Off the grid entrepreneurs

imagesI was on a call with an investor this week and he used the term “off the grid entrepreneurs”.  I told him that I’d have to use that one for a blog post.

What he is referring to is entrepreneurs who are not familiar with the verbiage that gets tossed around in the start-up world.  The entrepreneurs who walk into your office with a company that is gaining traction and gets their audience (business to business or even business to consumer) and gets the void they have filled but doesn’t really understand where to go to raise capital.  Doesn’t really get what a cap table entails, doesn’t really understand how to build out a work org chart, doesn’t really have the greatest grasp of their financials, doesn’t really get all the nuances in a legal document, doesn’t fully understand what kind of equity they should give away.  Enough said.  Red flags?  Perhaps or perhaps not.

As we move into a different fundraising landscape I worry that less of these type of truly scrappy entrepreneurs won’t get funded.  As people, particularly early stage angels, start to pull back on their investments. One of the top concerns is the question that nobody says out loud but asks themselves which is “will this founder be able to raise the next round”?

The environment in Silicon Valley is far different from the other hubs such as NYC, Berlin, Chicago and others.  You need to speak the language and it is scary for an investor if you don’t.  I know that I am so over-extended with early stage founders that I just do not have the physical bandwidth to be of assistance to help them navigate the world until they get knowledge under their belt.  Makes me just want to do investments where there are engaged investors (smaller fund investors who manage money vs their own capital) particularly when it comes to off the grid entrepreneurs.

This is something I am thinking about these days and I wonder if others are too.