No, this is not going to be a review of the dozen or so expert sites that popped up on the Internet in the last few months and weeks. Instead, Enable provides you with a well-known site that provides a lot of a lot value - value that is hidden away and not promoted all that much by the site.
The site is Garage.com . Almost everyone has heard of the site and its founder Guy Kawasaki. Most people think it is a site for raising angel money and venture capital via the Internet. They are right. However, the site also has a wide spectrum of information and resources for start-ups and entrepreneurs.
Today's Enable looks at one such resource - Garage.com's forums. They allow start-ups and entrepreneurs to gain valuable information about venture capital and other startup-related issues from the best minds in the business. The best part of this section is the ability to view the questions asked by actual entrepreneurs and then see how experts answered them. More importantly, you can submit your own questions and get the experts to answer them for you - for free.
We strongly recommend that you use the question and answer sections to review questions entrepreneurs previously asked regarding investments and other critical issues. Do this before meeting with investors. This way you will be prepared for the meeting and you will be able to act from a position of strength. If your question is not there, then ask it yourself.
The Accounting and Finance Forum
Early stage entrepreneurs often miss simple but important business, financial and tax considerations. Smart planning now can save time and money later. In the accounting and Finance Forum section of garage.com, you get very practical advice from the big 5 accounting firm PricewaterhouseCoopers. There is also a mailing list that lets you be notified when new content is posted in this forum.
The following is an actual example from the question and answer section:
"Question: How should an Internet startup (with basic organization and a product demo) price a first round of financing? How does a lack of sales or revenues affect first round offers?"
"Answer: There is a Warren Buffett anecdote that may shed some light on this question. Buffett once said if he were teaching a finance class, he would flunk any student who attempted to explain the valuation of Internet companies. There is no science to valuing Internet companies! We advise many entrepreneurs who have similar questions. Here is one answer you should take to heart:
"The startup's CEO is not in the business of valuing companies. That's the job of the potential investors. Your investors should make you an offer. Don't attempt to give them the answer to the valuation question. Only two things can happen if you attempt to give them a valuation, and both are bad:
You give a number too high and mess up the deal.
You give a number too low and that's what you'll get!
Don't focus on the valuation. Focus on which investor is going to help you the most and do your best to make that deal work. Interview CEOs from other startups with whom the investors have worked and find out which investors were most helpful in building the companies."
This kind of information is worth its weight in gold! Knowing this before you meet with investors will provide you with the ammunition you need to get the best possible investment - from the best possible investor.
Another valuable resource in this section is the Start-up Spreadsheets. If you need help planning your startup's finances, these spreadsheet templates provided by PricewaterhouseCoopers might be able to help. You can download these for free. However, Garage.com emphasizes that that they are provided here for your use on an as-is basis. Garage.com does NOT offer technical or accounting support on how to use these. If you need help, please consult the experts at Price Waterhouse Coopers.
The Venture Capital Forum
Searching for startup capital can be treacherous and time-consuming. In this section, Advanced Technology Ventures gives you the straight scoop on what to do (and what not to do) when pursuing financing for your high tech startup.
You can be notified when new content is posted in this forum by signing up for the Venture Capital mailing list.
An example of a very valuable question and answer is as follows:
"Question: Aside from the dollar amount, by what criteria should an entrepreneur determine if he or she should seek a first funding round from angels or VC?"
"Answer: Your question is a good one in that many startups are facing this dilemma. But it's also a tough one to answer. My advice would be that if you are entering a marketplace that is very competitive, and time-to-market is the number one factor for success, you want to make sure you are well funded and have as many resources/contacts/advisors on board as soon as possible. That is, find venture capitalists to fund your company. On the other hand, if you are in a market space that offers more time to develop your products or services, you may be able to start with angel investors until you have a product prototype or customers and feel comfortable raising a larger round of financing. If this route is possible, you may be able to raise your first VC round when your company has a higher valuation. "
The site Garage.com provides a wide variety of valuable information and insights for entrepreneurs. It is worth taking a lot of time to carefully check out the site. Spend a lot of time - on an ongoing basis - at the forums. Learn from the questions of others and ask your own. This is a wonderful opportunity - don't waste it.
Published by Israel's Business Arena on July 11, 2000.