Why Accelerators Are ‘Graduating’ Entrepreneurs Who Fail To Get Funding

There is a notion of ‘graduation’ in incubators and accelerators that I find amusing.

Entrepreneurs are often expected to ‘graduate’ after 3-months.

Let’s explore what this means …

Out of the over 7,500 incubators and accelerators around the world, most consider ‘funding’ as the key success metric.

As I pointed out in my Harvard Business Review article, The Problem With Incubators and How To Solve Them:

Most incubators use funding as a success metric, which is a somewhat flawed criterion. Over 99% of companies should operate as organically grown, self-sustaining businesses — bootstrapped, without external financing. For them the goal is to achieve customer validation, not financing. Yet if the incubator uses financing as its success metric, it will try to force inexperienced entrepreneurs into an unnecessary financing round. And more often than not, they will fail.

>>>

Artificial Intelligence, Over Engineering, Zombie-Filled Planet

The last few days have been full of pundits predicting the future of technology, especially Artificial Intelligence.

Listen to Stephen Hawking cautioning that AI could spell the end of the human race:

>>>

Big Idea: Will Capital Kill Capitalism?

2014 has been awash with capital. Showering money on young startups, VCs have become giddy, entrepreneurs dizzy, and sane industry observers aghast.

Right before Thanksgiving, however, Quartz published a story on the failing Fab, How Fab.com went from a $1 billion valuation to a $15 million fire sale:

Flash sales site and retailer Fab’s rise was as meteoric as anybody’s in Silicon Valley: it went from scratch to $250 million in sales in just two years. A little more than a year ago, it raised $150 million at a $1 billion valuation, bringing it to a total of $310 million in venture capital funding.

Now it’s set to be sold to Irish manufacturing company PCH in a deal that could be worth as little as $15 million, according to TechCrunch.

There is a reason why fundamentals are called fundamentals. They are, er, fundamental.
>>>

How To Get Seed Funding From An Accelerator

A number of accelerators offer a good chunk of seed funding these days.

YCombinator, the best known of the lot, invests $120k in fewer than 100 startups, twice a year. For those ~100 slots, they get over 3000 applications. Companies are required to move to Silicon Valley for three months and YC takes 7% equity.

TechStars also offers about $120k in seed funding and takes 7-10% equity, and has offices in multiple cities.

Numerous accelerators offer $15-25k in funding around the world. That is the average at the lower end of the scale.
>>>

Five Entrepreneurs Who Bootstrapped Their Startups With A Paycheck

Bootstrapping your startup while holding onto a full-time job is plenty viable. We have numerous examples of very successful companies that were built in this mode.

Here are five entrepreneurs whose stories will give you lots of inspiration:

1. Girish Navani, CEO of eClinicalWorks: Girish has since built one of the leaders in cloud-based healthcare IT solutions including practice management, EMR, etc. The company forecasts over $300 million in revenue in 2014. Read my February 2010 Entrepreneur Journeys interview with him here. Also, a recent follow-up interview is here.
>>>

Do You Agree With Peter Thiel?

I don’t. On a number of issues. Most of all: Don’t play little ball—swing for home runs.

Over 99% of the businesses that seek financing get rejected. Asking every entrepreneur to swing for the fences is dumb advice, in my opinion.

Acc. to Peter, a small idea = bad idea.

I couldn’t disagree more.

I just published Bootstrapping With A Paycheck, where we have case study after case study of businesses that have been successful by starting small, taking small amounts of risk, and developing very nice businesses.

Sorry Peter, I don’t get why every entrepreneur needs to swing for the fences.

Your thoughts?

Women Entrepreneurs: How To Deal With Sexual Advances From VCs

Over the last few months, we’ve read a number of stories of male VCs hitting on women founders. These situations typically arise when the founder is an attractive woman.

My first observation about the issue is that a beautiful, charismatic, smart woman is extremely powerful. Often, young women who fit this description, are unaware of exactly how powerful they are. As a result, they do not fully appreciate the kind of impulses they trigger when they walk into a situation with one of the following categories of male VCs on the receiving end.

Let’s examine each of these scenarios in a bit more detail.

1. The Casanova: Many powerful, rich men have a track record of misbehaving. They have a Casanova complex. They chronically want to seduce. It is instinctive. If you run into one of these fellows, and get the impression that they are more interested in you as a sexual phenomenon than in your business, you should just move on. The dynamics CANNOT be changed. Don’t waste your time trying to. Just stop following up.
>>>

Women Entrepreneurs: VC Rejection Does NOT Equal Sexism

I am stating the obvious – or at least what should be obvious – that rejection by a venture capitalist does not automatically equate to sexism. However, of late, the media has started sensationalizing a lot of stories of VC rejection and transposing them as stories of sexism.

These are two different issues, and the cause-effect relationships of the two are ambiguous at best.

In some of these stories, the VCs have exhibited rather stupid behavior, no doubt. However, did they reject the deals because the entrepreneurs were women? I don’t think so. Let’s examine in a bit more detail.
>>>