While Mike Brenner was introducing Fortify.vc to the Startup Baltimore folks at ETC facility yesterday, they were learning who we were, and I wanted to understand who they were. So, I whipped up a silly question to find out whom we would be speaking with for the next couple of hours, and although I hate to “group” folks into buckets, what we discovered were a handful of categories that work quite well when coupled with one or two other words used to describe people.
I asked, “are you a Founder, Funder, Farmer, or Fool?” and said “please also add one more word or phrase to describe yourself” mine additional phrase was “Honey Badger.” After got some weird looks from the audience which I’ve gotten use to this over the years I explained;
A Founder has hutzpah and is fully engaged in their startup. You know who you are, you are either eating ramen noodles daily, or should be, and you are looking for funding, users, or revenue, or should be.
A Funder is someone who either has money to invest, or is full of crap, sometimes both.
A Farmer is someone who is either trying to find their next gig, or trying to find him or herself.
A Fool has a day job but wishes he or she were one of the above.
I neglected to add one more category which next time I will not forget. Family is the one that most often brings the greatest amount of joy to our lives. If you are in the Family category, you are either a full-time homemaker/caretaker for little people (young or old), or pets, or all of the above. This might be the most challenging category of all, and those of us that are in the other categories should be thankful to those that provide the stability of Family in our lives.
The Startup Baltimore crew consisted of the following;
I asked the group what they wanted to discuss and have the discussion start out with, either my role as an entrepreneur, or my new role as a self-appointment seed and early stage VC. They chose the latter and proceeded to pepper Carla and I with questions about legal issues, the funding process, and how they could be introduced to potential Funders. It was a fun exchange, I definitely learned a ton, and met some great folks. I could not help but wonder how our Interns (and hopefully future Funders) would have responded to some of the questions … we shall see next time (get ready intern crew – the hot seat is coming for you).
I have been told that my fingers are a bit too chatty.
Message to our Founder friends in startup land:
1) FIND A GREAT ATTORNEY. FIND A GREAT ACCOUNTANT. Listen to both of them. Start your Delaware ‘C’ Corp unless BOTH your Attorney and Accountant recommended strongly that you start an LLC (the Accountant will usually prefer the LLC). The DE ‘C’ will save you time and money in the long run. As a Founder, this always annoyed me, as a Funder I now “get it”. Every Attorney that works in corporate law understands the DE ‘C’. Try doing a three-party LLC deal with Attorneys from three different states … good luck.
2) REQUEST INTRODUCTIONS! Ask friends and family for intros before you ask them for cash. Once they know what you are up to, and IF they are interested, they will ASK YOU if you are taking on investors. It is always better for others to want you, then for you to need them.
3) GAME THE SYSTEM. DON’T BE DESPERATE, BE CONFIDENT. Don’t beg people for money, request their time and shared knowledge. Know what you need, and obtain it in parts. Be patient. Be focused. Leverage your contacts, as it is their contacts one or two folks removed that have most of the intros that you will need. Keep in mind that Angels are known to write checks quickly following the commitment of a VC (or Super Angel) in a deal. Meet with and get to know local, value-added Angels, and let them know once you have a term sheet or invested capital from a Super Angel or venture fund. It is amazing how quickly they will grab for their checkbook once a lot of the hard work (aka ‘due diligence’) has been done by others.
4) LEVERAGE TOOLS TO SAVE TIME. Linkedin, Twitter, Facebook, AngelList, Blogs by VC’s (comment on them, they will be read by someone).
5) ATTEND EVENTS. The first step is to register. The second step is to arrive. The third step however is THE MOST important, and it is also simple … actually speak with other humans at the event. Don’t be afraid, just do it. It is amazing what can come from a few conversations. It is called networking, ask around about it, it has ben around a while All kidding aside, GROW A PAIR and get out there, meet and converse with people!
6) ASK FOR HELP, AND OFFER IT AS WELL. We all have at least one skill. If you are a Founder skilled in juggling, offer to teach someone to juggle (or whatever) and add some value to his or her life or business. Don’t just take, give as well. At the same time you are asking for their assistance, mention that you can juggle or show them a freakin magic trick, do something fun and memorable (but not crude or rude). Karma can only give so much to those that only take. Give back as well; it is always best to do so.
7) NDA’S – I discussed all of the reasons that a professional investor that sees several hundred to thousands of business plans per year, is NOT likely to sign any form of non-disclosure or confidentiality agreement. This is the case for most VC’s and it is the case for us. We simply cannot track every person in our firm and every deal or conversation that they have ever had. So if a VC who is a Funder says no the NDA, do not fear, he or she was not planning to run home to their garage and whip up a copycat of your widget. However, some Angels can and will sign an NDA, I know because I did it as an Angel. So, if your Attorney says that you MUST have the NDA signed even by Funders, ask the Angels if they will sign your idea protecting piece of parchment that rarely holds up in or is ever presented in a court of law. MOST importantly, trust your instincts about the person and their intentions.
Message to our Funder friends in the VC world:
TRY BEING FAIR AND REASONABLE. Some of my closest friends are also angel investors and venture capitalists and most of them are incredibly hard working and community minded individuals. Being fair and reasonable comes naturally for some, but for others, well … let’s just say that Gordon Gecko lives within far too many people in the investment community, and look where he ended up. Seriously though, this is simple to understand … if you are not, or have never been a Founder, get to know some Founders, and spend some time in their shoes. Be a Founder of something, anything at all (a lemonade stand with your children). You (Mr. and Mrs. VC) should respect and acknowledge the incredible sacrifice that Founders make, and we are the ones that should be kind to them. I am of the opinion that it is the Funders and that shall inherit and control all things digital. So, be human and act the same way to Founders as you do to other Funders. The same rules that apply to kindergarteners should apply to all of us. Be kind. Listen. Wait your turn. Be fair. Clean up the messes that you make. Do not take things that are not yours. Apologize when you know that you should. Share something, share at least your knowledge with Funders, Farmers, and Fools. Speak at events with entrepreneurs. Go out and meet the “little people” that you think are your minions. They are NOT your minions btw. You will learn a great deal from them, especially if you have not yet been a Founder or Farmer (a much larger percentage of VC’s have never founded or operated companies than should be the case). Assist the ecosystem that you are a part of. You might think that you deserve to act a certain way because you feel that you are at the top of the food chain, but Ivory Towers are lonely places, and most people don’t care to visit those towers or their inhabitants. Change now, or soon, or you might be forced into the role of Farmer, Fool, or Founder someday soon. Just my two cents.
Message to Farmers who are ISO their next gig:
Yo, what’s up? What is it that you are really looking for? Do you wish to be a Founder, seriously? Do you have any frigin idea how difficult that it is to start, operate, and succeed as a business owner? Are you scared? Good, you should be. Also know that second to being a parent (imho), the most joy that many of us have in life is from being a Founder. Find what makes you tick. If it is or could be a business, look into it, deeply look. Be adventurous and be smart. Ask for help. Read books and blogs on the subject as if it were your full time job. At some point, and you will know when to go for it!
Message to Fools:
If you have a day job, and you love it, shout hooray! If you woke up and realized that you are being pimped by an evil corporation and not being treated fairly, or you are bored out of your mind, or too smart to be locked down, get up and grab your red stapler and walk the F out the door. Fools are a necessary part of the economy and I too have been a fool more than once in my career, so I too “get” that it is quite difficult to leave the day job, etc. So either explore your business as a hobby (but not for too long) or live vicariously through your Founder and Farmer friends. Turn your dream into an innovative product or service. Be bold, but be careful. Know your personal financial situation and speak with others who have made the jump from Fool to Founder, prior to grabbing your stapler.
Message to Family:
Saving the best for last, of course. Thanks for your loving support, without you, we would not be who we are, and it would not matter as much who we were anyway. Family will always come first for me, thanks Mom and Dad for teaching that to us. Speaking of family, I have got to go, the little people are now awake …