Dr. Earl R. Smith II

By Dr. Earl R. Smith II
DrSmith@Dr-Smith.com
www.Dr-Smith.com

Listening to the delivery of an elevator speech is the single most distracting event in an investor’s journey. It is to that point in time – the equivalent of ‘love at first sight’ – that most of the subsequent failures can be traced. An elevator speech is an advertising undertaking. It is an attempt to draw in a potential investor and get them interested in providing funding for a venture. It the starkest terms, it is a money trap. Read the rest of this entry »

By Dr. Earl R. Smith II
DrSmith@Dr-Smith.com
www.Dr-Smith.com

The reaction to my two prior articles in this series has reinforced my view that angel investors often, by their own tendencies, can make it less likely that their investments will prove profitable. In Angel’s Sins, I outlined some of the mistakes that early stage investors make. In Angel Investing – Governance I described how many investors overlook the contributions that a professional, independent board of directors can make. I have received quite a few responses from investors – some that contain tales of woe and loss while others invite me to ‘get involved’ in an effort to salvage what can be of a lost situation. I don’t much like these latter invitations – too hard on the digestion with little to show. Treating sick puppies may be necessary but this series is about preventive approaches. Read the rest of this entry »

By Dr. Earl R. Smith II
DrSmith@Dr-Smith.com
www.Dr-Smith.com

Most angel investors, when funding a start-up, ignore the structure and operation of the board of directors. Most early-stage companies that I work with have only a casually structured board that seems to exist to satisfy legal requirements. Accumulated experience has shown me that this is a very risky approach. A board has defined obligations that are important to the future of any company. Boards unable to fulfill these obligations severely limit possibilities. Here are some of the guidelines that I offer when working with these start-ups: Read the rest of this entry »

By Dr. Earl R. Smith II
DrSmith@Dr-Smith.com
www.Dr-Smith.com

In this case, I am talking about early-stage investors and the sins that they sometimes commit when they decide to back a start-up company. I spend a lot of time engaged with such companies – and much of that time is spent working to set right things that were set in place when the first round of angel funding occurred. What follows is a partial list of ‘sins’ and a few suggestions that might both mitigate their impact and improve the investors’ prospects. Read the rest of this entry »

By Dr. Earl R. Smith II

In this column I would like to discuss ways to meet the financing needs of a growing company. Let’s start from this point: The CEOs principal contribution to the process is to make sure that the correct financing strategies are in place and well focused. Read the rest of this entry »

By Dr. Earl R. Smith II

The beginnings of a good idea

Recently I sat in on a presentation that two founders of a technology start-up made to a frontline venture capitalist. What was most striking about the experience was that, from one point of view, the founders seemed very well prepared. Their presentation was polished and contained all the usual sections, their slide show was professional quality, and they spoke with passion and deep knowledge about their space. The materials which they provided were all neatly and professionally packaged. Read the rest of this entry »

By Dr. Earl R. Smith II

I do a lot of work with companies seeking financing. Whether it is a first round or follow-on, funding for further research and development or marketing and branding efforts, equity or debt financing, a start-up or mid-market company or financing to prepare for acquisition by a strategic buyer, there are strategies which can significantly improve the prospects for success. In this column I want to focus on preparations for and managing the initial meeting with a venture capitalist.

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By Dr. Earl R. Smith II & Marty Secada

Between us we have close to sixty years of working with start-ups seeking venture funding. Over that time we have noticed patterns – most of which lead to failure – in how founders approach the process of presenting to venture capitalists and attempting to arrange venture funding. In this column we will describe Gap Analysis – an approach developed to help focus presentations and significantly improve their chances of success. We will also briefly describe programs designed to significantly improve the chances of successfully arranging funding by combining this important tool with red teaming venture presentations. Read the rest of this entry »

By Dr. Earl R. Smith II

The most the important difference is that early stage investors have to deal with a class of uncertainties that are much the better quantified in the later stages of a company’s growth. Their attitude towards risk aversion and the focus of their diligence can be quite different. Additionally, because there are no significant ‘corporate tracks in the snow’, these investors very often have to make ‘leaps of faith’ based on their gut feel.

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By Dr. Earl R. Smith II

The last column, Financial Strategies – Some Basic Rules, triggered a particularly heavy flow of responses … most of them describing strategies, some of which had worked and some of which had not, that had been deployed in attempts to arrange the necessary financial resources for an emerging company. Thanks to all of you who took the time to send me your ‘war stories’. I plan to weave the best of them into a future column. Read the rest of this entry »