The Seven Deadly Sins of Entrepreneurship
This past week has come and gone so quickly I can barely believe that the TEC program will last just one more week. This past week our required reading was a book called Mastering the VC Game by Jeffrey Bussang. In this book venture capitalist and entrepreneur Jeff Bussang provides readers with an insider’s view into the world of venture capital. In this post I would like to talk about seven sins (pitfalls) that Bussang says entrepreneurs commonly make:
- Term sheets: Term sheets are tricky business for most entrepreneurs and in Bussang’s book, he talks about the importance of hiring a good lawyer and clearly understanding what terms you are accepting when you take funding from a VC. Bad terms can really be detrimental to any startup.
- Getting into bed with the wrong VC: Many entrepreneurs are eager to accept capital from any VC who comes to the table. However, Bussang clearly articulates that this can be a kiss of death to startups. Entrepreneurs must choose wisely their venture partners and evaluate what they will bring to the table for the startup.
- Not knowing a VC’s sweet-spot: All VCs have an investment philosophy/strategy. Don’t try pitching your company before you know how much capital you need and what size checks the VC typically writes.
- Board dynamics: Spend time upfront building a transparent and trustworthy relationship with your board. Also, do what you say you’re going to do – execution is critical!
- Transparency: Keep your board members and investors abreast of both good news and bad news from the beginning. Take small steps to be transparent and honest, it will pay big dividends in the future.
- Being in over your head: Entrepreneurship is a wild ride full of highs and lows, at times it may feel as though you are in over your head but according to Bussang you must be honest with yourself; get help when you need it and manage the board before it manages you. Doing this things will help you survive in the wild entrepreneurship ride.
- Know every number and detail: An interesting personal experience that Bussang shares in the book is when he talks about when he and his partner pitched Upromise to Kleiner Perkins. Bussang said that in the middle of the pitch that he was asked a question about Upromise’s gross margin projections and that he nor his partner knew the answer. Bussang said that from that experience he learnt the importance of knowing every financial and business detail of his business.
This will be the last week for me with the TEC program, I am saddened by how fast this amazing experience has come and gone. However, I am excited for the next two weeks, because I am staying a week longer to work with SendMe. During this time I will be handling the responsibilities of one of my supervisors as he travels outside of the U.S. This will be a challenging and rewarding experience that I am looking forward to!
Until next week,