In the last few months in meeting entrepreneurs, I am finding many details that are interesting to me:
1. Office space is often somebody’s apartment or house. Many times it is also a dorm of sorts for their employees, and their living room is filled with desks and PCs. It is a nice way to save cash until they can get some to move to a real office space.
2. Meetings happen in cafes, or in the bedrooms of the “office” apartment! There must be some HR law that is violated if somebody of the opposite sex is interviewed behind closed doors in a bedroom…?
3. Entrepreneurs are at different levels of experience. Many I have met have started companies before. Many are first timers. What worries me is where they are getting their advice and education. I think some are not directing their education at all, but learning on the fly. A few have cash to work with their legal services to learn, which is kind of expensive.
4. Legal services are tough to pay for. It’s nice to hear some lawyers in the Valley are deferring payment until the company gets setup. But it also creates this climate of get it done fast and cheap and it could cut corners which cause problems later. One is in the area of investment terms. Often these terms will be cranked out and the entrepreneur doesn’t ask anymore questions for fear of creating billable hours; he just accepts them and takes them to naive investors. Typically these terms are company friendly only and naive investors take them without knowing the danger. It seems that even seasoned, large investors take the terms because they have lots of cash to play with, and bet on the team and the product. With them, they are used to losing cash on bad deals and factor that into their investment strategies.
5. Early investors are often friends and family and education level in angel investing is minimal. seems like many are operating on trust and don’t push back on the terms.
6. Everybody is at a different stage in funding. Some are pre-angel, some are in the middle of angel, some are post angel trying to get the big VC influx. It’s been interesting to get a handle on every company and where they are at.
7. Time is a big issue. I find that many are deluged by VCs clamoring for attention, companies that want to partner up, users who complain, etc. When the team is super small, you have to try to work on all that at once and it’s really tough. Many seemed overwhelmed.
More later on the wild and wooly world of entrepreneurs and startups…