fail.
They fail because they don’t have the discipline in regards to the operations. Because they are always going from hand to mouth, they might not pay their taxes. So they get into trouble with the IRS or other contractors. So it’s always those issues, not their specific skillset. So that was really a catalyst for the program, making sure they have the training necessary for success.
What area do you find the most businesses lacking in? Whether it’s marketing, accounting, financing, sales, or just balancing the responsibilities of being a business owner?
I’d say it’s the accounting and finance, and then overall operations. That also means the paperwork, filing the necessary forms when they should be filed. It’s the back office stuff. Because they are so busy and engaged in working and making it happen that they don’t spend the time doing those things.
What inspires you about this program?
What really inspires me is to see so many people benefit from the bank’s commitment. I used to be a lender, and even today I can drive up in Springfield with my daughter and say, “I financed that building”; that’s ten or fifteen years ago. And that kind of longevity, it’s a legacy that I think every lender should have.
To feel that you’ve had a hand in developing that building or subdivision. The real inspiration is to see these individuals gravitate to the information, to appreciate what the bank is doing. I had an individual send a letter to the president thanking them for having such a commitment to the community. That speaks volumes to me.
Do you see it being a permanent program, or at least some variation of it?
Absolutely. Here’s my wish list. I’d love to keep the academy, but to broaden it so that we have the entrepreneurs coming in for the program and receiving the $5,000 loan, to have the next iteration of that be having them come in next for $25,000. Which means that their businesses have grown to that level, and that they have the revenue stream that supports them needing $25,000, $30,000, or $50,000. And then related to that would be being able to bring those individuals back for another cohort of instruction that helps launch them to a different level.
You mentioned that you have partners on the ground. The partners also have the ability to match what you’re providing, right?
Correct. If an entrepreneur can justify needing $10,000 after already receiving our $5,000 from completing the course, the Community Economic Development Fund will match our loan amount. But theirs is based on credit, so they’d have to meet their credit criteria.
We’ve covered a lot of material. Is there anything else you’d like to say?
The Academy has been great, we are actually in Middletown this week, and then hopefully we will go back to the same communities. It’s a great program.
Jill Johnson, CEO, Institute for Entrepreneurship Leadership.
Entrepreneurs have a difficult time raising capital and building a business. In this interview with Jill Johnson, Co-Founder & CEO of Institute For Entrepreneurship Leadership (IFEL), which was conducted over the telephone on June 13, 2017, she provides her unique perspective from the world of entrepreneurship.
Time has passed since I interviewed Jill, but her insight and wisdom is still relevant today. Our Throwback series spotlights inspiring people and the work they do.
This interview was edited and condensed for clarity.
Could you talk a little about what the Institute for Entrepreneurial Leadership is and how you started it?
The Institute for Entrepreneurial Leadership is a not-for-profit organization that my father and I started together in 2002. The focus is to connect entrepreneurs with the knowledge, networks, and capital necessary for entrepreneurial success. We also have a particular focus and outreach on entrepreneurs from traditionally underserved audiences, including women, minorities, and entrepreneurs from low-wealth communities.
What led you to start this organization with your father?
My parents had a newspaper publishing business called City News for about twenty years. It was a good business by many accounts, at their highest point they employed about 12 people or so, and hovered around the $900,000 level. It helped to put food on the table and get my siblings and me through school.
It was a business that was generating revenue, employing people from the community, they were very involved in the community, and their publication itself was serving a need in the community. Publicizing good things that were going on, and helping people have hope.
Unfortunately they didn’t build their business in a way that would enable them to monetize the value that they had created in the City News brand over the twenty-year period of time until they decided to retire.
I started my own career in the financial analyst program at Goldman Sachs, and I saw in Mergers and Acquisitions a lot of people make a lot of money selling businesses, starting a business and selling it for a lot of money. None of those people looked like me, there weren’t women, and there weren’t minorities who were doing that.
After having that experience and working with my parents a bit writing business plans for people who were raising money during the dot com era; I wanted to use my knowledge, expertise, and my talents to help more businesses figure out how to create a path to create wealth through entrepreneurship.
What are the unique challenges that small businesses face in regards to people of color that you help them overcome?
This isn’t necessarily only for businesses of color, but a huge challenge is creating a sound infrastructure. How do you build a team so that the business can run without you? If you can do that, then you are on your way to at least creating an opportunity to monetize the value in your company.
Is the business profitable? A lot of people focus on growth and revenue, without focusing as much on profitability, and that’s really key. I think the challenge for a lot of minority companies is the access to capital. Particularly to grow, how do you get over that hurdle so that you as the owner who’s doing everything, to being able to hire the right talent who can help you in the business and take it to the next level. And that talent is expensive.
Capital gives you the ability to learn from mistakes. Because you can make the mistake, recover from it, and move on and keep growing and building. If you don’t have capital, it’s often tougher to come back from those mistakes. Capital gives your business the runway that enables you to have the time to be successful.
You talk about getting businesses capital ready. Explain what you do to get a business capital ready.
It starts with asking, is the business profitable? Do the economics of the business make sense? So many entrepreneurs don’t fully understand the economics of their business. So they could be underpricing, because they don’t understand what it costs them to produce the product or service.
That’s definitely part of it, and then it goes back to whether or not the business can run without you. Maybe you’ll be able to get a loan, but the loan is far more risky if the entirety of the operation is dependent on you. A business that can run without you becomes more fundable.
Do you have a plan? How are you planning on growing? Do you have a plan that’s based in the reality of an entrepreneur? Because we are often reaching for things that most people might say are unrealistic. But this is because our reality is just different than everyone else’s. Also thinking about how to achieve that plan, and how to fund it. You might not have the capital that’s necessary to fund that plan.
So you’re part of the Workshop In Business Opportunities (WIBO) curriculum, could you tell me how that helps businesses develop systems so they can be profitable?
It’s actually a curriculum that was created fifty years ago in 1966, and we brought it into the IFEL umbrella in 2011. It is such a phenomenal curriculum because it really focuses on the fundamentals.
It walks a person through everything from nailing down who their target market is, to figuring out how to market toward that audience, how to reach them, how to find them, pricing strategy, looking at cash flow, and then looking at various operational aspects of the business. So it really is just a great guide through the fundamentals. And that’s what a lot of businesses are lacking.
Based on your experience, what area would you say is the most lacking for small businesses when assessing their skill base?
Usually it’s the understanding of the economics of the business. Is the business profitable? Are you paying yourself? If you aren’t paying yourself or only paying yourself a little bit, then the business is far from profitable.
How do you get an entrepreneur to really assess whether or not they can make this work?
The way we work with entrepreneurs is helping them through a process of self-discovery. So it generally doesn’t work if someone from the outside says this won’t work, and this is what’s wrong. You have to help them understand and to see for themselves what needs to change.
Is the curriculum is a 16-week program?
Yes, but in the workshop there is also a lot of discussion amongst and between the participants. So when you have another participant saying, “How much are you making? It doesn’t seem like you can make any money from that. Because I would probably pay twice that for this product.” We’ve seen this a lot, where the participants in the course are the ones pressing on certain issues.
As they are going through this course, is the goal for them to decide to start a business, or is it mainly just to learn how to write a business plan?
The purpose is based around people starting their business, and seeing if their business is viable. And so at the end of the 16-week workshop, they have the tools necessary to get going in a way that is economically sensible and whether or not there is the opportunity to be profitable.
You have some exciting things going on, including the 9th annual Next Level Business Plan and Pitch competition. Tell me a little about that.
The focus of the competition is helping people put together a strong business plan. We put it in the format of a competition because it’s more fun and enticing for people. But really it’s just a means to get people involved in the program where we provide guidance and feedback for writing business plans.
We show them that writing a business plan is nothing to be afraid of, that they don’t need to get someone else to write it, that it essentially just takes what’s in your head and puts it onto paper; how you’re going to make your business successful and how you’re going to make it work. So we try to take the intimidation factor out of it.
You’ve been involved in Newark as a community based, not-for-profit organization. What kind of impact are you having on the community that you’re in?
Some of things we are doing are working with local businesses in Newark where we are located. We have engaged in a project with the Prudential Foundation, where Prudential employees have been involved in working with local businesses as volunteer teams.
So they are helping entrepreneurs identify and work through strategic challenges that their business might be having. We also do WIBO courses here in Newark for businesses in our area.
And then when you look across the board in terms of our impact on local businesses getting started, there are now 7 different locations outside of New York and New Jersey that are using the curriculum. And the number of businesses that we are seeing going through the program and getting started is definitely creating excitement for the communities that they serve.
When you talk about the communities that you’re in, are you referring to the businesses in New York and New Jersey or outside those states?
We are in Portland, Maine; a community near Williamsport, Pennsylvania; Bridgeport, Connecticut; Richmond and Roanoke, Virginia; and Kansas City and St. Louis, Missouri.
I think one of the things that’s changing in the world today, specifically in the United States, is that the corporate world is no longer a safe option for many people. What’s happening is that many people are becoming self-employed out of necessity. How do you help those people make that transition from being sort of an order-taker to being in a leadership position? Is that a long process, or is that just something that people realize they have to do over time?
In some cases, it may not be in their best interest to make that leap. It may be better to find another entrepreneurial environment and find someone else who needs help. It’s critical for people to assess their true talents and to understand what their skills are, because it may be better.
If you’ve been a great operational person with a company, you could find an entrepreneur or small business or start up who needs that. You may be doing it even in a self-employed fashion, in a contract capacity, but you’re still doing what you do best.
I think people can develop leadership skills, but that probably means those skills were just latent and just weren’t being used versus just not being there. People have to do a personal inventory, and a self-assessment to really know what values they add to any company, including their own. Because even if it’s your own company, you might come up with the idea, but you may need to figure out if you need someone else to lead it and be the CEO.
I saw that you interviewed Piper Kerman, author of Orange is the New Black. During that interview, what did you learn about her that you didn’t know that helped you learn more about that population?
Her story was very interesting. I think her situation isn’t necessarily unique, but what was different about it was that she had resources and a support system going in, which then enabled her to have that same support system coming out.
Many people who are incarcerated do not have that, so when they come out they are further isolated and the prospects of getting themselves on track are much more difficult. When trying to start a business on top of trying to figure out housing and other life issues, it’s tough.
So the main thing that I learned from Piper’s story is that having that support system makes all the difference in the world.
Why is it important to help the reentry prison population? Why is that something that you feel strongly about?
Well for one, we are incarcerating people at far too high of a rate, more than any other industrialized country.
So I feel like there is a problem there. That being the case, if we are incarcerating people at such a high rate, there has to be a way for them to return and be contributors to society and their communities when they get out.
And if they can’t find their place in a productive way, it often turns into reentering in unproductive ways. It’s very important to find ways and provide opportunities for everyone that’s willing to work hard, and who want to achieve something better.
Have you had anyone who’ve been in prison go through your program?
We actually offer scholarships to people who were formerly incarcerated.
So the financial aspect is not a roadblock for going through your program?
No it’s not. But we do find that they are more successful going through the program when their personal life has stabilized.
Do you see yourself changing your mission and becoming involved in lending, or do you see yourself continuing to be more of a facilitator in delivering the client to financial options?
I’m open to moving in the direction of being a direct provider of capital, whether that’s lending or other form of capital.
I’m open to doing it in a way that finds an organization that’s doing it well and is in alignment with our mission, and inviting them to join our family of programs, much like we did with our Workshop.
Do you have a specific success story that you’d like to talk about regarding a client that’s gone through your organization?
Yes, there are a number. One of the largest WIBO success stories is Bogota Latin Bistro in Brooklyn. We have a number of success stories in our newsletter that comes out each month.
Thank you Jill for participating. And at some point I may contact you to follow up about one of the success stories.
Terrific, thank you Anthony.
Special Note: I want to congratulate Thomas Dupont for graduating from the University of Connecticut School of Law in 2021. Thomas, Class of 2017, transcribed this interview when he was a paid intern for me, while attending Wesleyan University in Middletown, Connecticut. Currently, he works for a law firm in New York City.
Distractions Derail Productivity
Success is routinely measured by accomplishments. Did the Los Angeles Lakers win the NBA championship? Did Apple achieve its annual sales goals? Did Tesla begin manufacturing its Cybertruck?
While numerous factors certainly contribute to success, none is more crucial than productivity—this is where the day is won, battling to keep the seconds and minutes from potential saboteurs known as distractions.
Oxford Languages defines productivity as “the effectiveness of productive effort.” But distractions are thieves of productivity. For example, a new email may arrive in your inbox while you are in the middle of an important project. You know you shouldn’t open this email, but curiosity kicks in. Now you’re going down the proverbial rabbit hole.
If you fail to accomplish your work goals, you must examine how effectively you used your most precious resources: time and attention. The results—or lack of—can be traced directly back to your daily productivity.
According to Basex, a business consulting firm, interruptions cost U.S. companies $588 billion annually. When we succumb to distractions, whether it be checking email, looking at our smartphone, watching NCAA March Madness, or perusing social media, we lose the battle of productivity to distraction--and that time and potential productivity is lost forever.
Our focus often crashes. According to Gloria Mark, professor in the Department of Informatics at the University of California, Irvine, it takes nearly 24 minutes to get back to the original task after an interruption—think of a derailed train and the time and resources required to clean up the mess.
Mark’s research indicates that distractions have a psychological impact as well: “Attention distraction can lead to higher stress, a bad mood and lower productivity.” These psychological impacts can be contributing factors to poor results for both an individual and an organization—a timely warning for companies scrambling to open their physical offices as the pandemic in the U.S. subsides.
An interesting fact from Mark’s study is that interruptions at work are usually self-inflicted. An example is answering a personal call on your mobile phone, or sending a text message to a friend—it’s like an own goal in soccer. This is not the same as a co-worker interrupting your work to ask a project-related question.
Deep vs Shallow Work
To win the day with improved productivity, you must do deep work. Cal Newport, a professor at Georgetown University and author of the book Deep Work: Rules for Focused Success in a Distracted World, coined the term “deep work.” Deep work has been defined as “the ability to focus without distraction on a cognitively demanding task.” This type of work requires our full attention, such as a computer programmer writing code, a dentist performing a root canal, or an automobile mechanic fixing the brakes on your SUV.
Shallow work is the opposite of deep work. Shallow work is “non-cognitive, logistical or minor duties performed in a state of distraction”, which can be summed up as easily replicated, requiring little thought. Examples of this are searching the web, viewing social media, or passively listening in a weekly Zoom meeting.
You can’t focus when constantly distracted. Would you dare interrupt New England Patriots Head Coach Bill Belichick when he is performing deep work: developing his strategy to win the Super Bowl? Probably not. Could you picture a five-star general on the battlefield sending nonessential text messages during a critical mission?
Focus is your ally to get deep work completed, and can be a game changer, leading to a greater sense of personal fulfillment during the day. Anything worth doing takes time and attention—the idea of multitasking (performing several tasks at once) has been thoroughly debunked, especially when it comes to doing deep work.
Productivity Tips for Deep Work
Deep work is the solution to unlock meaningful work productivity. The website twominutebooks.com provides productivity tips based on the book Deep Work.
Star Deep Work Now
We live in a noisy world where many stimuli compete for our limited attention and time. To be successful, focus on deep work and the resulting productivity by developing a routine of good habits. Rid yourself of your distraction demons: the productivity killers.
When you ignore distractions and the tendency to engage in shallow work, you will be in a position to get more done. Deep work will lead to high productivity and the potential for successful outcomes. This is not to say that you will never succumb to distractions. It’s a constant battle worth winning.
Don’t Fret When a Bank (Computer) Declines Your Business Loan: Review Your Options
By Anthony Price
Note: This piece was written just as COVID-19 hit the U.S. For most small businesses, the SBA Economic Injury Disaster Loan (EIDL)is your best option. However, a number of states are providing grant and loan programs as well. Information and programs are changing daily. Contact me for more information.
When it is time to raise capital, entrepreneurs check their pockets, ask family and friends, then go to a bank. Startup founders must accept that a bank loan usually is not in the cards. They are more likely to get approved for a personal credit card at an annual effective rate exceeding 30 percent than for a business loan.
Commercial bankers decline loans for a myriad of reasons: 1) Operating history is fewer than three years. 2) Historical cash flows will not support the proposed loan request. 3) Credit score is too low. 4) There is insufficient collateral. 5) The business has not generated a profit in the past. Adding insult to injury, the decision-making process at large national banks is done by computer algorithm, not humans.
Don’t fret about a “no,” because there are nonbank alternatives. But before you start searching for capital, ask yourself this question: Am I running a business or a hobby? A business must be focused on generating a profit, which is the result of creating value for customers. Profit is the money above what it cost you to produce the product—a reward for solving a vexing problem. On the other hand, a hobby is something you like to do but may not be a viable business.
Start with the basics. A successful business does three things better than the competition: 1) Solve a problem that is a pain point for customers. 2) Create value by making customers’ lives better. 3) Build a business that builds the product consistently every time. Your value proposition (what differentiates your business from the competition) and marketing will be the difference makers.
Next, are you seeking debt or equity? If you are seeking debt, try a community development financial institution (CDFI). The Riegle Community Development Banking and Financial Institutions Act of 1994 was signed into law in September 1994 by President Clinton, providing government support for CDFIs. CDFIs promote economic revitalization and community development in underbanked, underserved and underinvested communities throughout the U.S.
The Hartford Economic Development Corporation (HEDCO) is a nonprofit CDFI based in Hartford that lends to small businesses throughout Connecticut. Other nonbank lenders in Connecticut are worth getting to know such as the Community Economic Development Fund (CEDF) and the Community Investment Corporation (CIC). Do your homework, and you’ll find new options, from Honeycomb Credit offering crowdfunded loans to revenue-sharing notes on Mainvest.
Technology has allowed the creation of new capital options. GoFundMe is a platform that businesses can use to raise capital. Over $9 billion from 120 million donations has been raised on the platform since 2010, mostly to individuals. At the other end of the capital spectrum, Gust is the preferred platform where 85,000 investment professionals vet over 800,000 startups seeking investors.
Kickstarter and Indiegogo are the two top reward-based crowdfunding platforms. Over $4.8 billion has been pledged on Kickstarter and over 178,000 projects have reached their goals, since its inception in April 2009. Project organizers offer a reward (their product) to raise funds.
This author conducted a Kickstarter campaignto raise $20,000 to bring mini books to the masses. Mini books are 30 minutes of reading that fit in your pocket for on-the-go people. This is my second campaign. My first campaign raised $5,000 to write the book, “Get the Loot and Run.”
Another option is investment crowdfunding, which was made legal when the SEC implemented regulations in 2016 as part of the Jumpstart Our Business Startups (JOBS) ACT of 2012, signed into law by President Obama. Start Engine, Republic and Wefunder are investment crowdfunding platforms. These platforms require a considerable amount of work, but once approved, you can solicit funds from the public on the platform and raise up to $1,070,000 annually. [Update: SEC increase the 12-month raise amount to $5 million in March 2021.]
There is no Staples Easy Button to raise capital. But if you’re patient and do your homework, you may find attractive nonbank options that say “yes”.
The Venture-Capital Game: An interview with McKeever (Mac) Conwell II, co-manager, Pre-seed Builder Fund, TEDCO.
Note: This interview has been edited for clarity. Consult a securities attorney before raising investment capital.
Whatʼs the best thing an entrepreneur can do to get themselves ready for seed funding?
If you think about seed or traditional seed funding, and the way we look at venture capital, and you consider where venture capital is today, in 2000, 2010, 2012, you could get seed capital without a problem, without any customers or anything like that. And there are some instances where that happens today. More often than not, you have to have traction. Traction is defined differently from investor to investor, company to company.
But it boils down to the most effective way to go out and raise funding is when you donʼt need it. So that means you probably figured out your customer acquisition strategy. Because customer acquisitions will get you paid as an entrepreneur, either through revenue or through way of traction to get funding.
What do you say to an entrepreneur at the seed stage if they donʼt have traction or customer acquisition?
I try to be as honest with them as I can, mainly, investors and venture capitalist will just string them along and tell them they are not ready. Helping them understand if you want to get funding, these are the types of things we look for: We are going to look for you to have traction. We are going to look for you to have customers, paying customers. We are going to look for you to have some trial data or companies accepting a trial beta.
And it they give me the response, I donʼt have money to market or get it out there, my response to them is the chicken and egg, right? As innovative and creative as youʼre trying to be with your business, you should be just as innovative with customer acquisition.
You have two things: You either have time or you have money. So if you donʼt have money, you need to use all your time to figure out how to capitalize it. Because you already used all of your time to build and get the product, now you got to use all of your time to figure out how to get customers.
Thereʼs plenty of channels to start getting customers—to start generating revenue that doesnʼt cost money—but requires effort and time.
What do the companies look like that you have invested in the seed stage?
They have one to three founders. Their development may be in-house or may be from a third party, whether they are contracting out with somebody or using a dev (development) shop. They are still trying to figure out what their long-term strategy is.
But what they have figured out how is to get a group of people to start paying them for their product or a group of people to start using their product. We are not at the point of whether or not this truly scales. But we are at the point where we think it might.
The money we are giving them is for them to figure out can this scale beyond the group of people paying you or using it now. From a product standpoint, itʼs usually a product that is mostly baked, but not fully baked. Thereʼs still some things that need to be done. Itʼs just now getting to the point they got some revenue coming in.
They are starting to think through partnerships and doing some biz dev (business development) and they are at the earliest stage of creating themselves, branding themselves as subject matter experts.
If youʼre going to create a startup and youʼre going to be a leader in the space, it always helps for the founders to build a brand and start to be known as subject matter experts or whatever space it is.
What do you want to see in terms of a companyʼs ability to scale up?
Typically, when we talk about [scaling up], depending on the company, thereʼs a company that has a product that is being used really well in their local area. If we are talking about Maryland, DC, Virginia area, now he has the ability to be a national company.
This is a place where a lot of startups will fail because they are able to get the people in their local community, local state, or people they should go to. But what happens if youʼre based in Maryland and you want to expand to Texas? Do you have to hire staff or physically move your operation to Texas to get up and running? Or is there a way for that to happen organically or programmatically?
If you need to put boots on the group for that, thatʼs not going to scale well. That takes a lot of money. That becomes very capital intensive. Grouponʼs way to grow was to have a gigantic sales force. And it didnʼt last.
If we are talking numbers, when you come to me, we are doing pre-seed funding. Maybe youʼre doing $100,000 or $200,000 in revenue, how do we get you to $1 million or $2 million in revenue? Can you get there?
Letʼs say youʼre selling a product. How do we get you to grow by 50 percent month over month for the next six months? Can you do that or can you at least start charting in that direction so that we know if you get more money you can continue in that direction going?
At the pre-seed level, whatʼs the range of funding youʼre contributing to these businesses?
For my organization specifically, at pre-seed stage we do $50,000, seed stage we do $100,000 to $500,000, and at the venture stage, we do $500,000 to $2 million plus.
Do you put someone on the companyʼs board and provide additional services at this stage?
No. For pre-seed and seed, itʼs personally my belief, you shouldnʼt have a board. If youʼre raising money at the pre-seed or seed stage, you should probably be raising a convertible note or SAFE (simple agreement for future equity) note. Thatʼs a note for equity in the future, based on a future evaluation. They are much simpler to use. They donʼt necessarily require you to have a board, so you can continue to grow the way you want to.
When you get to a series A round, whoever your lead investor is, they are probably going to ask for one or two board seats. I typically tell entrepreneurs, if you have a series A round, youʼre a C corporation, you need a board, try to keep your board to three, definitely donʼt go over five.
I think five-person boards are hard for a series A company. You really want three. You want your lead investor (or most impactful investor), you as the CEO, and then a third party, who is a trusted party that you as the CEO chose. And you chose them for the business acumen, not because they are always going to agree with you.
Is your organization setting aside money for a follow-on investment, after your organization has made a series A investment?
Yes, absolutely. The venture fundʼs initial investment in a series A is somewhere from $2 and $5 million. But as you raise additional capital there is capital set aside to do follow-on funding.
What are your thoughts on the Silicon-Valley model, where they are trying to invest in unicorns (billion-dollar companies).
They kind of have to because thatʼs the way the economics break out. If youʼre a fund, the majority of the investments you make are going to fail. Typically, the economics state that the one-year investments are going to hit and the recurrence from that should be large enough to return the entire amount of the fund.
Then after that, youʼll have a few other companies that are going to hit and they are going to be your singles and doubles and triples that are going to give you some okay returns. Thatʼs where you make your money off of. That only really works for a unicorn model.
From a venture stand point, you only make money back if the company gets acquired or goes public. Thatʼs a high bar to reach. Whereas, I think revenue-based investing allows for you to investment in a lot more diverse set of companies because you get returns back based on the companyʼs revenue growth, as opposed to a zero-sum game.
Venture capital is a zero-sum game. Most companies are not going to get acquired or go public. But there are plenty of companies that may never be big that are going to grow and grow their revenue significantly over a period of time. You can get good returns back and be just as financially rich. Thatʼs a very different model.
The Silicon-Valley model works because they are only trying to feed those super huge outcomes. I think thatʼs a form of investing that is overhyped and is one that we overvalue because at the end of the day, venture capital (VC) is nothing but a subset of private equity. Venture capital is like pennies compared to the money spent in private equity.
What do you say to a company that is not going to be a unicorn, but could be very successful at the $10, $20, $40, $50, $100 million level? What do you say to that company that is not going to be a unicorn or shouldnʼt go to funders out in Silicon Valley?
I tell them to be creative, and I tell them thereʼs more than one way to get funding. I tell them there are plenty of angel investors out there that do revenue-based investing.
You watch Shark Tank, thatʼs a lot of the kind of investing they do. I also tell them the people with the most money that can make that kind of investment, are family offices. They are offices ran by families that basically have endowments or have generational money that is being managed by someone to grow. They understand revenue-based investing, very well. And thereʼs opportunities there.
I tell them donʼt get so caught up in the venture capital, Silicon-Valley hype, because it is hype. Thereʼs a lot of marketing around it. Itʼs sounds cool. It makes for good stories. It makes for good movies.
Thereʼs more than one way to play any game. Thereʼs a bunch of different ways to do this game. Find the one that works best for you. Thereʼs several books out there on other models and other ways to raise capital.
Are there any books you want to mention?
Jenny Kassanʼs book, Raise Capital on Your Own Terms: How to Fund Your Business Without Selling Your Soul. I believe she gives like 16 different ways for you to raise money for your company, without having to go the VC route.
Why donʼt women and people of color receive funding comparable to white males?
I think itʼs a really complex question. There are layered reasons for it. Very often—especially for people of color, I donʼt know if this is true for women, but Iʼm not going to speak on that—we donʼt have access or are not part of networks where money flows.
There are people in this country who grow up in blue-collar households, who live in neighborhoods where their neighbor owned a plumbing business, or their uncle was a doctor, or their teacherʼs brother was a lawyer. And they are able to have conversations and be around people who think about money differently or have disposable income.
Whereas, very often people of color will come from communities where that didnʼt exist. So even the idea of how money works in general in our capitalist society doesnʼt even get picked up, whether it be from an early age or later on in life. Itʼs not there.
I would also say because of that, people of color and women are not necessarily exposed into the game of money and the game of raising money. Thereʼs a strategy to raising money. Itʼs not just I have a business, you should give me money, or I have a business thatʼs doing good, you should give me money.
Thereʼs a process to it. And it youʼre not in those circles where you get to learn that process, and you come in without having the network and without understanding the process, without understanding itʼs a bit of a dog and pony show. Youʼre several steps behind, no matter how successful your business is, or how successful your business will be.
How do we teach people of color and women to play the game of raising money?
If you want to learn that game, a lot of that knowledge is out there. A lot of investors have blogs, where they breakdown exactly what theyʼre looking for when they talk to entrepreneurs. A lot of them have written books about exactly what they are looking for when it comes to entrepreneurs.
Guy Kawasaki has a famous book called The Art of the Start, where he gives a breakdown on what the pitch looks like. They give some very practical advice. There are tons of YouTube videos of pitches, people giving advice on pitches, but you have to know to look for that. If you donʼt even know the language of startups, you wouldnʼt even know where to start. You wouldnʼt even know what to Google.
I would also say programs like Founderʼs Gym. Founderʼs Gym is run by a former investor [Freada Kapor Klein] from Kapor Capital, who saw that these underrepresented founders were having a hard time raising capital because they didnʼt know the game. She literally created a program that teaches people the game of raising funds.
Accelerators can be a good place to learn the game and then having the ability to reach out to mentors, or gaining mentors from entrepreneurs who have already done it who could share that advice.
But again, very often people of color come from communities where the idea of a mentor isnʼt the same thing, where like your mentor was your big brother from the Boys & Girls Club or your best friendʼs uncle, who had a good government job and had the house that the water was never turned off, which is very different from me meeting an entrepreneur in my industry —maybe heʼs really successful—and me having a conversations, and asking him for advice and having them help me along and building my business.
How do you educate entrepreneurs about being open to feedback?
Thatʼs a tough one because people like that tend to not want to hear what you have to say. What I do is try and have a sit-down conversation and let them know like hey, Iʼm only here to help you. I worked with and helped a lot of companies.
Iʼve seen a lot of stuff happen in this industry. Iʼm only trying to give you the benefit of the knowledge that I have accumulated and things Iʼve seen happen. At the end of the day, you as the founder of your company need to make the final decision, but it is worth your time and energy to at least hear out what Iʼm saying.
And if they donʼt take to that, well it will probably never work. If youʼre an entrepreneur whoʼs not coachable, itʼs going to be really hard for me to help you. If itʼs hard for me to help you, Iʼm not going to be willing to open up my Rolodex and my connections to help you in the future.
If youʼre going to act that way, and be difficult with me, I donʼt want you acting and being difficult with my friends or people who I do business with. Nobody wants to work with a jerk.
Is there any advice you can give a fellow entrepreneur?
Investors are not here to give you money to solve problems you havenʼt figured out.
Very often entrepreneurs are looking to raise venture capital, looking to raise money from investors because they have some problem they havenʼt figured out themselves. They want to figure it out on someoneʼs dime. Very often itʼs how to get the product built or how to find customers and markets.
Nobody really wants to give you money to figure stuff out, unless they just like you and care about you. Thatʼs why your first bit of money comes from friends and family, which is another thing entrepreneurs of color and women entrepreneurs tend to have issues with.
People in African-American communities tend to give us money to get started because they care about us. So if we donʼt [get money from the community], we can only go to people who do this professional. And no professional investors give you money to go figure things out, especially a person of color.
Iʼm not giving you my money to learn, Iʼm giving you my money to grow. Be really open to feedback and be honest with your investors, or the people around you trying to help you. Donʼt try to hide things. Hiding things and holding things back, only holds back your company.
The moment you can be open with the people that are there to help you, the moment they can actually help you get through those things.
How much have you raised? What led to the eventual sale of your company?
For my first company, we only raised $25,000 and that came from an accelerator. We grew that a little over 4 and a half years. What happened was towards the end of that company, we had a large client who was using our product. And they basically wanted exclusivity, and we said instead of exclusivity, would you like to buy it?
And so they came back with some terms and some things. They essentially purchased the technology from our company. In Silicon Valley terms it was an exit. It was a Fortune 100 company that bought the technology from us.
It was an exist. It wasnʼt an exit in what you traditionally see, when you see companies get acquired because they didnʼt acquire us as a company, they just acquired our technology and our IP (intellectual property). That was fun.
What happened next? Did you start another company?
Directly after that, I started the second company. I went through another accelerator. I raised an undisclosed amount of angel investment. For my first company, we werenʼt able to raise money: 1) because we didnʼt know how to get customers and 2) we didnʼt know what we were doing.
For my second company, raising money and getting introductions...that was super easy because I knew everything already. I understood the game of raising money. I understood what the investors were looking for.
I had connections from day one for my second company. I had connections from people to help me and get feedback from. And I learned how to be a CEO and got really good at business development, so I was able to get customers.
My second company everything came so much easier. But the part where I fell apart at, and the thing I messed up on was I just didnʼt get the right team.
What do entrepreneurs need to do to get the right team?
Make sure that the people you are working with are entrepreneurial minded, meaning they are willing and ready to quit their job, put in long hours, sacrifice a whole lot, and may have to do it for an extended period of time because they are doing it because they truly believe in the vision.
If you donʼt have people who have fully bought into the vision, they are just doing it because itʼs cool, fun or something to do, then they are probably not the right people for your team.
We covered a lot of material. Any closing thoughts?
Entrepreneurship is one of the hardest things Iʼve ever done. And one of the hardest things youʼll ever do. And people will rarely talk about the dark side or hard parts about it.
But Iʼll say itʼs the most rewarding things Iʼve ever did. So donʼt go into it thinking itʼs going to be fun, or that youʼre going to have a good time doing it. Thereʼs going to be a lot of hard times. But when you get to the other side, you would have gained and learned, more than you can ever have imagined.
Is it fair to say that you may go back down the road of entrepreneurship again?
I donʼt know, thatʼs up in the air.