Planning, Startups, Stories


Tim Berry on business planning, starting and growing your business, and having a life in the meantime.

3 Essential Truths About Startups and Investment 5

Today I’m answering, with this post, a lot of similar questions I get often in email, where somebody is asking me how to get connected to or hooked up with or recommended properly for angel investment. Here are some unpleasant and unpopular facts about startups and investment.

  1. Only friends and family believe in you and invest in you because you’re you. And that’s if your friends and family do believe in you; that’s not true for everybody. Outside investors, in sharp contrast to friends and family, either believe in your business prospects, your market, and your team, or they don’t invest. They’re doing it to make themselves money. (back story: I get a lot of emails from people asking how they can get investment for their business when they have pretty much nothing to offer investors. The answer is: You can’t.)  Or not at all.
  2. About that great idea you have that’s worth $5 billion for which you need $500 million to get started: unless you’re already a startup star, or an oil prince, or family wealth princess, just forget it. Mark Andreesen or Mark Cuban or Paul Allen could maybe get $500 million for a new idea. You can’t. (If it makes you feel better, neither can I). Give it up or scale it down to a $5 million idea that takes $5,000 to get started; or just forget it.
  3. All of you newbies – new to entrepreneurship, no successful startups, no traction — asking how you start your business with no money: Please, get real. Once in a blue moon a foundation or government agency will grant some money, and usually that’s just a low-interest loan, to some proposal that has social and economic value that fits government priorities. We see this in special development zones, some scientific or defense-related research areas, and occasionally with private money committed to social good. But it’s rare. If you aren’t one of those special cases, forget it. And if you are, do your homework, find out what really happens with grants and such.

If you’re still interested in a startup, stop looking for some pie-in-the-sky solution. Get a job in the business area that interests you, and learn the business. Partner up with people who’ve been there already. And do your homework, look up all those web pages full of good advice about startups, including this one, bplans.com, which is full of information about what you can and can’t do. If you’re in the U.S., connect with your local Small Business Development Center, or Women’s Business Center, or Small Business Administration (SBA) office. If not, find the equivalent in your country. Get some real info, and then do the work: do some research, develop a realistic plan, take real steps.

Starting a business isn’t a right. The government doesn’t owe you your startup. You have to make it happen.

  • Pingback: The FUNDamentals – The A-Z of getting business funding

  • http://www.talentpartners.fi/ Niko Hämeenniemi

    You can’t start in a business without money,investing really need a money,in today business world specially in Finland investing is really expensive and without any idea on entering business is like putting your two feet i a black hole.In some part of Finland in Helsinki business are really successful because they have a good business plan and they also have an consulting things which give business more successful.

  • http://www.cubert.net Charles Robinson

    This. Is. Awesome. :-)

    When I attend business networking events and people find out I’m a software developer the conversation inevitably turns to “I have this idea for an app…” On behalf of every software developer, please stop asking us to “mock up something.” It’s a quick way to destroy a friendship, or prevent one in the first place.

    • http://timberry.com Tim Berry

      Thanks Charles, I love your addition. I totally agree. Tim

  • http://www.steigmancommunications.com Daria Steigman

    Hi Tim,

    I’m so disappointed. Here I was thinking $500 million was going to drop into my lap “just because.”

    I love your blog series responding to questions, because the questions are very revealing. I’m not surprised that people are clueless about what it takes to run a business (I’ve gotten a lot of those questions too), but I am surprised they think strangers will have their wallets out before there’s even proof of concept, let alone of success.

    • http://timberry.com Tim Berry

      Thanks Daria. I agree. Do you think it’s a side effect of how much free info is available on the web? Tim