By Corrine Sandler, EO Toronto member and CEO of Fresh Intelligence
When I started my first business seven years ago, I knew that I had a concept that I had to act on quickly. But how could I finance a start-up? I had no idea how to borrow money or where to look for investors, so my only option was bootstrapping.
I approached a friend who ran a marketing company; he offered me office space and a little cash: I often say that I built my company with the bricks others have thrown at me. I paid back my minimal cash loan within three months, and seven years later my company Fresh Intelligence is a thriving global enterprise with offices in two major cities. I am the sole principal, with a kick-ass Senior Executive team and employees that I’ve been told would walk on hot coals for me.
As a serial entrepreneur, one company is never enough, so I started my next venture almost six months ago—but this time I chose a different approach to financing it. Why? It is a technology company, and I needed to scale it quickly to grab first mover advantage without first mover risk. I’d built the technology; I’d set up the entity; now I needed to go hunting for the capital to make it happen.
Thus began my bad romance, courting cash; building a pitch deck, refining the pitch deck, building a new pitch deck; honing my mission and vision; crafting new pro formas and financials; changing my acquisition strategy; moving my target; building a new pitch deck; and chasing the cash cows all over the country. I spent six months meeting with VCs in North America, and in the process completely lost touch with why I’d wanted to start this business in the first place.
It started to feel like a lopsided tennis game, with me doggedly lobbing back the volleys they sent flying over the net. It was a crash course in a business I knew nothing about, and I literally learnt on the run. Their demands shifted constantly; and I gladly obliged. They told me I needed a Chief Technology Officer immediately, even though I had an MVP (minimum viable product) ready to go. But my job now was to appease them, so I shifted gears and began interviewing for a big-ticket employee.
And finally the penny dropped: I got a call from a VC that focused on seed stage funding. They were close to getting me a term sheet—we just needed to meet for a final discussion. They could squeeze me in for an hour at a Starbucks across the street from their three o’clock meeting; could I be there? Oh, yes. Yes, I could.
Two hours out from the scheduled meeting, I got an email; we had a new time and a new location—and my hour was now down to 45 minutes.
As I read this, I paused for a moment, reflecting. In my first company—the initial bootstrapped baby—I’d always had the autonomy to make my own decisions and drive my own vision and mission. Suddenly, I was reduced to being a glorified gopher—and where would that end? I thought of something a friend had said; “Corrine, they’re all your friends until they give you money; then it’s the bottom line that counts, period.”
I looked at the calendar; had it really been six months since I launched my tech platform? What had become of my vision, my mission? I hadn’t laid a single brick. I had been waiting for others to do it for me—and I’d nearly lost my way.
I agreed to their change of location: I went there to thank them for their time, and to inform them that I’d decided to focus on my company—emphasis on “my”—and not their funds. The experience I’d gained was invaluable, but the time I’d spent could have cost me my first mover advantage—and my autonomy.
When weighing your growth options, don’t lose sight of the big picture, or of your mission. Don’t let dollar signs steal your dreams, distort your business plan, or dilute your vision.
Would I do it again? Never say never—but not on anyone’s terms but mine. Let the VCs come knocking; until then, I’ll carry my own bricks and build my own home.
Top five lessons I learnt when dealing with Venture Capitalists:
- If they ask you to change your business plan to get dollars? Walk away.
- If they focus on year 1 revenue and not the concept? Run away.
- If they think they have the power, because you need them? Hide away. They must want you more.
- If you find yourself celebrating a term sheet arrival more than a sale—you have lost your way.
- If your original vision is disappearing in the rearview, and you don’t like the looks of the landscape ahead—grab the wheel. It’s your way, or the high way
Categories: Best Practices Entrepreneurial Journey Lessons Learned WOMEN ENTREPRENEURS