Value Drivers and the Entrepreneur’s Dilemma

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From a talk I gave to the Venture Association of New Jersey about the challenges of growing a business.

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Value Drivers and the Entrepreneur’s Dilemma

  1. 1. Monmouth Venture Partners presents Value Drivers and the Entrepreneur’s Dilemmato the Frank J. Graziano Managing Partner September 21, 2010
  2. 2. Do you want to be rich? Monmouth Venture Partners Helping Exceptional Companies Realize Their Full Potential 2
  3. 3. Or king? Monmouth Venture Partners Helping Exceptional Companies Realize Their Full Potential 3
  4. 4. Achieving both is a rare exception… Monmouth Venture Partners Helping Exceptional Companies Realize Their Full Potential 4
  5. 5. Here’s the reality…“Most entrepreneurs want to make a lot of money and run the show. Research shows that it’s tough to do both.” “If you don’t figure out which matters more to you, you could end up being neither rich nor king.” _ Noam Wasserman, The Founder’s Dilemma, Harvard Business Review, February 2008 Monmouth Venture Partners Helping Exceptional Companies Realize Their Full Potential 5
  6. 6. Some sobering facts…• 50% of founders no longer X X X X X CEO 3 years after funding• After 4 years, only 40% are X X X X X X still in that role• By time of IPO, less than 25% X X X X X X X X • 4 out of 5 founding CEOs have to be forced out! Monmouth Venture Partners Helping Exceptional Companies Realize Their Full Potential 6
  7. 7. Growing pains…• Limits of bootstrapping• Outside money enables faster growth• Loss of total control of the business• Investors want oversight and seats on the board• First steps in putting your role as founding CEO at risk Monmouth Venture Partners Helping Exceptional Companies Realize Their Full Potential 7
  8. 8. The paradox of success… Structure Process Marketing Specialized Sales Roles Customer Managerial Service Heirarchy Product Launch Finance HR Operations Monmouth Venture Partners Helping Exceptional Companies Realize Their Full Potential 8
  9. 9. Implications for raising money…Better Terms Entrepreneurs v. Investors Alignment of Interests Control WealthWorse Terms FFFs Angels VC PE Sources Monmouth Venture Partners Helping Exceptional Companies Realize Their Full Potential 9
  10. 10. Implications for creating value… Product Management Market Economics Sales Competition & Marketing Monmouth Venture Partners Helping Exceptional Companies Realize Their Full Potential 10
  11. 11. If your motive is… Seek outside Use your own investors capital (FFFs)Raise a lot more Raise less $$$$$$ Wealth Control overall Hire professional Not recruit management potential rivals …influenced by venture’s potential Monmouth Venture Partners Helping Exceptional Companies Realize Their Full Potential 11
  12. 12. Other tales from the trenches… Monmouth Venture Partners Helping Exceptional Companies Realize Their Full Potential 12
  13. 13. Q&AMonmouth Venture Partners Helping Exceptional Companies Realize Their Full Potential 13
  14. 14. Thank YouFrank J. GrazianoManaging PartnerMonmouth Venture Partners, LLC(732) 930-0161frank@fjgraziano.com Monmouth Venture Partners Helping Exceptional Companies Realize Their Full Potential 14

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