October 4th, 2013 Hatchery: Running out of startup money?
All investors want something that can change the world. That came from Dane Atkinson, CEO of SumAll who arrived at The Hatchery meetup with co-speaker lawyer Randolph Adler, Jr. last October 4 at the American Management Association building.
The other end of that thinking is that you might end up changing if you fail to deliver. Atkinson and Adler just hope the experience serves as a learning lesson when you pivot or start another idea.
Everyone is into startups these days, Atkinson assured us, although he cautioned that “no investor will touch a lifestyle business.”
In a casual fireside talk, Atkinson and Adler talked about the world of VCs. “VCs (venture capitalists) are predicated on compression of time.” That line came from Atkinson again who is most likely suggesting how you should work you a—off if you’re the startup.
Taking off from there, Adler said VCs have bosses who want ROI. So in the beginning, you’ll have to put yourself in the shoes of the VC and ask some tough questions, “If you are a VC, would you invest in your company?”
Adler called also for some perspective. ”We see the success story but not the others who have failed. You may need a gut check.”
The two was clearly making sure they were on point and on the theme of the chat, “What to do when you run out of money?”
Find ways to pivot, if you want to save your startup but give your problems some distance in the beginning. “If your story is not working, take the weekend off, step back, come back to face your demons and challenges, or pivot,” Atkinson said.
Every CEO makes mistakes. Atkinson was never more empathic than the relationship between CEOs and employees where the problems may actually lie. “People who work for you are your employees. Ask them to do work and that they have serious obligations to adhere to.”
“Ask for help. Your customers are an amazing lifeline. 9 out of 10 people will help you,” he added.
If all else fails, Atkinson suggested how it is easier to start a new concept. (Don’t) feel like you’re giving up on yourself. Even if you have failed, they (VCs) can still fund you next time.
Adler said, “Just be honest with you. If you’re running out of money, shut it down. If you have debt, there are angel investors who may want to ‘collaterize debt.”
As Atkinson talked about how much VCs fund startups, Adler told the audience what could be the most insightful tip in their talk. “What do these figures tell us? Nobody knows the value of a company or how much one is worth.”
It may also be the reason why, when a startup fails, it is still a surprise for some people.
“Consider VCs not as a guiding force but as part of the environment,” Atkinson concluded.
Atkinson is actually a co-founder of SumAll. Previously he has served as CEO Squarespace and CEO Sensenet. He's a serial entrepreneur having founded 6 startups over the course of his career, achieving five exits. He also is an advisor/ investor and board member to a dozen more companies.
Adler is managing partner and co-founder of RK Adler LLP. Adler represents technology, new media, fashion and other similarly situated startup, ventured-based, emerging companies at all stages of development.
The meetup was hosted by Yao Hui Huang.