Advice thread: Anyone in a start-up, business brokerage, or venture capital?

[Daedalus]

I'm wrapping up the last couple weeks of grad school, about to get my MBA. I've also got 10 years in the aerospace biz (engineering), but I'm concerned things are stagnating. Even if I don't get laid off, there doesn't seem to be much growth potential for me here, at least until all the baby boomer workers start to retire in force in 10 years or so.

I'm thinking of possibly starting a business, buying a business, or working for a small startup. I know there are bankers, business owners and others here who have good advice to give, and I would love to hear it. If you have or currently work for a start-up, please post your experience. I turned down a job at a start-up a couple years ago, and honestly I'm glad I did. So far at least. When they go public I might be kicking myself in the hind end.

Thanks!

 

[PoohBEAR]

For me, I love start up operation. It the excitement of seeing thing changes quickly and the ability to get things done w/out the redtape of corporate world.

 

[HTN]

I'm wrapping up the last couple weeks of grad school, about to get my MBA. I've also got 10 years in the aerospace biz (engineering), but I'm concerned things are stagnating. Even if I don't get laid off, there doesn't seem to be much growth potential for me here, at least until all the baby boomer workers start to retire in force in 10 years or so.

I'm thinking of possibly starting a business, buying a business, or working for a small startup. I know there are bankers, business owners and others here who have good advice to give, and I would love to hear it. If you have or currently work for a start-up, please post your experience. I turned down a job at a start-up a couple years ago, and honestly I'm glad I did. So far at least. When they go public I might be kicking myself in the hind end.

Thanks!

I had posted something similiar to your post here. No one really responded as to ideas etc. I guess they're all on vacations.:biggrin:

 

[sahtt]

Too vague my friend. Your asking us to narrow down infiniti and attampt to cater it to your skills as an aero space engineer?

Most operations don't begin as random start-ups. They are derived from 5-10 years of research/experience and finding a niche or getting a peice of an evergrowing pie. If you throw out some ideas we could critique them or give you a better guess as to what to expect.

Do you want a franchise? Jason's deli is popular in my area, start up is about 1m.
Do you want to start a consulting firm specializing in your skills?
Do you want to build an internet sales company selling a product you are familiar with?
Do you want to find a weak market in your area such as child care centers and fulfill it?
Do you want to open a machine shop/mechanic shop specializing in some particular car?
Do you want to buy a lot and try your luck at selling/buying used cars?

See what I mean?

 

[Daedalus]

What I'm looking for is feedback from experience, kind of like what Calvin posted. People who have been there, done that, and who know about the non-obvious pitfalls of each. Which path did you take and why? Which do you think is the best? I'm not looking for suggestions or feedback on a particular business idea. Of course, if any brokers are out there, then absolutely I'm soliciting a pitch for businesses with compelling financials in the socal area.

If you work for equity in a start-up, are you glad you did it, or sorry? How did you gauge the likelihood of a successful exit, and how did you guaranty your stake? I turned down the start-up offer because the rough math told me my equity at exit wouldn't make the long hours for so many years worth it. But I think this is probably my preferred path right now. It's kind of the middle ground that offers a paycheck and some exit upside too. I have sat down with a VC, and hopefully he will be able to make some intros to others who have startups with opportunities. I wanted to get as much feedback as possible from others who went down these paths, and I think Prime members as a whole are pretty entrepreneurial.

 

[steveny]

Buy junk and sell antiques.

 

[sahtt]

What I'm looking for is feedback from experience, kind of like what Calvin posted. People who have been there, done that, and who know about the non-obvious pitfalls of each. Which path did you take and why? Which do you think is the best? I'm not looking for suggestions or feedback on a particular business idea. Of course, if any brokers are out there, then absolutely I'm soliciting a pitch for businesses with compelling financials in the socal area.

If you work for equity in a start-up, are you glad you did it, or sorry? How did you gauge the likelihood of a successful exit, and how did you guaranty your stake? I turned down the start-up offer because the rough math told me my equity at exit wouldn't make the long hours for so many years worth it. But I think this is probably my preferred path right now. It's kind of the middle ground that offers a paycheck and some exit upside too. I have sat down with a VC, and hopefully he will be able to make some intros to others who have startups with opportunities. I wanted to get as much feedback as possible from others who went down these paths, and I think Prime members as a whole are pretty entrepreneurial.

The rough math is very important but rarely accurate in my experiences. That's the risk. I'm usually debating between relatively unknown potential gains against absolutely assured, often underestimated costs, not an easy battle to win for any business opportunity that's half way legal.

I've had 2 businesses myself and a couple small partnerships. One was a landscaping business, I sold it after 3 years once my business partner from the beginning was killed in an accident. Overall I was glad I did it. It gave me a lot of experience getting customers and I got to work with my best friend on our own schedules. The second was one I now run as a small side business, buying/selling used cars and motorcycles. It came natural for me and it was still extremely difficult at first, and that's coming from someone with a lot of car knowledge and sales experience. I can't imagine someone starting from scratch, though I'm sure it's been done.

I slowly started allocating more capital towards financial investments vs motorcycles/cars. Now I only buy 2-3 cars and 2-3 motorcycles for profit.

 

[Factor X Motorsports]

Things to think about when joining a start up.

Who are the founders and what are their track records?
How well funded is the company?
Who is funding the company?
What percentage equity stake is being offered and over what period?
What type of shares are being offered for your equity stake?
Current market cap?
Do you have the option to participate in any private placements?
Market size?
Market position?

Some of the biggest mistakes we made with our software company was not raising enough equity on the 1st round of financing, over estimating our growth, and not bringing on a seasoned management team early on in the 2nd round of financing.

One of the biggest things you cannot control is market timing. In respect to what we were doing, we were about 5 years ahead of the curve. If we would have continued and not gone acquisition who knows what would have happened.

Obviously there are many, many more questions you need to ask yourself and the company but this will give you a high level view of what you are getting into. One more piece of advice is to do it while you are young and do not have any attachments. Start-ups suck the life out of your personal life. Hope this helps!