With unemployment still being exceptionally high, there has been a wave of individuals leaving Corporate America to become entrepreneurs. Entrepreneurship is what built the infrastructure in American business. America is the land of opportunity, and entrepreneurship has been ingrained in everyone's DNA in the U.S. However, the challenges that face entrepreneurs today seem more than in previous decades.
It takes guts to become an entrepreneur and to leave the safety of a corporate job. By a multiple, the stress and responsibilities of being an entrepreneur are much higher than most C-level exec positions, while the pay is almost nonexistent the first few years. Everyone always doubts you every step of the way. The obstacles always seem endless.
Yet, entrepreneurs are created every day. They are the backbone for progression, imagination and technological innovation that has made America great up to this point. Who doesn't want to be the next Zuckerberg, Gates, Thiel, Trump, Cuban, Pickens or the endless supply of business legends that have created the foundations of American business? Everyone aspires to be a great entrepreneur, to leave a positive mark on society, and to make it big. However, there are rules to this game of entrepreneurship, and the primary one is access to resources.
An entrepreneur can be the hardest working, smartest, most talented individual, with the best idea in the entire world, but if he does not have the proper resources to execute his vision, then it's simply a piece of paper with a nice doodle on it, or a business plan that collects dust.
Therefore, if you're an entrepreneur, the million-dollar question then becomes how can you raise capital to execute your vision? Historically, entrepreneurs would go to banks to provide loans. They were the gatekeepers. This is what my father's and grandfather's generations did. While I know several entrepreneurs of former generations that simply had a business plan (not even a financial model or historical cash flows) and received bank loans, today this is not possible. After the 2008 financial crisis, capital is too restrictive to be loaned by banks. When I founded my company Soletron, I didn't even waste time looking into this fundraising option. It's as improbable as finding the Loch Ness Monster. It simply is not realistic in today's society.
This leads us to family and friends, the emotional and financial support of our lives. Yet, this is dependent on someone's upbringing and surroundings. Not everyone has access to wealthy or influential friends. If someone is blessed to have this, then that is great news, and one needs to utilize this and every asset he has as entrepreneur. Unfortunately, though, the majority of Americans do not have this opportunity. What other options are there?
You could try institutional capital. Everyone always hears about the Horatio Alger stories of a startup that raised millions of dollars. What about the good old days from the tech boom in the late 1990s? Is it making a comeback today? No. A piece of paper today is not going to get you a $10 million pre-money valuation, and the chances of raising institutional capital is minute. Access to capital is tougher today than in previous time generations, which means that deal funding will be even more selective. It can be done, but statistically will be tough.
So if you can't rely on government, banks, VCs, family and friends, who can you rely on? Yourself. You have to make it happen as an entrepreneur by whatever means necessary to go after your dream. That is why in today's climate, it is the norm to try unconventional tactics to fundraise.
Just a little while ago, two college students, Scott and Stacey Ferreira, founded MySocialCloud. I think they executed one of the best unconventional fundraising tactics in the history books. Being 20 and 18 years old, they noticed a tweet from billionaire Richard Branson about a fundraiser for the 25th anniversary of Virgin Atlantic. They took out a $2,000 loan to attend the event and meet Branson. Shortly thereafter, they had received close to a $1 million of funding from Branson, Jerry Murdock (Insight Venture Partners) and Alex Welch (CEO and founder of Photobucket). The chances of them raising $1 million from the aforementioned avenues were very low, yet they took destiny into their own hands to make it happen.
This got me thinking on how I can try unconventional fundraising tactics with my company. I have raised $550,000 for Soletron, which is a social networking and ecommerce platform for lifestyle retail verticals. My investor mix includes VCs, family, friends and angels. However, to get to the next level of our company lifecycle, we need to raise a Series A of a few million. I thought for several weeks, and then came up, with what I thought would be a positive, entertaining, appropriate and inspiring event:
I challenged Billionaire Peter Thiel to a $1 million chess match for a Series A investment. The fundamentals are simple: If I win, Peter invests $1 million into Soletron, and if I lose he would receive a chunk of Soletron equity. Specifics of the match would need to be negotiated. What makes this feasible, is that Peter and I are in the top 1 percent of all chess players in the U.S. and are lifetime masters. Our ratings are practically identical, and we were both one of the top chess players for our respective generations. It would be a fair match, and one for the ages. I have the absolute respect for Peter, and think he has done a tremendous amount both on and off the chessboard. He is a true entrepreneur, and I wanted the theme of the potential match to highlight the challenges that are facing entrepreneurs today. All sponsorship capital would be donated to charities of our choosing.
Immediately, this received international media attention in a short time proximity. It's Peter's move, the clock is ticking, and the world is awaiting Peter's response. I hope that he accepts to give the underdog and an aspiring entrepreneur the chance. Everyone would win if the match were to happen. Regardless, though, if it doesn't come to fruition for whatever reason, Peter is still a role model in my book.
I hope, though, that current and aspiring entrepreneurs out there never give up on their business aspirations. No matter how difficult your position might look with fundraising, you always have moves you can play. You just have to try different tactics.