It’s time for a mentorship-based seed fund in Louisiana

There’s been a lot of good news lately about entrepreneurship in Louisiana. With the renewal of the digital media tax credit and the energy around startups lately, things are just going to start taking off, right?

Well, maybe.

I still see some gaps in current eco-system that can be filled with a true mentorship-based seed fund. (In case you’re wondering, I mean a Y-Combinator / TechStars style investment program. Mentorship-based seed funds exist all over the country, I’ve compiled a listing here)

So where are the gaps? Well, here’s what I see:

  1. The “Moving Companies to Louisiana” Strategy – one of the biggest stated goals of the digital media tax credit, and a strategy I see LED & GNO Inc among others pursing is trying to lure companies to move to Louisiana with the tax credits, etc. GNO Inc put together a great deck, on what makes New Orleans so appealing. Probably the most visible impact thus far is the EA Sports testing facility in Baton Rouge. Here’s the thing: Established companies have employees. Employees have families, houses, schools located near where the company is currently based. Even though knowledge-based industries like digital media don’t have large infrastructure needs, their employees have established lives.
  2. Supporting the “Shoot for the Moon” Companies – I had a conversation with a Launch Pad member on Friday who has been through the startup process several times, and he and many others feel we don’t have the deal flow in Louisiana right now. The problem is that were not quite at the point where people are seeing the wealth creation of other successful companies, and frankly we’re just new to building a startup ecosystem. Deal flow is directly related to entrepreneurs willing to take huge risks. Entrepreneurs willing to take huge risks and “shoot for the moon” is directly related to having an ecosystem that supports risk-taking and acknowledges and accepts failure.
  3. Bridging the Gap Between Business Plan and Business - having a great idea doesn’t mean you are prepared to run a company. Most people starting a company have great subject matter expertise or talent, but may not have a fully rounded skill set in the ancillary areas of building a company. First time entrepreneurs get bogged down in this stuff: accounting, legal, personnel management.

So, how does a mentorship-based seed meet these needs and more:

  1. Move Folks when its Easy to Move – Start young. Most people entering Y Combinator are just graduating from college or in their 20’s. People are portable at this stage and many digital nomads would love nothing more try out New Orleans for a stint. We’re already seeing this with all the amazing young people coming down here post-K for Teach for America and programs like that. There is a huge difference in a person’s willingness to move based on what stage they are in their lives.
  2. Go Big - A lot of people have a “go big” idea, and given the opportunity to pursue it, even for 3-6 months will usually determine if there is something there or not. Of course, this is the riskiest stage of an idea, but most people never get the shot to really go for it. I know so many people trying to bootstrap a startup right now, but paying the bills with freelance work. The freelance work engulfs you and you never really get to go for the big idea. Often times (I am an example), people build service businesses to pay the bills, and though they may be successful, they aren’t investable and aren’t the big win that we all want to see happen. A seed fund that provides Ramen-soup money for founders to pursue an idea and get it to a prototype without having to divide their time to pay the bills really gives entrepreneurs a shot to go big. Think what would happen in Louisiana if every summer we gave 10 young startups enough funding to build out their big idea.
  3. Mentorship – these funds are called mentorship-based seed funds for a reason. They don’t just hand entrepreneurs $25k. They have a curriculum and program that teaches the skills required to run a business. Already in New Orleans we’ve created a set of entrepreneurial hubs. This is a huge start, because startups can ask each other questions, and tackle problems together. Filling this out with a true curriculum that removes the headaches of setting up your accounting, legal, etc would enable entrepreneurs to have a singular focus on building their product. We have people in this city willing to devote the time and effort, but the value of this contribution needs to be acknowledged and compensated.

What kind of investment are we talking about?

  • 10 companies selected for June – August 2010. Each company gets $25,000 to build a prototype. – $250,000
  • The administrative costs of the program are probably equivalent to the investment dollars. – $250,000

When I think about the real-world impact that a program like this would have and the allocation of economic development and grant dollars that are being spent in Louisiana on advertising, conferences, infrastructure, administrative staff, workforce development, it seems like a drop in the bucket to get a program like this off the ground and I believe it is an investment worth making.

What do you think?

When the going gets tough…

A friend emailed me this afternoon with a question:

How do you deal with the negative reviews/press/self doubt phase in this entrepreneurial world?

This is a great question, and one that we all have faced as entrepreneurs and undoubtedly will face again. Building a business, launching a product, producing anything is incredibly difficult. It is all-consuming and an emotional rollercoaster.

First, its important to understand that we all go through it. I’ve felt on the brink of collapse before:

  • I was producing a Mardi Gras event in 2004, and lost control of it before it even started. I can’t bring myself to say what happened but for a little while it looked like it wasn’t going to happen, and I was going to lose $25,000 deposit and refund $25,000 in tickets. Ugh. I went to my good friend Vaughn Mordentti and he bailed me out of the situation (not literally). I went to him hat in hand, and he saved my butt.
  • In December 2008, I pulled the plug on siteMighty, a web app that I had put years and lots of investment into.
  • I had dinner with my wife at Slice Pizza in 2003 and she told me that she felt if nothing happened with Destination VIP, I needed to start making arrangements to close it down. I had 14 employees on payroll at the time.

Looking back, each of those fit the old saying: things are darkest before the dawn. We pulled off the Mardi Gras event. Letting go of siteMighty allowed renewed focus on Flatsourcing and Launch Pad. And I sold Destination VIP three months after that conversation.

A few thoughts on how to get through these difficult moments when you face the self doubt and are thinking “what the hell am I doing, and how did I get myself into this.”

  • A word on advice – everyone has advice for you. Only you have the complete picture. It’s OK to tell someone, I’m really not looking for advice here. Or to just listen and take it in. But always understand that advice or guidance is only one person’s opinion. Only you know what is really going on in your business, and you have the privilege (and maybe burden) of running it yourself. You’re an entrepreneur and you’re the boss.
  • Dealing with criticism - criticism is like advice. Easy to give. Hear it, just like advice. But don’t dwell on it. It’s much easier to criticize than to produce something for someone to criticize.
  • Forget everyone else – someone is getting more press, more attention, making more money, and having more fun than you right now. Forget about it. It’s not what is important. Focus on your business and let go of any comparisons to, or competition with others.
  • Prioritize and let go - you have a ton to do. How much of it is mission critical, and how much do you want to get done. During times like these you’re feeling swamped. Make a list of what you have to do, then order the list. Focus on the top 20% of it. The rest probably can wait. Everything may not be perfect, or the way you envisioned, but as long as things are happening, you can improve it later.
  • Ask for help – you know who is rooting for you. Now’s the time to ask for a little help. Be as open as you want to be, and don’t be afraid to be specific on what you could use some help on.
  • Find balance – when times are tough, you need your family & friends more than ever. It is difficult to balance, because your business needs you more than ever, but you need support. Make time for family.
  • Make a plan – One of the best stress relievers is getting things out of your head and onto a sheet of paper. Write down everything you have to do. Break it into chunks you can accomplish and feel like things are moving forward.
  • Persevere – keep putting one foot in front of the other. Focus on crossing things off your to-do list. As much as you want to give up, don’t. Perseverance is one of the most important attributes of an entrepreneur.
  • Everything will be ok – of course there are no guarantees, but you’re going to get through this. Take a deep breath, and keep pushing forward. It probably doesn’t feel like it right now, but someday you’re going to look back on this and how much you grew during this difficult time.

This post is based on personal experience. It’s not a panacea, but hopefully by reflecting on what has helped my during difficult times, I can help you when the going gets tough.