The Founder’s Guide to the 2017 Investing Landscape
Posted at 8:00h, 24 Jan 2017 in Advice by Bonnie Halper No Comments 135 Likes Share

Esther Dyson hit it spot on when she said that there are too many entrepreneurs out there, and way too many who don’t know the fundamentals of how to work and/or build businesses properly. Many young entrepreneurs have never worked for a company, or may have worked briefly for a startup that may or may not have gotten traction/funding, and that’s not the same as working for a company that is not dependent on funding – nor are you likely to learn the fundamentals of building a true, sustainable business that way.

We talk to investors all the time and count some as being among our closest friends/longest-standing acquaintances, and they tell us things – provided that they’re shared anonymously – that they would not ordinarily share with entrepreneurs. We’re going to share some of that information with you here and, for the record, with the prior consent of those investors, and a special thanks to Veronica Guzman of WAM Ventures, who did give us permission to mention her name, for her comments and insights.

Many founders – especially first-timers – believe that pitching to investors is a panacea. Note to self: we do attend many accelerator demo days and one investor recently told us that he was writing checks to companies he had met through the accelerator, which is why he goes to demo days: to suss out good companies. Mind you, he was writing those checks to companies he had met through the accelerator three years prior, and not that day. He had been keeping a watchful eye on them, and now that they were ready (meaning, had traction/customers/sales), he was all in. A company that has nominal revenues and has only been in business a few months is asking for major disappointments, if getting funded is their goal at that point, another investor recently noted. “Advisors are telling them to pitch angels this way,” Veronica noted.

Wrong, which is why one needs to choose your advisors/mentors wisely: do they have experience with early stage startups? Do they understand the investment landscape? They may well be subject matter experts, which is all well and good and absolutely necessary, but make sure that when working with them, stick with what they know.

“All are newbies … 1st timers… are swinging their bats anyway!,” said Veronica. “They’re not keeping the rest of world in perspective: fundamental macroeconomics, the over-heated stock market, pending inflation, political changes. We’re living in a very volatile environment and startups have to wake up and figure out ways to bootstrap and/or learn to build better. Yesterday’s dumb money is dwindling.”

According to a report released by Oxfam, “the disparity between the rich and poor is even more dramatic than previously thought. 8 men, the report says, control as much wealth as 3.6 billion people, or close to half the world’s population.” We did point this out to an investor friend, whose response was, “Exactly. And the rest are barely moving the needle. And equity crowdfunding, especially at the “retail” level will cause even more risk for both sides… investors and entrepreneurs who probably shouldn’t be funding and/or funded at all.”

And then there’s that other small problem that’s throwing fear into the hearts of all investors, globally: the lack of exits.

So, what’s a founder to do?

According to Forbes, when he took over as CEO of Nike, Mark Parker said that shortly thereafter, he talked to Steve Jobs on the phone.

“Do you have any advice?”  Parker asked Jobs.  “Well, just one thing,” said Jobs. “Nike makes some of the best products in the world.  Products that you lust after.  But you also make a lot of crap.  Just get rid of the crappy stuff and focus on the good stuff.”  Parker said Jobs paused and Parker filled the quiet with a chuckle.  But Jobs didn’t laugh.  He was serious. “He was absolutely right,” said Parker.  “We had to edit.”

There’s no doubt that we’re in a time of transition, and the best of times to think, re-examine, reconsider and/or edit, if necessary; to remember that the future belongs to those who can see it coming, and above all, with eyes wide open, to move onward and forward.