Entrepreneurs: Are you infected with “Founderitise”?

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Entrepreneurs: Are you infected with “Founderitise”?

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Entrepreneurs: Are you infected with Founderitise?

Read below to see if you have the symptoms…In my work as a business consultant and fund raiser, I’m often called in to assess the viability of a venture and its business plan in order to establish how viable a fund raising effort would be.

In the majority of cases, there’s much work to be done on the business plan and the Private Placement Memorandum (PPM) to bring it to a point where it would attract the interest of investors.
Though common issues are with respect to Sales Forecasting, Cash Flow and Breakeven analysis, Marketing plans and so on, one issue seem to be the most significant in terms of putting investors off and it does not have much to do with the business plan or venture per se, but rather with the founders.
What I encounter most often is what I refer to as the equivalent of the common cold for entrepreneurs. I call it Founderitise. If you are an entrepreneur and have been infected by Founderitise, chances are you will be facing a tough time raising capital for your venture.
Here are some of the common symptoms for entrepreneurs infected by this ‘disease’:

  •  Unrealistic valuation. Venture founders believe their company is worth 10X (100X is not uncommon either) its realistic value. This is particularly evident in young startups where there are no customers or revenues, yet the concept alone is worth ‘millions or billions’ according to the founders.
  • Everyone is a Chief. The founder or founders have all slotted themselves with CXX titles (e.g. CEO, COO, CIO etc.). Yet, they have very little and sometimes no experience whatsoever in those roles. Don’t get me wrong – there are certainly examples of founders with no experience as CXX that turn out very successful in these roles, but those are the exception by far – not the rule.
  • The equity pie is too small to share. The founders feel very strongly about “Losing control” and the concept of splitting the equity pie as a way to attract investors or key talent is a tough pill to swallow. Let me remind you that the wealthiest entrepreneurs on the planet have ended up with a small (sometimes tiny) piece of a huge pie rather than a huge piece of a smaller pie. There are plenty of examples here from Bill Gates to the Google guys to Mark Zuckerberg of Facebook to name just a few. These billionaires were smart enough in the early days to part ways with large chunks of the equity pie in favor of smart money and key talented employees to help them turn their ideas and concepts into reality.
  •  “Do it alone” or “Lone Ranger” mindset. Founders with this attitude feel they don’t really need anyone to help them turn their ideas/concept and venture into a reality. They can do it alone, or at least that’s what they believe. The reality is simple, power comes in numbers. To put another way, no one can accomplish big ideas without some help from other talented professionals with expertise that’s usually not found in one person. Just like a venture needs an accountant and a lawyer, it needs a spectrum of expertise typically not found in one person. Those talented professionals also offer an incredible brain trust that could be used to further advance and enhance the original founders’ concept and vision. Furthermore, when investors see you have a team of professionals around you, their take is 1) Someone else believes in this venture 2) You must have some leadership skills to be able to recruit other talent and 3) If anything happens to you – there are others that can carry the torch forward.
  • Larger than life Ego. Ok, if you are Steve Jobs and have already proven your ingenuity or visionary and futuristic outlook then go ahead – you are entitled to one. (Although that doesn’t necessarily make you a better or nice person so I would still advocate against it even if are hugely successful). But seriously, a huge ego means it’s all about YOU, rather than it being about the venture. And when investors get a sense that YOU are more important than the venture in hand – they run for the hills. Large ego also implies ‘qualities’ like stubbornness, close-mindless and centralistic (dictatorship style) approach to leadership – these all spell one thing to investors: someone that’s difficult to work with, that’s tough to work under and that’s not open to input and advice from the board and key shareholders. In other words, a high risk scenario.

If any of these resonate with you as you read them – you most likely have Founderitise. In that case, a dramatic shift to your perception can mean the difference between seeing your venture idea and concept come to life, or not.

Our company can help you if you have Founderitise. First, we’ll diagnose you for a reality check. Then we’ll offer some treatment plans.
It’s never too late.