Julie Meyer On the Mistakes That Entrepreneurs Make

Adopted Brit VC and ex-California girl Julie Meyer is a big favourite of ours at *particular (although I didn’t rate her book “Welcome to Entrepreneur Country” especially). Yesterday’s Good Morning Silicon Valley led with an interview with her in which she describes the biggest mistakes that entrepreneurs make. There are a number of gems there, but the one that really strikes a chord is something that drives my business partner, corporate finance specialist Deb McGargle crazy. So-called “loyalty” or “reward” equity:

Julie Meyer, CEO of Ariadne Capital

Julie Meyer, CEO of Ariadne Capital

“There are many [mistakes] I’ve seen in the 15 years I’ve been doing this. These are some that can be deadly:

“Making all your friends co-founders with founding equity, when only two of you are doing the work. Once you’ve given the founding equity away, you can’t get it back.”

She also mentions another that is of relevance to us:

“Not reading the investment documents thoroughly. I once had to break the bad news to a (not stupid) guy who hadn’t realized when he signed with his Series A investors that if he missed some milestones, a massive amount of his firm was going to be transferred to the venture capitalists.”

Last year, we were asked to put together a series of videos to take the teams participating in Searchcamp through their invest. Unfortunately they were never used, but we had made similar suggestions to both Rivers Capital Partners and North Star (both of whom have invested in many of our clients) and were rebuffed.

The other mistake that she mentions that jumps out at me is this:

“Outsourcing the development of the product to an agency of some sort. If the product is not built in-house, don’t invest.”

Advice to investors as much as entrepreneurs perhaps, but proof (were it needed) that the old ONE North East funded investment model has no place in the real world.  It’s not the role of an equity investor to fund a third party’s profit margin on the creation of the key asset.  If you can’t develop the product in-house, you either have to bootstrap or raise debt finance.  Or find a fund that is based on public money and that doesn’t really care so much about where the money goes…

Read the whole piece here:
http://www.siliconbeat.com/2014/03/17/elevator-pitch-julie-meyer-of-ariadne-capital-on-how-to-crush-it-in-europe/

One thought on “Julie Meyer On the Mistakes That Entrepreneurs Make

  1. Pingback: Julie Meyer On the Mistakes That Entrepreneurs Make | Particular.pro

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