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Being Customer Ready rather than Investor Ready

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Blackstone LaunchPad at UCC

Creative Zone, Q Floor, Boole Library

UCC

T12 YN60 Cork

Ireland

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Blackstone LaunchPad at UCC in association with Local Enterprise Office Cork City is proud to host 'Being Customer Ready rather than Investor Ready'.

Discussions on entrepreneurship are often peppered with words such as 'angel investor', 'elevator pitch', 'burn rate', and 'IPO'. Startup business focus has moved to thinking in terms of being 'investor ready' rather than being 'customer ready'. Negative cash flow and high risk are often seen as badges of honour. The particular, and highly publicised, startup paradigm based on these phrases, has led to young entrepreneurs becoming fixated, believing that it is the only viable model. Jerry Sweeney, Managing Director of Cork Internet eXchange (CIX), will suggest that there are other models that may better suit a particular entrepreneur or a particular venture type.

There is a more traditional way to build a business. In Germany for example, there is a large business sector referred to as the Mittelstand. These are privately (often family) owned businesses that frequently span several generations. These businesses develop skills, products and capital. Entrepreneurs should study this, and other, startup models. A focus on investors necessarily dilutes focus on customers and markets. For example, Michael Dell took Dell Technologies private so that he could focus on the business and not the short term requirements of the shareholders.

While organically grown businesses have social benefits, such ideas are not purely altruistic. Once an entrepreneur takes on angel investors and venture capitalists, her shareholding is diluted. It is better to avoid this dilution if at all possible. For example, Microsoft took in no outside investment, didn't do an IPO until 1986 when it was eleven years old, and as a result Bill Gates still retained 45% of the equity even after the IPO.

If you are looking for money to get your business going, remember that a customer is an investor that doesn't want their money back. They are the best kind of investor. Michael Smurfit once famously said 'equity is blood'. Don't be too quick to give it away. Focus on the market. If you do need capital later, you will find that investors will appreciate this focus.

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Blackstone LaunchPad at UCC

Creative Zone, Q Floor, Boole Library

UCC

T12 YN60 Cork

Ireland

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