By Margaret Wallace (Founder & CEO, Playmatics)
Over the past few years, I have had many opportunities to speak with up-and-coming entrepreneurs, both in San Francisco and in New York City. I get as much out of it as I hope they get. I enjoy sharing my knowledge and experience in founding startups and raising investment money. I also find a lot of inspiration from all of the creative and visionary people I meet along the way.
The event was held at Google’s New York City headquarters. I was impressed with the variety and types entrepreneurs in the audience, many of whom I had the chance to speak with after my talk. I met several people who had very compelling ideas focusing on a variety of industry sectors who, I believe, had the drive to make it happen.
I spoke for about ten minutes -– an abbreviated version of a presentation I sometimes give on my
adventures in entrepreneurship, which can be found here:
So what makes me uniquely qualified to speak to groups of entrepreneurs like this?
In the span of my career, I have co-founded four startups -– all in the tech, gaming and digital media sectors. Each of these startups is unique in one sense because they were all funded differently –- ranging from bootstrapped to VC-backed to angel-funded and some combination in between.
One thing I always emphasize to budding entrepreneurs is that they really need to understand the impact of their funding choices. There are subtle and not so subtle differences to how funding impacts a startup that, despite all of my time in the industry, I would have never expected until I experienced first-hand.
Different Funding Considerations, Different Risks
For instance, a VC-funded company is going to require a whole different set of negotiation skills and focus in comparison to a company that is boot-strapped or relies on ensuring cash-flow some other way. With a VC-backed company, much of a CEO’s time is spent “managing” their board and investors. Much of their time is spent raising that next round of funding. Immediate cash-flow is often much less of an issue, however, VC-backed companies (especially if they are funded in an early stage) are usually on a much tighter rope to show results compared to a company which is boot-strapped and allowed to grow more organically. A VC-back company is also more subject to the latest shiny trend that investors might be taken by –- and they will often have to contend with well-intentioned investors trying to position them around these trends.
Timing Is Everything — Not Just A Cliché
One of the most important lessons I have learned as an entrepreneur is that timing is everything. A colleague once said to me that being too early in an industry is just the same as failing. I couldn’t agree any more with this statement. It is fully possible to have the right idea at the wrong time. In this case, if an entrepreneur can’t hold on until their idea, product, method or service gains traction in the marketplace, all an entrepreneur is really doing is giving a proof-of-concept to the next wave of companies who may not be as original but timed their initiative more in line with market realities. Similarly, it is just as dangerous to raise money for a particular idea at the height of a bubble.
However, this doesn’t stop investors and entrepreneurs from allocating money to a particular sector even though that industry is all but exhausted. If I were a VC, for example, I’d steer clear of funding any gaming company trying to raise money to make “Facebook games.” That ride is over and the winners have been well-established. The time to raise money for “Facebook games” was two years ago, not now. Suffice it to say that a lack of proper timing can really kill a startup.
All Things To All People
Entrepreneurs must wear many hats. They need to be all things to all people while maintaining clear focus and vision to fully execute on their dreams. If an entrepreneur has raised money, there is no shortage of people trying to give advice. While it’s important to be open to new ideas and recommendations –- this should never come at the expense of maintaining a clear inner voice and acting from that core.
Editor’s note: Got a question for our guest blogger? Leave a message in the comments below.
Photo credit: Bethan Phillips on Flickr.
About the guest blogger: Margaret Wallace is the Founder and CEO of Playmatics, bringing rich games and applications to the Internet, in social media networks, and on a variety of connected gaming and transmedia platforms. Located in the heart of Chelsea, Playmatics focuses both on branded and original IP. In April 2011, she also became CEO of Shadow Government, an angel-funded social mobile gaming company, headquartered in Zurich and New York City. Follow her on Twitter at @MargaretWallace.