Journey to Impact: Advice and Entrepreneurship
Rana K. Gupta formerly served as director of faculty entrepreneurship at Boston University. He helped BU researchers bring technology and other research breakthroughs to the marketplace to increase their impact through programs and workshops, one-on-one consulting with faculty, educational resources, and community building among BU innovators.
An entrepreneur friend called me recently to ask for my advice. She started a company two years ago, on her own. It’s growing, fast. She needs cash to meet demand.
She found a group of Angel investors, knowledgeable in her field and wanting to invest $XXX,000. They want YY% of the company, but she wants to give away only ZZ% of the company (where Z<Y) in return for the investment. She’s consulted with a handful of entrepreneurs who told her either to not dilute her ownership and don’t take the money, or stick to her ZZ% figure. After a handful of conversations, she had a handful of their opinions about what to do, but no way to determine how to proceed. Frustration took over. What should she do, she asked?
Please, can you guess my reply?
Correct. I asked, “What’s your objective?”
We talked about her objective for a while. Finally, she articulated why she was doing this (it takes our brains, hearts, emotions and pulse a few iterations to dig up our REAL, true objective). I asked if she’d shared that with her would-be investors (knowing full well the answer). She had not (and that’s never a good beginning to a relationship).
By the way, I asked her if she’d at least treated herself to a bottle of champagne to celebrate that she’d built, all by herself, sufficient value that these people wanted to put in $XXX,000?!!! I mean come ON, whether you take the money or not, enjoy the moment, enjoy your accomplishment! She had not. And I digress.
We then talked about various scenarios she might consider, both with and without these investors, other types of financing, or not growing as fast and using the cash she has on hand all in the presence of achieving her objective. It became obvious she needed the investment. Then we talked about some scenarios and possible terms of such an investment that would help her beyond just cash in the bank, such as the investors being held accountable for certain milestones. She left the conversation with several options to consider.
I’m telling you this story because I realized something I’ve known for years but only now struck me so plainly: unless the person(s) offering their opinion has something to risk, more often than not, they are only doing it to hear themselves talk. People love to sound important. They love to make themselves sound like the smartest person in the room. It’s easy to tell someone else to stick to your guns, don’t dilute your equity, go after this market not that one and all that good sounding tough talk.
I’ve referenced before this notion of how much people want to tell YOU how to do YOUR work. I used parenting as an example. As you consider your pathway to create impact, you must know first the answer to what is your objective? THAT answer is the beginning of your plan and helps you make decisions when standing at a crossroad.
And if you DO ask for advice, think about who you’re asking and what they’re telling you and why. If you find them asking questions to help you think through your needs and situation, and exploring scenarios to find your answer, then they’re helping. If they have nothing to risk and they’re telling you what to do, proceed with caution.