The following post is from an upcoming study by Endeavor’s Center for High-Impact Entrepreneurship (C-HIE) on key success strategies for start-ups. The study is based on interviews with 55 High-Impact Endeavor Entrepreneurs from 11 countries. In honor of Global Entrepreneurship Week, we’re sharing five of our favorite “Rules for Becoming a High-Impact Entrepreneur” from this study, with input from some wise Endeavor friends. The full report will be available soon.
Entrepreneurs can’t do it all alone: research has verified that enlisting equity investors and talented advisors helps entrepreneurs overcome early risks to their business.
Jeff Bussgang is a General Partner at Flybridge Capital Partners, an Entrepreneur-in-Residence at Harvard Business School’s Rock Center for Entrepreneurship, and the author of Mastering the VC Game and seeingbothsides.com. He spoke to Endeavor about why it’s critical to “get other people’s money and advice.”
“It is easy to fall in love with your own idea, but harder to convince others. The process of pursuing other people’s money and counsel forces a rigor of thought and battle testing of the plan. Obviously, raising capital can provide resources to help with rapid expansion, but access to the advice of investors and trusted advisors is arguably an even more important component to success. Experienced investors, such as angels and venture capitalists, are pattern matching animals that have been exposed to a wide variety of startup situations and people – allowing them to avoid common pitfalls and accelerate progress. But if you’re going to choose an investor, choose very carefully – it’s a mutual relationship. Be sure to do as much due diligence on them as they conduct on you.”
Research completed by Endeavor’s Center for High-Impact Entrepreneurship found that Endeavor Entrepreneurs sought outside help by:
1. Enlisting equity investors and/or sharing financial risk with their customers and suppliers. Sixty-six percent of Endeavor Entrepreneurs interviewed had at least two funding sources when they started.
2. Seeking outside advice from mentors. Seventy-four percent of the best entrepreneurs interviewed – those whose companies have grown at an average rate of 20% or greater over the last three years – had strongly engaged mentors when they were founding their business.
Endeavor South Africa Entrepreneur Carlo Gonzaga believes that multiple heads (and check books) really are better than one.
Carlo Gonzaga started pizza chain Scooters (today under the umbrella of Taste Holdings) with about 90% of his own savings. Knowing, however, that getting outside capital would help to grow the business more quickly, he also sought additional funding sources. His first strategic investor was a casual dining restaurant group named Nando’s. Their collaboration was not strictly financial; Nando’s support not only gave Scooters more credibility as a restaurant franchiser, but also provided Carlo with knowledgeable advisors from the restaurant industry. With Nando’s executives and a board of directors as mentors, Carlo was able to quickly expand his pizza chain to other restaurant franchises.
In 2011, Taste Holdings listed on the Johannesburg stock exchange.