When you think of New Orleans the first things that typically pop into head are Mardi Gras, Katrina, Music, and perhaps Crawfish.

The city itself was devastated after hurricane Katrina, and in many ways what is happening in NOLA now can be described as a phoenix rising form the ashes.  A vibrant start-up and technology scene is taking root and starting to flourish.

Typically a distant afterthought for New Orleans, registered Louisiana start-ups in the digital media space are now eligible for a 25% tax credit on all expenditures made within the state, better yet, hire local and you can add another 10%.

This initiative stems from the success that a similar tax credit for film had on the state’s GDP. In 2010 over a billion dollars were spent by the film industry in New Orleans (NOLA). Whether digital media credits will have the same impact on the city as film credits had is yet to be seen but there are a number of people and groups pushing for the industry to develop in the region.

Building From the Ground Up

One of the groups pushing for NOLA is the Tech Stars Network, well known for bringing entrepreneurial accelerators to many a region, and one of it’s newest members is Launch Pad Ignition, with Chris Schultz spearheading the way to build a sustainable tech industry in the city.

But what about the companies? Some start-ups to follow are LiveSet, Dydra, Kin.io who will pitch in front of such Tier 1 VC firms as AOL Ventures and First Round Capital come May. Better yet, the programme managed to bring in companies from NYC (Badger), and the Valley (Game Builder Studio) as well as one international company (Rayku), to note Dydra is also half German.

Then there’s also the Idea Village an incubator focused on generating more entrepreneurial activity in the city. Sure NY has a few of these, but NY is also 8million people, NOLA, a mere 350k.

Financing Available

Louisiana’s financing situation has historically been in either industry or oil, but such initiatives as the New Orleans Startup Fund, and South Coast Angels increased interest in the tech space means there is enough money to get these companies though a series A, and interest from tier one VC’s on both coasts proves there may be worthwhile investments to be made in the swamp yet.

To sum up, New Orleans still has a long way to go before it’s on the level of New York or Silicon Valley and in fact the presumption of this crescent city known for its music, lifestyle and party will ever contend with the East / West coast big boys may be laughable at present. But with the biggest brain gain in the country, tax credit incentives, a strong and developed network to capital on both coasts and a drive to refashion the city post Katrina, one would be wary to write off the Silicon Bayou just yet. With that, “Les Bon Temps Roulle”.

Here are just a few ways to completely and utterly dig your startup into the ground, as such read them, and do what you can to avoid them.

1. Have a poorly defined value proposition. Having a poorly defined value proposition will cause you headache after headache when looking at and presenting your business model. You have to know who you are targeting, what you’re offering and why they would want to use your product or service. Who is your customer?

2. Setting unrealistic objectives in your development and deployment pipeline. No matter what you think you will not underpin the world in a year, you will not have income of €20.000.000 in year one, and you will be greatly disappointed.

3. Focusing on the bottom line instead of on the service / product you offer your customers. Your customers are your lifeblood, if they are unhappy your bottom line will suffer, if they are happy, they’ll be repeat buyers, and even help market your product. Simple as that.

4. Involving yourself and your business in ethically questionable practices. Unsavory marketing practices, overly creative accounting are just some of the things that will in the end ruin your business, don’t do them.

5. Developing a product without adequately deploying resources to market it effectively. Sure, you may have a product that could cure cancer, end world hunger, and fly humans to the moon, but if no one knows about it, no one will use it. Market it, and market it effectively.

6. Going on a spending spree. Meaning, poor cash management. You may have €250.000 that you received in the form of F3 (Friends Family Fools) Capital and you think it’s great so you pay a premium for services that could otherwise be outsourced, delivered in a more cost effective way, and get everyone a brand new Mac Pro to write e-mails on. Not a good idea.

7. Launching too early or too late. Timing is everything, think about the market, the economy, the sector you’re in, where is it now, where will it be in 3 months, 6, a ear or two. You don’t have to change the world today, and launching today may lead to failure.

8. Flying solo. Think you can do everything yourself? You can’t. Involve others. Even if you’ve decided to start alone, bring in friends, talk to your network, and see if people will help you out. You don’t have to give them an equity stake in the beginning see how you work together. If you work well, ask them if they’d like to come on board.

9. Forgetting about scalability. Good ideas scale well, milti million ideas scale at their core. How big can your product realistically get? Who is your customer, and how can fast can you grow without compromising service.

10. Secrets are no fun. Talk, and share your idea with people you trust, friends, family, colleagues, these people are inevitable to the success of your business, you don’t know everything, and collaboration can more often than not fix problems before they arise.

11. Doubting your idea early on. Doubt is natural, you will have ups and downs, this is completely natural, but if you doubt your idea within the first month, or three of your start up career. Chances are you’ll become disheartened quite early on and quit. Save yourself the trouble and thoroughly analyze your concept before taking the plunge.

Good Luck!.

As the case may be, you walk up to any investor and ask whether they prefer idea or team, and as if previously programmed to do so, virtually all will respond “team”.

But clearly it’s ideas that change the shape of enterprise and industry, innovation and movement forward. Sure, one could say this, but unless those ideas are generated within an already functioning business with ample resource to devote to the evolution of this new innovative idea – the team will be the most important part of your new enterprise.

For a moment let’s take a step back from entrepreneurship, and look at your company as a functional unit of a larger organization. You have your project leader, your finance guy, strategist, your engineers (or those individuals that make said innovation come to light), your workflow processes (as hectic as they may be, they’re still there), deadlines, etc…

And while in an entrepreneurial setting these functional roles often if not always overlap, the similarities are more often acute between a new venture team and a business unit.

Why is this important? Because BMW wouldn’t pick just anyone off the street to lead their design, engineering, and marketing of the new 6M coupé’s and for those same reasons neither should you.

The selection of the team to spearhead the launch of your startup should be conducted in a manner which will lead to the formation of a group of individuals with complimentary skill sets in order to compensate for any weak comings of any of the other members of the team.

Or in layman’s terms, if my sales skills are rubbish, there better be someone on the team who can sell a chicken an egg.

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The reason why investors first and foremost look at the team rather than the idea is in actuality fairly simple.

A mediocre idea can have a very good chance of success should it’s business model development, launch strategy, deployment, sales etc… be well thought out and executed, and this unfortunately comes from experience rather than being a visionary. On the other hand, an idea that may change the way we live – isn’t worth very much if you know, or have strong doubts that it won’t even make it to market.

Build good teams, build complimentary teams, and just because someone’s been your friend since you were in kindergarten, doesn’t mean he or he is the right business partner. Enterprise is more often than not logical. Be logical.

Consumer internet is still the hottest US VC investment category, swiftly followed by clean tech and energy

The sector was voted the hottest growth area in the industry with 73.5% of those VCs polled backing it. Cleantech and energy is the second hottest growth area in the venture capital industry, according to more than half of (53.1 per cent) venture capital executives, third place goes to Internet Marketing with 40.8%.

Perhaps the question for those hunting more innovative products and business models at better valuations is whether they should be following this trend? Although it is a positive sign for early stage growth companies whose investors are looking to exit in upcoming fundraising rounds.

Overall, the annual study’s results indicate optimism in the venture capital scene compared to previous years. Over half, 56 per cent, of US venture capital executives are more confident and optimistic about the industry today, compared to a year ago when an overwhelming number of executives felt the industry was ‘broken’.

The survey found executives to be split down the middle when it comes to which geographical region currently represents the area of hottest investment opportunities, with 42 per cent indicating the east coast, namely Boston and New York, and 42 per cent Silicon Valley.

Seventy-one per cent of respondents are not worried about new deals and 72.9 per cent indicate they expect to see a steady deal-flow over the next six months.

When asked to identify which functional trends they were most concerned about, 62 per cent of the executives indicated they were very worried about the uncertain return of exit markets.

The survey also asked how the tax legislation on carried interest will impact the venture business and 46 per cent indicated it will have a major negative impact, while 16 per cent believe a ‘work around’ will be found.

This (second) annual VC survey was undertaken by Polachi Inc, a provider of Access Executive Search, canvassing VC executives across the US of which more than 98% are partners or managing partners.

While there are days of the entrepreneur, various government backed incubators initiatives and some absurdly difficult to find money from the EU, the one thing – and possibly the most important thing that is missing Europe-side, are readily accessible mentors. Those seasoned entrepreneurs who are willing to donate their free time to help the future generations of younger ones who lack that experience which sometimes means the difference between success and failure. Well and to keep them away from the failure.

In the U.S., that is SCORE or known by its longer name the Senior Corps of Retied Executives who typically council America’s small businesses, and set them on the road to success and profitability. On average retired individuals who have a passion for entrepreneurship and years upon years of experience in setting up companies. More so, this is probably the most prevalent of all U.S. entrepreneurship initiatives – and is non-for-profit.

On the other hand, Europe has what sometimes seems like countless initiatives dedicated to helping the entrepreneur. Information sessions, workshops conducted in conference halls, packets, subsidized space, financial assistance, etc… etc… etc… and best of all they are all typically backed by taxpayer money.

But the rub is that there is no necessity to subsidize businesses, in fact subsidized companies will be more likely to fail due to the preconceived conception that access to capital is easier to acquire, or simply that to gain that capital one needs to adhere to a set of absurd government guidelines.

What the business needs is contacts, clients and a strategy on how to acquire them – this capital does not provide, nor do information sessions on why it’s great to be an entrepreneur or institutions whose “vision” is to help the entrepreneur focusing more on their own prevalence in any geographic area.

There’s just too much mess out there, too many signals, not enough simple guidance and “proper & effective” entrepreneurial education. Academia is great and teaching people how to be entrepreneurs is fantastic, but there are no better ways to learn that to just do it.

For all the people in the EU, SCORE is accessible form outside the U.S. and the information in there, i.e. business toolbox can be helpful to non business oriented entrepreneurs, and even some business oriented ones.

I recently came across a commentary that goes along the lines of VCs know what to do with engineers but engineers don’t know how to deal with VCs. As with all good lists, and entrepreneurs like making lists, it centres around recurring issues for the inventor when dealing with a VC. Issues that are worth refreshing in this author’s opinion:

VC’s don’t sign non disclosure agreements – it affords them protection if they like your ideas, but they want to fund someone else to do them. How do you legislate against that when they have all the financial muscle and contatcts? The answer is it is not just about NDAs and patents but core competencies and brand, so approach with caution.

VC’s are sheep – they will either all fund something or none of them will, so if you have an idea that’s too new and too different you may struggle to find funding. Too right! It’s not just about self promotion, you have to promote your sector and hang a big sign over the exit..

VC’s aren’t technical – they dismiss what they don’t understand, your novel ideas, and they focus on what they know, usually irrelevant marketing terms or growth predictions. If your idea’s too new and different for the expert to understand then you may not get funding. BUT isn’t there much more to achieving commercial growth than building a great product? Have you considered treating your VC as your target customer? Maybe engineers should run the world but they don’t – Deepwater Horizon anyone?

VC’s don’t take risks – VC’s have a reputation as risk takers – they are not. They collect money from rich people to build investment funds. The rich investors take some risk, though their risk is spread across the fund’s investment and is often a tax benefit. Are they solely interested in making blockbusters and sequels? They certainly have a formula and like to stick with it, this is why you need to know A LOT about your investors and choose them carefully. You wouldn’t sell a Ferrarri in a Wal-mart, place your investment just as you place your product and pray you can find some like-minded people with influence and some discretion over the capital in play.

Venture funds are big – If your idea needs a lot of money, then you have a better chance of getting money than an idea that promises the same rate of return for much lower investment. This is because it’s easier for the VC to manage fewer big investments than many smaller ones. True, but most are transparent on deal size, the important thing isn’t how much your company is worth or how much you can spend, but that you spend it well and with purpose.

VCs collude – They price fix by discussing among themselves funding and pricing for candidate start-ups. They will probably between them only fund between two or three companies in an industry – this limits competition and makes success of the few more likely. Absolutely, they hate competition to fund good ideas and the worst thing is they are spoilt, so spoilt they invest next to nothing in enhancing dealflow, how many sponsor or educate & participate in conferences freely? Are they trying to innovate or harvest ideas?

With thanks to Nick Tredennick, Brian Shimamoto and Alan Barrell. To be continued…

Cut and dry, if you can’t tell me what your entrepreneurial project does in a sentence, you’ve got a problem.

I can’t begin to tell you how common a mistake it is among budding entrepreneurs to delve into the mundane details of their projects. It usually starts off like this.

“We at New Mobile Platforms Ltd. have developed a revolutionary platform that will change the way in which people communicate. By utilizing free wifi access across major urban areas we were able to relay signals and triangulate the locations of other individuals using the same application on their mobile devices, thus pinpointing the users location to 2.3m. Other users and subscribers to friend’s devices, can see other users via real time database query’s that are updated on their mobile devices from street to our data centre and their handset every 15 seconds via, GPRS, EDGE and G3 network connections, as well as free Wifi hotspots. If you look at our programming schematic, you will see that etc… etc… etc…”

Long story short, to most investors, individuals, and to the general public you might as well be speaking Ancient Greek. The majority of the population are not engineers, do not know industry jargon, and most importantly are not interested in detailed programming schematics. What it is that they are interested in is how the product will help them in the course of their day to day lives and what need it satisfies, and when dealing with investors, they’d also like to know how it makes money.

So let’s take the above example, and rephrase it into something that can be pitched in an elevator setting.

“We’ve developed a mobile app that lets you know where your friends are on a map. It’s great for trying to meet up with people and can help you navigate unknown areas, find meetings, and the like. We monetize via Mobile Advertising.”

And that’s it. No long elaborate explanations, no technical details, just what we do, what it offers, and how we plan to make money off of it. Now whether or not this idea is a good one, is a different story all together, but being able to summarize what it does in a sentence is the most important part of any elevator pitch. You get your message across clearly, effectively and quickly.

To summarize.

• Stay away from lengthy explanations that can be confusing.
• Cut away all industry jargon.
• Get to the point and keep it simple.
• Say what you do, how it fulfills a need, and how you monetize it.

Once we had the pleasure of listening to a successful entrepreneur give a talk about how he made it, and how some of his friends who also started companies were faring. Long story short we got to talking about two good friends of his who had started companies years ago. One was now a very successful energy mogul, whereas the other one was still trying to get the idea he had all those years back off the ground, kept on funneling resources into it, he was undeniably unforgiving to his idea. How could his idea not work, after all he had thrown so much time money heart passion and soul into it? Simple answer, it just didn’t.

And when your entrepreneurial idea doesn’t work, the only thing to do is kill it, bury it and move onto the next one. If it doesn’t work, no big deal, the next one will, and if not that one, the one after that, and if not that one…. well… eventually something should hit. But people – they get overly attached to their ideas, they think that the one idea they have and devote resources to will change the world or something here, something there.

Most wont, and the best thing to do is to test it, launch it, if it doesn’t take off. Kill it. Your time is more valuable than the resources you’ll invest into bringing something inherently broken to market.

But how can you identify if your idea is a good idea other than that your friends, and family tell you it is? Follow these simple rules.

1. Does it satisfy a market need?
2. Is it scalable?
3. Who is my market?
4. What are my competitive competencies? Where do I excel?
6. Is my idea really that amazing? If not, it’s no big – more money gets thrown at mediocre ideas with great people than vice versa.

So before jumping into the fire, ask yourselves those few simple questions.

The first paragraph of a report published by the University of Cape Town: General School of Business in 2002 reads as follows.

“South Africa is less entrepreneurial than other developing countries, a fact which could impact negatively on the country’s economic growth and job creation prospects. According to the 2002 Global Entrepreneurship Monitor (GEM), released at the United Nations last week, South Africa is below the average rate of entrepreneurial activity when compared to the 36 other countries taking part in the survey and ranks lowest of all developing countries including Chile, Brazil, Mexico, India, Argentina and Thailand. [i]”

Which poses a very important question. Why is that? And have things changed under Mbeki and Zuma? For the most part, a lot of people would say no, while others hope that the upcoming Wolrd Cup will be the answer to all their problems. We know that this is however not so, and it is necessary to identify and remedy the various problems that plague South Africa’s entrepreneurial climate and provide a clear path for future entrepreneurs to have the environment necessary to actualize their business ideas and to foster development in new enterprise.

PROBLEM RECOGNITION

Charting the Bureaucratic Red Tape – The report “Counting the Cost of Red Tape” – November 2004 identifies the first and by far the most severe of the problems associated with entrepreneurialism in South Africa is just this, red tape. Decentralized regulatory environment, lack of information, and high costs all create a climate that is disadvantageous to the entrepreneur.

A life less Educated – deeper problem rests in the lack of skilled labor. Companies cannot adequately grow if labor requirements for growth are not met, training of individuals is an option, and the South African government has made stipends to foster training within organizations, however, the lack of information regarding these programs, and the risks that entrepreneurs are taking by creating their own businesses coupled with risk associated to the expenditure of time for training has to be taken into consideration as well; here we talk about local based SME’s – if you’re looking at something akin to an international business model, the problems run even deeper, especially considering many well educated South Africans have emigrated abroad diminishing the country’s talent pool.

Show me The Money – While there is plenty of capital in South Africa, the problem rests with acquiring it – aside from X seed funds are far and between – and BA / VC activity heavily lags behind other growing companies.  There are however a few initiatives for Entrepreneurs worth looking into.

The Small Medium Enterprise Development Program (SMEDP) – a cash, tax free, grant for new investment and major expansion project. It is capital investment based and is receivable over a three year period, with a maximum level of R100m for the level of qualifying assets.

A Foreign Investment Grant (FIG) – Coexisting to the SMEDP, the FIG is available to refund relocation costs of plant and equipment shipped to South Africa from abroad.

Skill Support Program (SSP) – a supplement to an approved SMEDP project which provides subsidies to training and personnel development costs. It is provided in conjunction with the South African Department of Labor [ii].

And although they are there, they are also subject to the same problems of red tape.

Where the Roads Have no Names – Infrastructure is key to any economy and more so a growing one. But aside from road and rails, what South Africa needs more than anything is an adequate IT infrastructure. Drastic changes, deregulation, and private investment in the sector are key in facilitating easier access to information by and for potential entrepreneurs; speeds, lowered costs, and widespread access are KSF’s (Key success Factors) to fostering any real business development in the country.

How do we tackle these issues and help foster growth in entrepreneurial activity within South Africa? We’d like to as you, and we’ll have our own answer this coming Monday.

The elevator pitch, those few sentences that are pivotal to conveying the message of your company across. You may think you have it right, but the truth of the matter is that even if you think you have it right, try in on a few people and see what they think, then go back to it, think about and try again. The elevator pitch will dictate whether you’ll get some love in the elevator, or whether your idea will just get shot down.

So what is it, Wikipedia defines the elevator pitch as “An elevator pitch or elevator speech is a short persuasive speech about a person, an organization or group, or an idea for a product, service, or project. An elevator pitch is often a part of a Marketing communications, brand, or public relations program. Good elevator pitches are succinct and compelling to their target audience. The name reflects the idea that an elevator pitch should be possible to deliver in the time span of an elevator ride, approximately thirty seconds to two minutes.“

Let’s leave the two minutes aside, and focus on the 30 seconds. The typical interest span of an adult human is eight seconds, so if you don’t get their attention in those fist 8 seconds, or let’s shorten it to even 5, chances are you’ve lost your audience. So.

Number One: Be succinct. Keep your opener to a sentence, at max two. This sentence should convey 1. What you do 2. What you need, and if you can, 3. Who you are.

“Hi, I’m Jacek the founder of f3fundit, a website dedicated to helping the entrepreneur and investor succeed, and we’re looking for applicants to Next Top Startup, a new concept ever we’ve planned for this June in Barcelona.“

What did we do here. 1. Introduction, you know who I am. 2. What we do, and 3. What we need.

Number Two: Have a hook. Let’s face it, if someone’s pitching you something you initially have no interest in, chances are you’ll tune out. A hook is something that grasps your audience’s attention. In this case your audience can be a group of people or one person. And your hook should be adjusted for them. Meaning, if you’re pitching to an investor your hook will differ than if you’re pitching to a collaborator. The hook is basically the value that you give the other party. What do we mean.

The pitch continues:

“The event offers a chance to win up to €25k for one startup, and we’re offering world class mentoring via the people we’ve brought on board.” this hook is targeted at the entrepreneur. You clearly see the value of participating in the event.

“The event offers you an opportunity to assess some of the best international companies, those that have gone through a rigorous selection and training process.” Here the hook is adjusted for the investor. The target audience clearly sees that we’ve eased their pre-selection and that we can help their deal flow.

Number Three: It’s all about you. For the next few seconds the world really is revolving around you, so knock the audience dead. Why should they listen to you? Who are you that you know your subject matter? Can they confide in you, and recommend you? Be sure to answer these questions.

The pitch continuities:

“I know the tribulations that a startup goes through, I’ve been there myself, I’ve likewise invested in companies, and what we’re doing is needed in the community. We’ve thus far received overwhelmingly positive support from the people we’ve contacted.“

You. 1. Establish authority by knowing your subject matter and market, and 2. since others are positive towards your ideas there ought to be something there.

Number Four: Seal the deal. If you and other party are really in an elevator, chances are your 30 seconds are up, or almost up. If you’re speed dating, probably the same. If you’re taking part in a pitch contest and have five minutes, let’s hope you brought slides. But for the sake of argument we’re in an elevator.

The pitch concludes:

“What do you think? How about we exchange contact details and set up a meeting later this week?“

Obviously, there are cultural differences and we’re not saying everyone should be so direct, but they should in their cultural manner get this message across nonetheless. Set up a meeting, a phone call, a chat, what have you, and when you go meet whoever it was you were pitching to, you’ll now have time to elaborate on your idea.

Number Five: Rinse and Repeat. There’s a reason we have a saying that goes practice makes perfect. Practice, do it in front of a mirror, on camera, record yourself, time yourself. Remember not to bee over anxious, test it out on colleagues and friends. Take feedback, rework and repeat the process again until it’s solid as a rock.

Do this, and you’ll be pitching like a pro in no time, and just for fun, let’s see what the whole pitch looks like.

“Hi, I’m Jacek the founder of f3fundit, a website dedicated to helping the entrepreneur and investor succeed, and we’re looking for applicants to Next Top Startup, a new concept ever we’ve planned for this June in Barcelona. The event offers a chance to win up to €25k for one startup, and we’re offering world class mentoring via the people we’ve brought on board. I know the tribulations that a startup goes through, I’ve been there myself, I’ve likewise invested in companies, and what we’re doing is needed in the community. We’ve thus far received overwhelmingly positive support from the people we’ve contacted. What do you think? How about we exchange contact details and set up a meeting later this week?”

34.7 Seconds. Meaning back to the drawing board on this one, and it sounded a bit off. But for the sake of exercise it was written along with this article.

And that’s that. As a bonus, stay far far far away from getting into technical details with your audience, we’ve covered it before, and we’ll say it again. The most important thing is to get your message across.