Wednesday, March 18, 2009

Focused business model

I've switched to a narrower business model - Ongoing CFO for startups, with possible project work. No longer though do I help exclusively with helping companies find funding.

Reason why - very bluntly, I'm a professional, my time is valuable, and I'm not going to work for free to help you find capital, my compensation completely tied to the success. Not everyone gets funded, regardless of how attractive your company is, and it's hard to give 100% effort when there's less than a 50% chance of being paid for my efforts.

There's a very easy distinction - companies who call me and say "Chris we need help raising money" typically 1. don't have any and 2. if they do, are not willing to pay me for my time, since they believe $1M is right around the corner. I've also heard "well if you are able to do what you say you can, then you shouldn't be worried about us getting funding and you getting paid". Problem is it's not an automatic process. Just because you look for funding doesn't mean you automatically receive it. While I may have connections and a history of doing so, it still is no guarantee.

On the other hand, companies who call and say "Chris we need a CFO", then my ears perk up. Typically these people recognize the value in everything that I do, and their need for a financial executive on the team.

The VC model is invest in 10 companies, get paid off by 1. I'm not a VC though, and my model is work hard for people who are willing to pay for my time.

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