I attended a very interesting and informative session on Capital Markets outlook sponsored by Mike Colwell @ the Biz. Presented by Matt Kinley of the Pappajohn Capital Resources and Equity Dynamics, the seminar presented the state of the market, their trajectory from 1998-present day and what anyone building a business would find useful.
A few strains of information were quite clear –
- Capital is available to the right businesses in most market conditions
- There is a good time and a bad time to raise capital
- Positive cash-flow is the ultimate asset to any business
- Prepare, Pitch, Follow-up and Delivery are key
- The market between 1998 and 2011 has changed significantly and successful entrepreneurs have evolved with it
The last bullet was my key takeaway. In 1998, for example, history shows that raising a few million bucks for an idea in exchange for equity was an oft-executed strategy. Ideas were pitched, easy money flowed, execution happened in pockets and many succeeded and others did not. Between then an now, private capital has shrunk by 89% (Matt’s data – see the slides when they’re up at the Biz) while ideas multiply daily.
Entrepreneurs, therefore, have evolved with the market. Many have realized that germinating the idea with a very select, core team of employees/partners can take the idea from thought to action. The same ideas can be further developed one or more times into a product and potentially monetized early. Bo Fishback’s presentation from BigOmaha about the birth to release of Zaarly is representative of such evolution. Though Zaarly has received funding already, it was working on its idea long before $$ came in the door.
So, entrepreneurs who focus on transforming their idea to reality and can demonstrate the product seem to have a better shot at market success, whether it is through demonstrable product for raising $$ or toward outright positive cash flow through monetization of their idea.
Where are you heading?