Can money make you stupid?

Last week I talked about the new JOBS Act making “equity-based crowd funding” legal; and how I believe it is a good thing for startup funding.  So this week I thought I would talk about a potential pitfall for the entrepreneur from this “easy money”.  I’m ignoring any pitfalls that may be introduced by the act itself – until we see a draft of the regulations I think it is too soon to comment.

While I don’t have any “real data”, based on my own experience I would say that when you talk to people starting a business at least 80% of them come out with some statement along the lines of “if I can raise [insert number here], then all of our problems will be solved”.  Unfortunately for many of them, raising the amount of money they are targeting – or even twice as much – won’t help them succeed.

Equity Crowdfunding – Just Around the Corner?

On Tuesday (March 27th), the U.S. House of Representatives approved the Senate’s version of the “Small Business Capitalization” amendment to the JOBS (Jumpstart Our Business Startups) Act.  This amendment allows small businesses to use equity-based crowd funding to generate investment into their businesses.

This doesn’t open the flood-gates and create some kind of fund-raising free-for-all that some opponents of the legislation might have you believe is the case.

Business planning, not business plans

I usually cringe when I hear an entrepreneur or small business owner talking about writing (or worse, being told to write) a business plan.  The reason I cringe is that, too often, what people mean by “business plan” is some 30+ page Word document that no-one will ever read and which will end up as a dusty binder on a bookshelf, or some forgotten bytes on a dusty hard drive.

Would You Want a ‘Fool’ Investing in Your Business?

Recently, in one of the LinkedIn Groups I belong to – Business Owners & Entrepreneurs – Sandra Brevett-Dib posted a link to an article on Forbes.com: ‘Early-Stage Startups Need Friends, Family, and Fools’ by Martin Zwilling.

I posted a comment that, when I talk about the 3Fs, I use the term Fanatics not Fools, because:

“I don’t like the term ‘fools’ when applied to people who are investing in your business – because to me it implies that your business is a foolish one to invest in.  Fanatics are people who love your idea so passionately that they are willing to overlook some things that a ‘professional investor’ may see as dealbreakers.”

That inspired me to talk in more detail here about Fools vs. Fanatics.