Startup financing – sweat

During the Internet bubble, it was easy to forget how most companies are created. I remember endless presentations where the punch line from two guys and a powerpoint presentation was “all we need is a seed round of $10m and we’ll be able to get going.”

I occassionally get a chance to tell the story of how my first real company – Feld Technologies – was funded by me and my co-founder Dave Jilk with $10 (yes – 10 one dollar bills) of equity (we had 10 shares of stock – $1 / share – that’s all the money we ever raised). There was an interesting constraint – at the time – it was basically all the money we had and it never occurred to us to go try to raise money from venture capitalists (we did eventually get a $10,000 bank line that my dad personally guaranteed with us).

Since many of the companies I fund are raw startups, I often think about the best way to get from an idea to a business. I keep coming back to the value of sweat – which has been perverted in the sweat equity cliche – which is fundametally different than sweat (you know, the stuff that rolls down your back on a hot summer day – or the stuff coming out of your pits when you are about to pick up the phone for that critical call.)

Mark Cuban has a great rant going on his blog (Success and Motivation Part 1, S&M almost p2, S&M p2, S&M p3) about starting up his first company – MicroSolutions. Some of you may know Mark as the owner of the Dallas Mavericks or the founder of which had a huge IPO and then was bought for over $5 billion by Yahoo!. I remember Mark’s articles in CRN in the early 90’s when I was running Feld Technologies thinking “man – this guy has his shit together.” Perspective is everything – he had it together because he was obsessed with succeeding. Now – I’m sure Mark doesn’t remember me – but the one time we met, I sat in a big red chair in the middle of his Audionet (’s early name) office – which was just an old warehouse on the edge of downtown Dallas with a bunch of tables, computers, and whiteboards everywhere and listened to him tell me about how amazing Audionet was going to be. I was just starting to work with Softbank at the time (I think I was described as a “Softbank Affiliate” or something silly like that) and since I grew up in Dallas, I stopped by when I was visiting my parents for Thanksgiving. Mark was raising a round and wanted the outrageous valuation of $80m pre for his business (ok – that would have only been a 50x on an investment at the Yahoo price). Charley Lax was at Softbank and was the guy I was working with most closely at that time and when we talked about it on the phone, he completely gacked on the valuation so it was a short exploration. I remember leaving thinking “This Cuban guy has balls”. Duh.

One of my new companies – Newmerix – is sweating it out the right way. I’m incredibly proud of the founders of this company – Niel Robertson and Ed Roberto – for starting this business up the right way. There was a nice article about them in the Boulder Daily Camera yesterday. Niel and Ed embody everything I love in entrepreneurs – they sweat every day, all day, never relent, and are determined to succeed no matter what.

  • the cowboy solitude

    blogs I’m reading

    I haven’t had a chance to start building a serious blogroll TypeList, so I’m just going to mention two of the more interesting blogs I’ve come across lately.

  • M@Blog

    Article flurry

    Wow, I didn’t think I could’ve missed so much on the ‘net. Tons of catching up to do. Apparently Japan has a NYT newbie in Norimitsu Onishi making the journal circuit – or at least someone woefully out of touch…

  • Cecelia Feld

    Is it “blog” or “brag?” Either way, you have a nice writing style.

    If anyone can’t let go of TDC, he should try an “anger management” course a la Tony Soprano.

    Nice to know you sometimes “beg for support” like Dad has to do.

    Remember to write about your mother.

  • Thinking Out Loud: T

    Attention Venture Capitalists!

    Would you like to ensure success in your portfolio holdings. This Enterprise Architect has several thoughts that could increase your return on investment……

  • Thinking Out Loud: Thought Leadership from an Enterprise Architect

    Attention Venture Capitalists!

    Would you like to ensure success in your portfolio holdings. This Enterprise Architect has several thoughts that could increase your return on investment……

  • Niel Robertson

    I finally got my own blog up an running. Its a bit different than other blogs and blog formats on technology and the future. Check it out.

    Parallax : Calculating Technology’s Future
    Predictions on the future of technology through a broad and self-proclaimed humorous look at the applications, technology, and cast of characters that make up my daily technology life.

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