Roundtable Recap: February 24 – VCs, Angels, Incubators, Accelerators – What Are You Doing With Your Rejects?

I recently wrote a blog post that I believe is worth pointing out in the context of the strategy roundtables: VCs, Angels, Incubators, Accelerators – What Are You Doing With Your Rejects?

It makes the following observation:

When I first talked about the 1M/1M program, I had observed the need to contain the immense infant entrepreneur mortality prevalent in the startup ecosystem. Over the past year, we have been talking to various investors – VCs and angels, and incubators and accelerators – asking them the question: What are you doing with your rejects?

To give you some further context, we recently spoke with a VC in Boise, Idaho, who gets 500 deals a year. His firm invests in four. That means that less than 1% of the entrepreneurs who apply succeed in getting financed. If you look at the numbers of super angels in Silicon Valley, they are even scarier. Mike Maples told us that he gets 7,000 deals a year and invests in 12 to 15. That’s a 0.21% hit rate. The flip side: a 99.79% rejection rate.

Friends in the investment ecosystem, this is the most obvious opportunity for us to address through 1M/1M and make a dent in infant entrepreneur mortality. (more …)

I’d like to hear from venture capitalists, angel investors, incubators, and accelerators on this topic. I have a fundamental observation to make here that seems to be lost in the noisy universe of entrepreneurs’ obsession with fund-raising: Most companies should not raise external financing. They should be built organically, bootstrapped, and get to sustainability. A sustainable business = (customer + revenue + profits). Investors are optional in this equation. Very few businesses address large enough market opportunities to warrant professional investor involvement, especially VCs. But many can become sustainable businesses that can make their owners tremendously wealthy.

With that preamble, let’s jump into the presentations for this week’s One Million by One Million roundtable. Very encouragingly, we had three businesses, each addressing an interesting business opportunity, and my personal experience resonated with all three.

First, Sam Slover discussed Learn It Live, a marketplace for experts teaching certain subjects through a distance learning mode. I have seen several businesses along these lines, but what I liked about Sam’s is that he has started working with professional IT organizations where experts naturally gravitate and empowering these existing communities to better leverage their expertise.

Sam had other ideas about healthcare and such, but I asked him to focus the business squarely on IT experts and build up the community by working with professional organizations, as he has already started to do.

Next, Taariq Lewis presented Bizeque, a business analytics company, with the observation that the C-suite at different companies is still unable to access critical business metrics (e.g., Who are my most profitable customers?) because they are dependent on database administrators (DBAs) to set up queries. Taariq wants Bizeque to free C-Suite and other top executives to be able to freely query such questions and act as a translation bridge between them and the DBA or business analysis teams.

Business analytics has, of course, been around for a couple of decades, and there are numerous vendors in the market. I advised Taariq to focus on just one analytics product and become a value-added service provider for that particular vendor. Taariq can use the relationship to better understand the situations of various real customers and have the vendor partner bring him into, let’s say, a dozen customer situations.

Perhaps, to begin with, Taariq uses his software to offer the solution as a service project and charges for building a certain set of analytics queries to address key performance indicators.

This would do two things: contain the complexity of the systems Taariq has to work with right out of the gate, and help him go to market through the sales and marketing team of the analytics software vendors providing the core engine. It would go a long way in validating his assumptions and possibly also bring in customer revenues if the value proposition really resonates.

Finally, Adarsh Jain from Delhi pitched CricketWeekly. Adarsh has a good insight that cricket enthusiasts, of whom there are millions in India, do not have access to quality cricket merchandise at affordable prices, and he has launched a site to do crowdsourced designs around the cricket theme to produce and market T-shirts and similar products. It’s a spin on Zazzle and Shutterfly types of concepts, and I think it has solid potential for the Indian market. I know because I grew up as a cricket enthusiast and have firsthand knowledge of the fever it creates among Indian youth. I can easily see them creating T-shirt designs and such on Adarsh’s site (I advised him to change the name, though).

Our primary discussion was about the company’s customer acquisition, and I suggested using events at various college and high school campuses to build up buzz.

In summary, all three of today’s entrepreneurs presented real opportunities. Now it’s going to be a matter of fine-tuning, sculpting the businesses day by day, and executing precisely, accurately, and without losing focus. I am a great fan of precision, and with some of the strategy tightening we did at the roundtable today, these businesses definitely have a shot at such focused execution.

You can listen to the recording of today’s roundtable here. Recordings of previous roundtables are all available here. You can register for the next roundtable here.

This segment is a part in the series : Roundtable Recap
. March 25 – A Mixed Bag Of Advice . April 1 – Bootstrapping Tips . April 8 – A Focus On E-Commerce . April 15 – Small Is OK; The Goal Is Profitability . April 22 – The Original Runners . April 29 – Finding The Right Direction . May 6 – Defining Value Proposition . May 20 – Validation, Validation, Validation . May 27 – Is The Venture Worth Your Time? . June 3 – Defining Market Segments . June 10 – Efficient Targeting . June 17 – Online Education Startups . June 24 – Three Startups That Can Hit One Million Dollars . July 1 - Get Your Pricing Model Validated . July 8 - The EJ Methodology . July 15 - A Market Of Late Adopters . July 22 - Bootstrap Using Services . July 29 - Startups In Malaysia . August 5 - Paying Customers =>Validation =>Valuation . August 19 - Niche E-Commerce Is Great For Bootstrapping . August 26 - 85%-90% Of Search Traffic Comes From Organic Search . September 2 - Find High Velocity Channels . September 9 - Open Opportunities In Cloud Computing And Rural BPO . September 16 – 5 Cloud Computing Opportunities for Entrepreneurs . September 23 - Do Not Spray And Pray . September 30 - Investors Don't Fund Broad Ideas . October 7 - Try To Get At Least $2M Pre-Money In Seed Round Valuation . October 14 - Professional Investors Do Not Invest In $20 Million Markets . October 21 - Bootstrapping Comes In Many Flavors . October 28 – Convert Potential Competitors To Partners . November 4 - Premium Lounge Sneak Preview . November 11 - African Tech Entrepreneurs Emerging . November 18 - Not Coming To The Rescue Of Victory . December 2 - Niche Marketplace Businesses Can Be Interesting . December 9 - Where Should You Raise Money? . December 16 - Top 10 Tech Trends To Watch . January 6 - Top 10 Vertical and Social Web Trends For The Decade . January 13 - Top 10 Online Advertising Trends For The Decade . January 20 - Personalization Remains An Open Problem . January 27 - Non-Dilutive Financing Through Revenue Sharing . February 3 - Indian Entrepreneurs Are Maturing . February 10 - When Keywords Are Competitive . February 17 - Indian Company Plugs Gap In Google’s Enterprise Solution . February 24 - VCs, Angels, Incubators, Accelerators – What Are You Doing With Your Rejects? . March 3 - Spotlight On The Northwest . March 10 - Spotlight On India . March 17 - Spotlight On Latin And Central America . March 24 - 75th Session Spotlights The Midwest . March 31 - Microsoft’s $100,000 India Startup Challenge Grant . April 6 - 1M/1M Announces Important Partnership With MAD Incubator, Malaysia . April 9 - 1M/1M Announces Partnership With TiE Chennai . April 16 - 1M/1M Partners With Indian Angel Network Incubator . April 17 - High-Octane Energy In Pune . April 21- Incubators Are Reaching Out To 1M/1M . April 28 - Guerrilla P.R. & SEO Most Profitable Customer Acquisition Strategies . May 5 - Ownership Matters . May 12 - Two Really Cool Companies . May 19, Making Money From Blogs . May 26 - Twitter, LinkedIn - Why Not Affiliates? . June 2 - 1M/1M And Incubators - What We Have Learned . June 9 - Silicon Valley . June 16 - Exciting Companies Lined Up For Microsoft Startup Grant Finals . June 23 - New Assessment Tool For Entrepreneurs . June 30 - Continued International Participation . July 21 - Crowd Sourced Funding Exchanges - An Emerging Trend . July 28 - Investors And Incubators Need To Look At Pre-Incubation . August 4 - How Do You Bootstrap Freemium Ventures? . August 11 - Menlo Park And The Silicon Valley Renaissance . August 25 - How To Use Twitter For Lead Generation . September 1 - Fall Call To Action . September 8 - A View Into Israeli Start-ups . September 15 - Do Your Homework First . September 22 - How Do You Catalyze A Region’s Entrepreneurship? . September 29 - From Poland To Argentina . October 6 - Dedicated To Steve Jobs, Reinforcing Mission To Restructure Capitalism . October 13 - FREE Is Not A Business Model . October 20 - Non-profits And For-profits . October 27 - Check Out Stanzr . November 3 - VCs Are Not Always Right . November 17 - Business Schools And Early Stage Entrepreneurship . December 1 - 1M/1M Premium Company Freshdesk Wins Funding From Accel Partners . December 8 - Three Open Opportunities For 2012 . December 15 - Web 3.0 And Social Dancing; Romania Emerging . December 22 - Free Apps, Ad-Supported Business Models => Dangerous! . January 5 - ERP Galore . January 12-13 - Spotlight On IIT Kharagpur, India . January 19 - Are Media Sites Fundable? . January 26th - Spotlight On Jacksonville, Florida . February 2 - YCombinator vs. 1M/1M . February 9 - Are You Fundable? . February 16 - What’s Happening In Turkey? . February 23 - Microsoft Israel To Offer 1M/1M Scholarships . March 1 - Strategy Gaps Need To Be Plugged . March 12 - Winners Of Microsoft Israel Scholarships . March 15 - Spotlight On 3 Day Startup Tel-Aviv . April 3 - Rendezvous In Bangalore . April 12 - More From Indian Entrepreneurs . April 19 - Tyranny Of The TAM . April 26 - A Rare Women-Only Session . May 3 - Some Wonderful Opportunities With Corporate Partners . May 10 - BlueSnap-Elance Contest Applications Deadline This Weekend . May 22 - Winners Of TechHub-A&N Media Battle Of The Startups Contest In London Win 1M/1M Scholarships