Category: Uncategorized

HIGH TECH COMPANIES NEED AN ORTHODOX CAPITAL STRUCTURE. This translates as meaning that the founder must give away enough stock to create a Stock Option Pool (SOP) of about 20% post-Series A funding for future stock awards and stock for new hires. Some EC countries (Spain for instance) have odd laws that give a heavy tax penalty for this structure. There are work-arounds that solve this, such as Phantom Stock. If you do not have this, it will almost certainly cause problems with foreign investors who are used to seeing this capital structure. Fixing this early is vital. View in LinkedIn

DILUTION IS ALWAYS A TOUGH ISSUE FIRST TIME AROUND for most entrepreneurs and Angel investors. Remember, all of nothing is nothing, and less of a bigger pie is more valuable. Founders should take care (do the sums and argue your position) to ensure that they and key staff have enough stock to keep them motivated going forward. Try and avoid at all costs any anti-dilution clauses (for anyone), as they will almost certainly cause problems in later rounds. View in LinkedIn

KICKING THE CAN DOWN THE ROAD will come back to haunt CEOs, because 90% of the time, it is because a CEO is emotionally disinclined to confront that issue. This usually arises when a board member, or staff member, brings up a thorny issue to the CEO. By deferring the pesky decision, the person who brought up the issue becomes increasingly frustrated, and more often than not, the problem becomes more complex. Lesson? Nip it in the bud. View in LinkedIn

MAKE YOUR CASE TO THE BOARD AND INVESTORS. The CEO of any company should be in the habit of making reasoned and thought-through justifications for key decisions facing the company, even if there is dissent from the board. Well-crafted, logical, and factual arguments are often enough to win your case, and the board will gain comfort that you show solid business reasoning, and are willing to stand your ground. I have heard dissenting board members (investors) explain their negative view on an issue explained by the fact that the CEO simply did not make his case. View in LinkedIn

TRY AND ONLY WORK WITH GREAT PROPLE. Life is short, and nothing is worse than working with unethical, egotistical, or dishonest people, be they investors, staff, or board members. The experience will go south, the relationship deteriorate, and you will be tainted by association. Remember the Sniff Test: If it is not fun don't do it! Of course, hard work can be less than fun, but it better not be ghastly. View in LinkedIn

MY MENTOR WHEN I WAS YOUNG, SAID "ALWAYS TAKE THE HIGH ROAD". It took some serious battles to understand what this meant. Be respectful, give credit where credit is due, take firm stands when you are being compromised and know you are right, and always try to do the right thing. Always ask: "can I write this as my epitaph and feel good about it?". View in LinkedIn

UNDER-PROMISE AND OVER-DELIVER is sound advice for CEOs. A BlowHard CEO who gives overly optimistic predictions will quickly wear thin on boards and investors alike. Be balanced in predictions and forecasts, disclose concerns and problems, and never try to play the field by telling one thing to one group and another to the next. The world is small, and people talk. Once your credibility is compromised, it is gone forever. View in LinkedIn

OVER-SHOPPING A DEAL CAN KILL IT. When investors smell that a company has been round the circuit twice, their suspicions are raised. Rather than be praised for leaving no stone unturned, the CEO is rejected because nobody wants a reject. Keeping your kimono closed, and being highly selective who you show your plan to, will attract more attention. Investors hate to be locked out of an over-subscribed financing, and this is the most desirable (and hardest to achieve) outcome for a CEO raising capital. View in LinkedIn

BIOPHARMA ENTREPRENEURS MUST NOT FALL IN LOVE WITH THEIR INVENTION, but rather set up a series of Go/NoGo decision points. I have seen too many scientific founders devote themselves blindly to their molecule, become blind to the adverse data, and in rare instances actually hide or lie about the adverse data (I have seen this three times in 25 years). View in LinkedIn

CUSTOMER SURVEYS can be a Go/NoGo decision for your emerging business plan. As this article describes, it is important to do your homework to see if your intended customer would actually use your product. VCs will gain comfort from well-constructed quantitative data from such surveys, which should be short and sweet, or your response rate will be poor. http://lnkd.in/Gpm-zX View in LinkedIn