By Carol Tice

With the passage of the JOBS Act, you might think startup entrepreneurs would be heading to the nearest website to get hundreds of individuals to pool their money and fund their growth. But it looks like more CEOs are hoping to get their growth money from good old-fashioned venture capital firms.

That's according to a recent update to a 2010 study from national law firm Dorsey & Whitney that polled more than 300 startup CEOs about their funding plans.

One reason startups are looking hard at traditional VC is the rise of newer firms that have made a splash with their investments, including Andreessen Horowitz and Google Ventures. Renowned firms including Sequoia Capital and Kleiner Perkins Caufield Byers also made the study's list of most-desired investment partners.

More VC money appears to be circulating, too: more than 36 percent of the startups based in major-metropolitan cities reported they had done a funding round in the past year, compared with less than 29 percent in 2010. Startups based in rural areas did almost as well, with nearly 34 percent reporting they'd score funding.

In the recent period, more CEOs reported they raised between $1 million and $5 million than they had in 2010, and fewer said they'd raised $500,000 or less.

Their outlook on future fundraising was more bullish, with 30 percent of the CEOs expecting to raise between $1 million and $5 million in the coming year. That compares with 23 percent in 2010.

Startups in cities are also making more use of business incubators, the study showed. Fifteen percent of the startups in metro areas said they'd used incubators for early help and funding, compared with less than 9 percent in 2010.

The study points up the advantages of getting help from traditional funders who offer business experience as well as money, compared with using crowdsource websites. With the latter, you get money, but from individuals whose investments are each very small -- and generally, they don't get a seat on your board or have expertise to share. The CEOs were strongly in favor of getting funding from investors with whom they have an established relationship, which isn't part of the crowdsourcing approach.

Source: http://www.entrepreneur.com

By Mikal E. Belicove

Entrepreneurs who want to take their business to the next level may eventually come to the conclusion that they need a board of directors. But what does it take to form an effective one?

Julie Garland McLellan, a leading governance consultant and the author of the new book Dilemmas, Dilemmas II, is happy to show entrepreneurs how to do just that. The boardroom authority has lots of experience, having spent a lifetime resolving conflict in the boardroom and examining different modes of raising capital.

Here are Garland McLellan's top 10 tips for recruiting and retaining a board:

1. Use a crystal ball: Think long term and recruit directors who can govern the company you aspire to grow into rather than the small business you might be now.

2. Find a go-to guy or gal: Have at least one director who understands boards and governance (preferably one who is trained or chartered by the National Association of Corporate Directors). Don’t rely solely on the lawyers and accountants to have governance skills.

3. Create job descriptions: Establish a clear job definition for directors (executive and non-executive) and define the role the board will play in strategy, risk management, etc.

4. No playing favorites: Insist that all directors recognize their duty to the company as a whole (or all of the shareholders) rather than play a limited role of safeguarding the interests of one shareholder — even if it’s your biggest investor.

5. Include a variety of flavors: Build a team that possesses a range of skills and diverse backgrounds in order to get different perspectives on each strategic discussion.

6. ‘Yes Men’ (or Women) need not apply: Select directors who would quit the board if they disagreed with a course of action you were taking. 

7. Lean toward like-mindedness: Seek consensus on all decisions, not majority voting, and be sure that all directors know how to assess issues from the perspective of the stakeholders and what is right for the company.

8. Draw that imaginary line: Be clear about the differing roles of the chairman and CEO — and don’t try to combine them in one person.

9. Remuneration requires research: Pay a fair and responsible equivalent, and seek expert advice if you need it. 

10. Boardroom hierarchy: Remember that the CEO reports to the board; be ready for a challenge and embrace the collective wisdom and enhanced discipline.

Source: http://www.entrepreneur.com

By Donald Todrin

The darkest days of the Great Recession are over, so we are told, but I'm finding that sales have increased only slightly for some small-business owners, while revenue remains deeply depressed for many. While some customers are loosening up their wallets a little, it is clear purchasing habits have changed.

Deep economic changes have occurred, and business will never be the same.

Entrepreneurs -- whether they're an unemployed person striking out on their own or a seasoned veteran trying to get the mojo back again -- must do things differently in order to survive. Everyone must change, especially small-business owners.

Luckily, what have not changed are the business fundamentals, those management traits that successful entrepreneurs almost all possess: tenacity, commitment and vision, and basic business skills.

New strategies are required, however, strategies designed to work in a changing business climate.

I've had a chance to develop and implement these strategies first-hand during the recession and its aftermath -- and have employed them myself. Not only have I consulted with many businesses over the years, but I've had a hand in running over 57 businesses of my own. I have a good idea of what works and doesn't work today, learned in the front lines of hand-to-hand small-business combat. 

Here are seven tips that will help to ensure your business is a success:

1. Have a written plan. Without a plan, it is merely a dream. It doesn't have to be a book, but you need a few pages outlining specific objectives, strategies, financing, a sales and marketing plan, and a determination of the cash you need to get things done. Writing it all down is a crucial first step.

2. Don't marry your plan. Every great military general in history has known that even the best-laid plan sometimes has to be thrown in the fire when the bullets start flying. Adjust, confront and conquer.

3. Keep your ego in check and listen to others. Advisors are crucial because you need people to bounce ideas off, inspect what you're doing, and push you to greater accomplishments, holding you accountable for what you are committing to do. Always be good to your word and follow through on commitments, even when difficult and challenging. This isn't about you; it's about the business. Don't take things personally and stay out of emotion. Do not let your ego take control.

4. Keep track of everything, and manage by the numbers. Create written systems for everything, because you will reap benefits from them later on. This is how you train your employees and retain consistency. Know your numbers and check them daily and make all decisions based on what they tell you. One of the most important calculations is cash flow pro forma. Determine how much cash you need to do the business, and do not start without the required cash on hand.

5. Delegate to employees and avoid micromanaging them. A manager's job is to delegate and then inspect progress. So don't be a control freak. Keep business organization flat. If you delegate effectively, you will get more and better then you expect. Have an actual written training and orientation plan so your employees know what is required of them. Use an incentive-based rewards system, and maintain a no-problem attitude about issues that crop up.

6. Use the Internet. It is incredibly powerful and very cost efficient, but it takes time and some skill. It is about creating a community, using social media networking such as Facebook, YouTube, Twitter and blogging to build rapport with your market. You need to get on the train and do it, because your competitors are.

7. Reinvent your business. It is net profit, not gross revenue, that you want to focus on. Separate yourself from your history and create a new competitive advantage, be it a focused niche or super service, but not by discounting.

Above all, have fun. Being an entrepreneur is your choice, so make it work. It can be done. You can survive, emerge and succeed in this downsized economy, if you follow the right path.

Source: http://www.entrepreneur.com

By Steve Blank

The quickest way to create a billion dollar company is to take basic human social needs and figure out how to mediate them on-line.

(Look at the first wave of the web/mobile/cloud startups that have done just that: Facebook, Twitter, Instagram, Match.com, Pandora, Zynga, WordPress, LinkedIn.)

It’s your turn.

Hard-wired
This week I’m in New York teaching a 5-day version of my Lean LaunchPad class at Columbia University. While the class teaches a process to search and validate a business model, it does not offer any hints on how to create a killer startup idea. So after teaching several hundred teams in the last few years, one of my students finally asked this question – “So how do we come up with an idea for the next billion dollar company?”

Is It a Problem or a Need?
I’ve now come to believe that the value proposition in a business model (value proposition is the fancy name for your product or service) fits into either one of two categories:

• It solves a problem and gets a job done for a consumer or a company (accounting software, elevators, air-conditioning, electricity, tablet computers, electric toothbrushes, airplanes, email software, etc. )
• Or it fulfills a fundamental human social need (friendship, dating, sex, entertainment, art, communication, blogs, confession, networking, gambling, religion, etc.)

Moving Needs to Bits = a billion dollars
Friendship, dating, sex, art, entertainment, communication, confession, networking, gambling, religion – would our hearts still beat and would our lungs still breathe without them? Of course. But these are things that make us human. They are hard-wired into our psyche. We’ve been doing them for ten’s of thousands of years.

Ironically, the emergence of the digital world has made us more efficient yet has left us with less time for face-to-face interaction. Yet it’s these interactions that define our humanity.

Facebook takes our need for friendship and attempts to recreate that connection on-line.

Twitter allows us to share and communicate in real time.

Zynga allows us to mindlessly entertain ourselves on-line.

Match.com allows us to find a spouse.

At the same time these social applications are moving on-line, digital platforms (tablets and smartphones) are becoming available to hundreds of millions. It’s not hard to imagine that in a decade, the majority of people on our planet will have 24/7 access to these applications. For better or worse social applications are the ones that will reach billions of users.

Yet they are all only less than 5-years old.

It cannot be that today we have optimally recreated and moved our all social interactions on-line.

It cannot be that Facebook, Twitter, Instagram, Pandora, Zynga, LinkedIn are the pinnacle of social software.

Others will do better.

Others will discover the other unmet and unfilled social needs that can move on-line.

It could be you.

Lessons Learned

• Value propositions come in two forms: they solve a problem or they fulfill a human social need
• Social Needs are friendship, dating, sex, entertainment, art, communication, blogs, confession, networking, gambling, religion, etc.
• They have always been fulfilled face-to-face
• They are now moving on-line
• The market size for these applications equals the entire human race
• These are the ultimate applications

Source: http://steveblank.com