We`re almost a decade into the 21st century, but a lot of SEO software programs still think it`s 1999. They want to autosubmit you to obscure directories, help you solicit reciprocal links, and otherwise automate tasks that worked back in the day but that don`t work now.
I just reviewed at SEOSoftware.net a program that, while far from perfect, takes a Web 2.0 approach to link building, steering newbies to techniques that actually work fairly well today (with the caveat that it gets a bit harder every year).
For the full review, <a href="http://seosoftware.net/lotusjump">visit SEOSoftware.net.</a>hardknocksmba12/11/2008 11:38 PM
It`s not what`s in the plan so much as what is credible and possible.
There are two normal exit strategies - the company goes public with an IPO, or you sell the business. The average deal sheet has a forced stock buyback (i.e., forced by the investors, not the management) at a multiple, but that rarely happens in the real world absent new financing because the money isn`t there.
Is you company going to be big enough to do an IPO? There haven`t been a lot of IPOs lately. It can happen, but saying it doesn`t make it so.
Are you willing to sell the company? Are you willing to give the investors the right to sell the company out from under you, which is what they will insist on if they have any sense?
If the goal is for you to run this company as a small company for life, angel financing from anyone other than your grandma is not a great option, because they are going to want their money back, with a fat payback, fairly soon. If that means freeing you up for your next opportunity, that`s the way it goes.
1) You are completely wrong on the trust issue. No one will invest with you unless they trust you and believe in you. Most experienced investors look for people to invest in, not ideas or business models. The deal documents cannot possibly be detailed enough to cover every contingency, and litigation is way too expensive to be something you rely on as other than a last resort. On your side, trust matters just as much. You need to be looking at the investor`s prior track record and talking to people they`ve funded in the past to find out what kind of people they are, rather than relying on deal documents to protect you. If you are short on cash one quarter and they have it, they can always demand that the deal documents get recut, and if it`s that or shut down the business, you are likely to go along. Trust character, not paper. You need clear deal documents, but in the end great documents won`t make a deal with bad people a pleasant or profitable experience.
2) Convertible debentures don`t mean diddly squat unless you are in a position to pay them back. You won`t be unless the business works. The money is going to be spent on the business, and the debentures are going to be worthless scraps of paper unless the business itself generates money to pay them off. If it were otherwise, you could just go to a bank to borrow money and skip all the drama with investors. Saying, hey, this is debt, and you get paid first, means nothing if there is nothing in the pot when payback time comes. If you have easily accessible personal assets in the US to pledge to investors that they can levy on if the deal goes sour, fantastic, but otherwise don`t expect them to be too excited about whether you call it a debenture or stock (in the US, they will call it debt that gets converted in the normal course, because debt comes first in bankruptcy and if things go that way they want to be first in line to get back whatever they can).
3) Flipping a coin is a random event with a 50 50 chance no matter how many heads you`ve tossed in a row. Business is not that random, and, yes, if you`ve had a string of successes in prior businesses, it will be easier to get investors. If you have had that kind of success, you probably don`t need the money, and certainly don`t need to come to public bulletin boards for advice. If not, no matter how great you think your plan is, you are going to have to deal with the same issues everyone else does; no one is going to give you credit for being a big success until after you are one.
If you want to reduce what you give up to VCs, here are some of the time honored ways that work:
1) Get the company up and running on bootstrap money, and only go to VCs when you have a track record and large revenues. That`s what Microsoft did, and that`s one reason the founders did so well. The VCs got a relatively small share of what was already a profitable and functioning company. A variation on this is to take as little as possible in a first round, and raise more money in later rounds where you give up less of a percentage for the same amount raised. The trick is at every stage to raise as much as you need, because, and you can bank on this, if you run out of money before you are showing results, you are screwed.
2) Get every big fund in Silicon Valley salivating to do the deal because your idea and technology is so transformative and the upside so great. Because they are competing to fund you, you can get better terms. That`s what the Google founders did, more or less. Easier said than done.
What you are offering is a heads you lose, tails I win deal. No investor in his right mind will touch it.
In any start up investment, there is a very real chance that every penny of the investment will be lost. That`s the heads you lose part for the investor.
Once in a while, an investment hits it big, and things pay out big time. In that case, the one that makes all the risk worthwhile, you want to say, hey, surprise, you didn`t lose it all, it did work out, but I am going to reduce your return so I can have more. That`s the tails I win part.
Either way, the investor takes a big up front risk, and either loses it all (and, yeah, arrogance aside, there are no guarantees here) or gets a modest return.
To top it off, you seem incapable of seeing it from the investor`s point of view, and seem to think they are out to trick you. Those are not good qualities to exhibit to people who are looking at a entering into a long term relationship where trust and mutual understanding are pretty important.
I think you are a very poor candidate for venture funding. I think you should figure a way to grow the business without outside capital, or with some kind of bank or secured financing.
What you should not do is any deal where people want you to pay them a fee up front to "consult" or set up an offering. Those folks are sharks, and usually could care less if you get to where you want to go so long as they get their fee. StartUp Nation doesn`t control who participates here, so beware of strangers bearing gifts.
One more thing about the startup hubs that I think can matter - the level of the game is pretty high there.
Think of it like basketball. If you go to the local court for a pick up game in a place where no one else plays very well, they aren`t going to test you. If you go to a court where they really can play, either you step up your game or go home. It may be that improving your basketball game is not what you really care about - just breaking a good sweat and seeing some buddies - so you would rather be on the less competitive court.
The start up hubs can be like the competitive basketball court. Even at the cocktail party / drinking at the bar level, if you show up and your game isn`t there, you will get the message by the time you finish describing what you do. If you are running a site that could have been done in 1998, you will get no respect.
That can be good or bad. If what your site needs to succeed is Ajax / Ruby on Rails / Widgets / Mashups / Social Networking, the start up hubs will push you to be at 21st century levels. If what you need is a boring old LAMP technical platform populating template pages from a database, and the business success turns on a whole lot of shoe leather sales and marketing, the start up hubs will just increase your costs of doing business and give your technical staff a case of software envy.