By Allan Maurer
It’s much easier to launch a startup company these days, but not nearly so easy to get venture or angel financing, says Joe Procopio.
New technologies such as cloud computing infrastructure, fairly easy to use website development and content management systems, and other advances make it a much simpler matter to get a company launched with very little capital.
But getting seed or venture funding these days is a different matter.
“It started with the Facebook hangover,” says Procopio. The number of financing deals and the dollars invested are down compared to last year. I think we’ll be seeing smaller deals with less game-changing technology behind them and a greater emphasis on revenues.”
In fact, he adds, “It’s not just about the idea any more. Financials are king. You really have to have customers and show good financials — or have a very clear path to them – to get funded these days.”
Get into the startup ecosystem
On the other hand, he says, “Often, getting funding is not the way to go.” Instead, he says, entrepreneurs should take advantage of the startup ecosystems popping up in many cities and regions.
Those include accelerators, incubators, competitions, universities, and crowd-sourced funding (such as Kickstarter).
For instance, he notes, via the University of North Carolina at Chapel Hill’s Carolina Challenge, “Students are getting into entrepreneurship while completing a bachelor’s degree. They’re coming out of school starting their own companies and get cashflow positive very quickly. It’s a trend that will continue.”
While there will still be some “home-run hitters” among startups and some great ideas that get tons of funding, most startups are probably better off “Letting customers fund them,” he says.
Procopio, a serial entrepreneur familiar to TechJournal readers for his columns about the startup scene in the Research Triangle in NC, where he is a familiar face at conferences and networking events for entrepreneurs, will participate in the upcoming Startup Summit in Raleigh, NC, Nov. 6-7.
Speakers from top brands
The Startup Summit is a new addition to the 2012 Internet Summit, which brings 120 thought-leaders to the Raleigh, NC, Convention Center Nov. 6-8, featuring speakers from AOL, Bing, Google, Klout, Mashable, comScore and many other top digital brands.
He’ll join speakers such as Angus Davis, founder and CEO at Swipely, Paul Singh, partner and “Master of the Hustle,” at 500 Startups, Sarah Lacy, founder and editor of Pando Daily, and venture capitalists from NextView Ventures, ABS Capital, True Ventures, Baltimore Angles and Nucleus Venture, Southern Capitol Ventures, Contender Capital, and North Bridge Venture Partners.
Among the other startup CEOs on the agenda is Procopio’s boss at Automated Insights, Robbie Allen, a former distinguished engineer at Cisco and author of ten books on a variety of technical topics.
Allen founded Automated Insights, which began by developing automated sports reporting, an idea that got a lot of press for its robot journalism angle. The firm landed a NC IDEA grant and raised a $4.3 million round of funding in October last year.
Procopio, who has been with the firm since 2010, says, “Our slogan is automate everything. “We joke that we want to automate our ping pong games,” he quips. Automated Insights has moved on from automated sports reporting – for which there is a limited market – to such things as recapping Fantasy Football games in a deal with Yahoo. Personally, here at the TechJournal, we think that is one clever idea.
Procopio, who also started and runs the ExitEvent startup network, has this advice for entrepreneurs:
First, “Chase sales and think customers first. Prove your idea before you seek money and consider whether you really need outside capital.”
Second, “Reach out to the startup ecosystem and get involved early. You’ll get so much return on very little investment connecting at educational events or just going out with other entrepreneurs for a beer. Later stage guys are open, helpful and willing to make connections for you.”
Ride the roller coaster
Finally: “Ride the roller coaster. If you’re having days with awesome highs followed by terrible lows, you’re doing it right.”
He sees a lot of entrepreneurs who go a month or two without gaining traction and get the 20th no, then quit.
But, he says, “That’s one of the best and worst things about being a startup. You’ll have days that are phenomenal and the next be crashing down and fighting fires. Doing that, you’re in the right place.”
On the other hand, he says, if you’re not having those highs and lows on the roller coaster, you may be growing complacent and “need to pivot.”
The easiest way to lose, he says, “Take your eye off the ball and get complacent.”
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