I just read an article on TechCrunch about how the independent film “Artemis Eternal” has already raised $40k of the $100k total amount that they are seeking for the film project via “crowd-funding.” In other words, they are allowing the public to contribute as little as $1 to fund their film development and “cut out the middle man.”

This announcement is very interesting to me because we see so many independent films and we normally just turn them away (unless there is a special circumstance). There are very few companies that we turn away at FundingUniverse, but as of today, we don’t have any confidence helping films to get funding — they are just too high risk for the overwhelming majority of investors. To be honest, it is just a world that we don’t know very well and so we don’t feel comfortable helping film-makers.

Because of the demand and the pain in the market, we’ve thought a lot about dedicating a portion of our site to helping film-makers through the fundraising process, however, maybe we should just refer them to Artemis and learn how to raise “crowd-funding.” For those of you that have raised money for films, where did you go? We’d love to learn more about this industry.

Especially as your team grows, there is often a disconnect between the person or people raising money and the rest of those in the company.  As you are assessing your needs, you should gather everyone up at least once to get down to the nitty gritty details of what is needed.  Find out where your team needs help, both with more people, technology, or supplies.  Make sure the expectations are realistic on both the management and employee end of the deal.  Sometimes the little things that make a company are forgotten in the midst of trying to raise money for a big hire or nationwide marketing campaign.  New computers, a human resource manager, or IT manager can often be just as important in the long term health of your company.  To be cliche, don’t forget the little guy.

A quick thought before I run off to the Home Runs in IT conference in Provo …

David Thorpe gave a video breakdown of rookie Al Horford on The Worldwide Leader’s website, and it taught me something about entrepreneurship.

In the second clip of the video, Horford is given the ball on the top of the key with a defender half-way down his throat.  Thorpe points out that most rookies have a tendency to react hastily in situations like these, instead of reading the situation and making the right choice.  He says,

“Reacting instead of reading is a recipe for trouble.  Most rookies, and some veterans, would have rushed into a mistake in this situation.  But Al Horford stays patient and ends up with a wide open look.  His follow through is perfect, too.” 

Entrepreneurship requires quick thinkers who can quickly identify an opportunity and take advantage of it.  Fortunately, most of us entrepreneurs are not short on these qualities.  In fact, I’d say that most of us are idea generating fools.  Just let us walk through town for a couple of minutes, and we’ll see 20 business ideas!

Unfortunately, we don’t always take the time to read situations before we react.  And when we do react, our follow-through can be a little less than Al Horford perfect.

This week, take the Al Horford approach to entrepreneurship.  The next time you are given the opportunity to partner with a company, hire someone that looks like a slam dunk, engage a service provider, or whatever else comes up, take some real time to read the situation before you react.  Think long-term.  Think short-term.  Think mid-term.  Think about how it will affect your team, your revenues, your customers …

Then, when you have made your decision, follow through thoroughly.  Young, bootstrapping companies don’t have very many opportunities to make mistakes before they die, so make every opportunity count.

Have you seen an entrepreneur with great vision and follow through?  Tell us about him/her?

Have you ever reacted too quickly to an opportunity that you have later regretted taking?  Tell us about it.

The Kauffman Foundation just released a study reporting that angel investors are making 27% on their investments over 3.5 years.

A few more interesting stats form the study:

• 52% of all investments returned less money than invested
• 39% of all portfolios returned less than the original investment amount
• 7% of investments returned 10x the original investment, accounting for 75% of the returns reported in the study
• Investors with experience in the industries they invest in typically received returns nearly twice as high as those with no experience
• When investors did less than 20 hours of due diligence on a deal, they lost money 65% of the time
• Investors who did 40+ hours of diligence prior to investment returned an average of 7.1 times their money (I learned today that the Tech Coast Angels do an average of 500 hours of due diligence before making an investment.)
• Investors who provided mentoring and guidance to their portfolio companies one or two times per month received better returns on their investments

What does this mean to entrepreneurs?

You want to increase your investor’s return on investment as much as she does, so make sure she is spending time with you once or twice a month. If you don’t have an investor yet, look for those with a track record of spending time with their portfolio companies.

Look for investors who have experience in your field. It’s tempting to go for the easy money from the doctor or dentist who will just give you the cash and back off. Don’t fall for that trap. An investor with domain expertise will increase your return on investment as well as theirs.

Today I spent the afternoon learning at the feet of Luis Villalobos, the Obi Wan Kenobi of angel investing. He has invested in more than 60 companies, started the largest angel group in the U.S., started the Angel Capital Association, etc. Now he’s raising a fund to co-invest with angel groups throughout the U.S.

Throughout his presentation he stressed the importance of investor involvement in startups. He said that he has never invested in a company that was fully ready for investment the first time it pitched investors. Even during the due diligence phase, TCA members are working with entrepreneurs to shape their business model into an angel-ready one.

So if you’re looking for an investor, make sure he’s ready to get his hands dirty. If you’re an unengaged investor with an average portfolio, don’t just stand there — get involved.

We’ve been in the unenviable position of moving our offices for the last few days, and communication with out clients and customers hasn’t been as efficient as it usually is.

We’ll all be checking our voicemail on Monday.  We’ll be fully online by Wednesday of next week.

Until then, please have patience with us.  Believe me, we’d rather be talking to you about entrepreneurship than packing boxes and haggling with the cable guy about how many connections we get.

Last week I blogged about burning boats. Today, I’m addressing the case of an entrepreneur who has burnt his boats, given it everything he’s got, and failed because of pride.

I’ve spent extensive time over the past few days with an entrepreneur who needs to face a bitter reality: He has a great idea that he will never make successful.

We’ll call him Bill.  He’s been working on his project for 20+ years and has yet to turn the corner.  He can’t bring himself to walk away because people continue to tell him what a great idea he has and how big it could be.  The people Bill is talking to are telling the truth.  His idea is amazing and it works.  With the right management team, Bill’s company would have a high probability of success.

He has had several offers from investors/experienced entrepreneurs with successful track records to buy a controlling stake in his company, but Bill refuses to give up control of his baby.  He insists on being the one to lead the company and will not hear otherwise.  It’s his idea, he’s done all of the work so far, and ain’t nobody going to take it from him.

I’m sharing this story because I’ve heard so many like it from dozens of frustrated entrepreneurs.

I hope Bill will find someone who will take control of his business, help it reach its potential, and let Bill maintain a small ownership stake.   However, I’m afraid his window of opportunity is passing him by, and it may be too late for him to succeed.

Do you think like Bill?

We have talked recently about the importance of having enough runway to get your company through each stage of its life.  During the startup phase it is obviously very important to use your money sparingly and to cut corners where you can.  That being said, you do not want to scrimp on the things that MAKE your company what it is.  Too often web startups do not protect their servers whether it be through missed backups, poor IT staff, or other issues.  If you are a brick and mortar business, having a fire hazard for a building often takes out businesses that otherwise would have survived.  If your business relies on something completely, make sure that it is solid and that you have protections around it.  Just ask this startup company about this issue.

Whether it be leased equipment, buildings, servers, financial, or legal, make sure you are looking out for quality.  The last thing you need as a struggling startup is to be taken down by a fire, hackers, lawsuits, or broken equipment.  While certain things are out of your control, most are at least partially avoidable.  In the fast world of dreamy eyed entrepreneurs, these things are often forgotten.

As your portfolio expands, it often gets hard to juggle board meetings and helping the individual companies.  As a recent startup, FundingUniverse would like to give a few thoughts as to what a new company most needs from an investor with little time.

1. Expert advice from those with experience in a certain discipline.  This means that specific advice about an area of the company will be more productive than advice about a company as a whole.  We often see startups that are constantly reminded of their overall shortcomings, but who never receive specific critiques on what exactly they are doing wrong.  Most companies know they are doing something wrong from a high view, bring it down for them and they will have a much better chance of correcting it.

2. Encouragement is key for any startup.  While critiquing is important, if it is not followed up with encouragement, entrepreneurs will often stop listening.  If you have the chance, respond to press releases and praise companies that have launched new projects or services.  It is best if these come unsolicited because it shows your ongoing interest in the company.

3. Help keep the focus of the entrepreneurs.  Often entrepreneurs can get bored of staying the course with a company and try to go beyond what is good for the company.  Try to encourage the company to stick to a plan and only add to it when absolutely necessary.

Yesterday, we hosted another successful SpeedPitching event.  We had 10 fantastic companies that each pitched to 40+ investors. 

I love these events.  There is so much excitement in the room and deals are getting done.  Here is a list of the 10 companies that pitched yesterday:

1. LinkingUniverse
2. Acceptx
3. Jenneman
4. Geary Technologies
5. Toy Share
6. HydroWire
7. SubZero Ice Cream
8. Kahuna Creations
9. Argon Technologies
10. Kuru Footwear

If you don’t know what a SpeedPitching event is like… watch this 1-minute video.

And, finally, we’d love to come to your area to host an event.  Please let us know if you are interested.

Will Price, hotshot VC at Hummer Winblad,  says:

“I continue to regret that so many brilliant people that I know, full of energy and ability, sacrifice their passions on the alter of safety or indecision.

The conquistador Cortes provided a model for all intrepid souls….that is to burn the boats on the shore and ensure no way back and the stark need to make the expedition succeed or go down trying.”

I love the metaphor and I really don’t have anything to add to it, except to say that I have a great deal of respect for entrepreneurs who have the guts to burn their boats and go all-out.  At the same time, I feel sorry for those who have had the entrepreneurial itch and never satisfied their urge, or only pursued it half-heartedly.  There are few things as haunting as the “What if?” that will follow them for the rest of their professional lives.

The other day I went to lunch with a couple of entrepreneurs who have burned their boats.  They’ve quit their jobs and cut ties in order to make their dream happen.  I love their passion, and their idea is a good one.  But, I don’t know if they’ll ever successfully raise the money they’re looking for.  It’s highly unlikely at the very least.

However, one thing is certain: They will never lie in bed at night wondering, “What if I had given it my all?”

Will you?