April 24, 2007

Do you have a “perishable” opportunity?

You have a great idea. You know it will be successful if you can get it out into the marketplace. But is your opportunity perishable?

Bill Payne, entrepreneur-in-residence at the Kauffman Foundation, explains an idea is perishable if it will “have no value unless commercialized in a limited window of time.” So what if your business idea could be classified as perishable? Bill offers a few suggestions.

1. Make sure the idea is both scaleable and fundable
2. Hurry, with patience
3. Consider shortcuts to the marketplace, such as development and/or marketing partners.

Bill explains, “It is always better to share a perishable idea and take a smaller piece of the pie than to see the window of opportunity disappear.”

Exit Strategy

Before investing in a company, it is important to know what type of exit strategy an entrepreneur is seeking. Whether through an IPO, a merger or acquisition, an entrepreneur should be able to convince you why and how they will exit.

Bill Payne, entrepreneur-in-residence at the Kauffman Foundation, explains this idea further. “Entrepreneurs must wear two hats, one as founder/employee and a second as an owner of startup companies. The founder/employee hat dominates the activity of the entrepreneur during the startup and operations of the company. But, the ownership hat is, in fact, more important to the entrepreneur, because a successful exit will have a lasting impact on the entrepreneur and his or her family. Successful entrepreneurs create wealth for their families; consequently, adequate attention to their ownership position in their companies is a critical but often overlooked responsibility of entrepreneurs.

Harvesting their ownership position is, in fact, their final and perhaps most important act as entrepreneurs. And executing the exit strategy is vital to the success of the investors. Consequently, a compatible exit strategy and harmonious execution of the harvest is in the best interest of both parties.”