Wednesday, January 9, 2008

Being A Startup Advisor... Early Stage Niche

Since I receive a few inquiries every month to be an advisor for some startup company, I wanted to lay out my reasons for why I enjoy this, what areas I like to help out in and what I look for in companies.

My first technology company that I co-founded was ViewPlus, a video-on-demand company. It was with my friends Jimmy and Peter, who I blog about once in a while. We had the fortunate experience of starting a company based on a concept and putting our sweat and fears into it during the first boom time. It was initially supported by our personal savings, our families and many many credit cards. We pitched and begged hundreds of investors to get our initial seed capital of $600,000 from angels and then $33 million from a private equity fund.

During that time, we agreed since we experienced the numerous joys and pains of startup life that we would always be willing to help out other entrepreneurs. We stayed with this commitment and appreciated it. It was fulfilling to provide even a little bit of knowledge that was helpful to others that were just beginning the tortures of entrepreneurship that we lived through.

Since then I've built up two other companies from the ground up (HeyAnita Korea, GoingOn Networks) and worked at another early stage technology company, Innotive. I've written the business plans and financials for the three companies I co-founded (ViewPlus, HeyAnita Korea, GoingOn Networks) and helped raise over $49 million from angel investors and venture capital firms. Three of these companies are still operating and hopefully at least one of them will have a successful exit. I haven't hit a home run yet so would compare myself to Paul Molitor (no Wade Boggs or Ichiro) :)

I've experienced the stresses of initially self-funding a startup ("many many credit cards") to raising probably too much capital ($7 million series A for HeyAnita Korea) to raising too little ($450,000 seed capital for GoingOn that was stretched out). I've recruited some excellent people and also made some poor hiring decisions. I've gone through the endless discussions on business models, product development and sales strategies, and loved it all. I went through near bankruptcy of one company to successfully raising $7.5 million in additional capital that led it to profitability.

So I enjoy helping other entrepreneurs in the early stages of company formation. From concept on a napkin to a product in beta, so that I can listen to their passion and participate in the conversations on how to make their product or service better. I like helping people think about their market strategies, assessing their competition and reviewing their business model. I also get excited in the negotiations of their financing deals or partnership agreements, and helping out in the fundraising process.

Some startups ask for fundraising contacts, which I gladly provide if they are interesting enough, but I'm not a rolodex of investor contacts. This is not my strength and some people have mistakenly asked me to be their adviser for this purpose.

For the role of an advisor, since I'm only investing my time and knowledge, I don't care if it is a company that is only an idea or without capital. Also I don't have much of a reputation, so early stage companies wouldn't tarnish my track record :)

My criteria is that I believe in the company's vision and product. I might not personally use it, but I have to recognize the market and customers/users they are targeting. Also the founders have to be trustworthy, passionate and are people that listen well. The last characteristic is not only that the founders or founding team is willing to listen to me, but more importantly each other and people around them (i.e. partners, customers, investors).

I really do appreciate my time with other entrepreneurs and hope to continue advising startups throughout my life.

Here are some blog posts to related to this:

"Advisorship" (Ross Mayfield's great post on advisors and running your Board of Advisors)

"Building An Advisory Board For Your Startup" (My old rant on advisory boards)

"Building the Perfect Team" (My old article from AlwaysOn and reposted at OhmyNews)

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