Interview- Jeff Kaplan- Director, Venture Asheville

Interview with: Jeffrey Kaplan, Venture Asheville Director. Tech junkie. Media maven. Academic entrepreneur. Dog lover.

Interviewed by: Nancy Critcher-White, Leadership HR Professional and Graduate Student at WCU, studying Entrepreneurship

Website: http://ventureasheville.com/

LinkedIn: https://www.linkedin.com/in/jeffdude/

Nancy (N): Thank you for joining me today, Jeff. While I know many entrepreneurs, when it comes to the topic of entrepreneurial finance, you have a different perspective that I’m interested in learning about. Thank you so much for agreeing to be interviewed.

N: What is your business background?

Jeffrey (J): Education, Academia, and start-ups. I was a teacher; worked for non-profits, went to grad school, did some sales and marketing. Product Owner and Consultant Anthroware. Product development and consulting for product developers. For Hatch, I did program events and new venture creation. Bullet points are ok, right?

N: Yes, of course. Bullet points are great. What personal strengths have contributed to your success?

J: I build rapport very quickly. We just met, but we’ve already been bonding and chatting, right?! That trust building was especially important with my consulting and sales positions. And even now with the companies that come to Venture Asheville, I build trust so I can help people in those business cohorts. Other things: I read quickly, usually articles and finance books. I know how to leverage resources and help others leverage resources. Public Speaking is fun. And I have an ability to convey a creative vision.

N: What was your very first entrepreneurial endeavor?

J: In 8^th grade, I bought a CD burner. At school, people would give me a list of songs they wanted on the CD and I would download the songs from Napster and burn their CD and deliver to them the next day. Blank CDs were cheap, and I had a good business going. Another guy entered the CD burning business and started a price war with me, plus his parents had faster internet.

N: How would you describe your current business and what you would tell someone who doesn’t know what Venture Asheville does?

J: Two things- Build Entrepreneurs and get companies funded. That’s my pitch. As the director, I direct. I meet a lot of people. Help businesses make connections. I’m usually either meeting with businesses or entities (sometimes other businesses) that can support the businesses in our cohort.

N: I know some folks might come to you with half-baked ideas, what do you look for in the businesses that are accepted into your programs?

J: We won’t take half-baked ideas. If people come to us at that stage in the process, we send them to Hatch or some other business development help. That part of the process is fun, and I still help with Hatch, but it’s not what we do at Venture Asheville. We are looking for businesses that need help scaling. We want a committed founder. I realize a lot of people have side hustles, but we are looking for founders to be all-in. As an aside, I would like to start some workshops on helping people turn their side projects into their full-time work. Other things we look for: Is there a product/market fit? Does it speak to an underserved market? I love unconventional business ideas and novel value creation. Sometimes that might look like an idea or software platform used for one purpose that a business owner wants to use for an unrelated and underserved group.

N: What types of attributes or success are your Angel investors looking for in the businesses they back?

J: Initially, they want businesses that are already making money. They are looking for 10-35% equity. They fund $100,000 to $800,000. They want companies that can grow and scale successfully. They want businesses to sell in 3-5 years of their investment and a 10X return or 7.5X return across all deals. No real estate deals.

N: This interview will be posted for other entrepreneurs and intrapreneurs to view and learn from. As a serial entrepreneur or serial investor, I’m sure you have financed ventures in multiple ways. Do you mind sharing some of your tactics for funding a start-up?

J: Personally, most of what I’ve done is bootstrapping, pinching pennies, and personal savings. It is really helpful to have a working spouse. I’m familiar with all sort of financing tactics because of my work though. Customer financing through pre-sales is a good option for some businesses. Strategic partnerships are something I did a lot of with my Dogphredly guide, which was acquired. I’m thinking of doing some crowdfunding for a current project, oh and equity crowdfunding is a really interesting concept. Seems a little scary but I think we’ll start seeing a lot more of equity crowdfunding.

N: What are your thoughts on financing tactics like angel investors or using crowdfunding as a way to start a business vs. getting a traditional loan or line of credit?

J: When you are in the earlier phases of a business, it’s hard to get traditional financing. I send people to Mountain Bizworks a lot. Lines of credit are great options early on. If you still need money after angel investors have invested, it’s possible their investments will get squashed, so that’s something to be aware of.

N: What general advice do you have for someone who is starting a business?

J: I see too many founders go for the path of least resistance and they don’t stay true to their vision. It’s going to be hard but don’t compromise your vision. Be tenacious and resilient. Be prepared for a lot of shit to go wrong. It’s harder, longer, and more expensive than you think.

N: Do you have any financial advice you would be willing to share?

J: Don’t spend what you don’t have. Take care of your people. Leaders eat last.

N: Is there anything I didn’t ask you that you would love for those listening to know?

J: As a founder, you can get pretty far before you need to hire a chief financial officer (CFO). That said, you need to know your basic financial documents, and you need access to your books. You need to know your balance sheets, your PNL, cash flow, income, payroll, and run rate. You’ve got to know what you are looking at.

N: I appreciative of your time today. Thanks so much for your words of wisdom for those reading. One last thing before we end…I’m working on a funding proposal for my husband, A.D. White, independent author/publisher. When I complete the draft would you mind giving your opinion on it?

J: Yes, I’d be happy to take a quick look at the funding proposal. In the meantime, have your husband come to the pitch parties at Hatch for open mic night.

N: You said you read a lot of business and finance books, what are you reading right now?

J: [pulls a book from his bag] This one is “Never Split the Difference: Negotiating As If Your Life Depended On It” by Chris Voss. It’s non-intuitive advice on negotiating.

The Intersection of Crowdfunding and Traditional Debt Financing

“Anyone who lives within their means suffers from a lack of imagination.” – Oscar Wilde via Wisebread.com

Last week I wrote about crowdfunding and the many different platforms available for funding. I decided to explore the site Lending Club. I’ve since learned, this type of funding is called person-to-person or P2P lending. Think of it as crowdfunding meets an angel investing pool. I spent some time researching their model and writing some brief instructions on the steps to become approved with Lending Club. Here’s my screencast evaluation of their financing option:

And some more in-depth info on the steps for applying with Lending Club:

Now, let’s follow the (hypothetic) steps to apply from the borrower’s perspective:

Determine your eligibility

Click on this link for a dashboard of steps to follow (with access to the electronic platform):

https://help.lendingclub.com/hc/en-us/categories/202523217-Small-Business

1. Start by exploring the “How to Apply” button
2. Check your rate
3. Choose your offer, if given
4. Watch as people invest in your loan
5. Funding is sent directly to your bank account
6. Set-up monthly auto-draft payments
7. Pay off your loan early, if wanted, with no early pay-off penalty

 

Success and Key Questions (6/30/18 Stats):

https://www.lendingclub.com/info/statistics.action

• How much does the Crowdfunding source take as a fee? Varies depending on the terms of the loan
• How long will the process take until the money arrives and can be used? About 7 days for approval and a few more days for funds to be deposited (depending on bank rules). Need to use their check-list to avoid delays.
• Restrictions? Varies depending on the terms of the loan
• Reporting requirements? Lending Club wants to see your IRS tax return and requires a 4506-T form to do so. Borrowers would report funds as part of their tax return.

 

Cash Flow- Sinking Ship? Let’s Hope Not.

“Beware of little expenses. A small leak will sink a great ship.”

– Benjamin Franklin via brainyquote.com

This week we are researching and writing about cash flow management. Each person in my entrepreneurial finance class has taken a cash flow topic and writing about it for the benefit of our other classmates. I chose the topic of “how to collect cash owed to your company”. Collecting cash owed to your company can be a hard task to manage. The easy solution might be to say, “why not require payment in full before products or services are delivered?” Unfortunately for many industries and businesses, cash payment up-front is simply not how business is conducted. It might be an issue of convenience, corporate billing structure, or needing to deliver upon a service before being paid in full. For many entrepreneurs, collecting cash owed has to be an integral part of daily, and at least monthly, operations.

The first step to ensuring proper and timely collection of payment is an accurate and proactive accounts receivable system. If an entrepreneur anticipates needing to bill customers for products or services rather than or in addition to point of sale transactions. Entrepreneurs should invest in a record keeping or point of sale system with built-in billing/monthly statement generation capabilities.

While I used several resources for the full report, I wanted to share a great article that I found about collecting money owed to your business. As usual, Entrepreneur magazine (and electronic content) published this great piece from John Rampton in 2017 called 6 Strategies for Dealing With Unpaid Invoices That Get You Paid Sooner.

Here are the 6 tactics:

1. Make sure you followed procedure and then follow-up politely.
2. Give discounts and charge a penalty.
3. Abandon the stiff business approach.
4. Collections, arbitration, mediation, court.
5. Contact a Business Reporting Bureau.
6. Factor them.

Make sure you click on the article for the details and some other great links to resources and definitions of some of the terms. I had never heard of “factoring” debt until I read this article.

 

Work Cited:

Rampton, J. (2017). 6 Strategies for Dealing With Unpaid Invoices That Get You Paid Sooner. Retrieved from https://www.entrepreneur.com/article/302037

Entrepreneurs, Dogs, Money, and a New Semester

“Dogs have no money. Isn’t that amazing? They’re broke their entire lives. But they get through. You know why dogs have no money? …No Pockets.” – Jerry Seinfeld

via Goodfinancialcents.com

I started a new class last week in my Masters in Entrepreneurship program at Western Carolina University. It’s a class that I was dreading a little bit. This one when I registered for it was called Advanced Entrepreneurial Finance. Now don’t get me wrong, I manage some pretty large accounts as part of my day job, and I’m the chief financial officer at home, but the thing that was psyching me out is, in my undergraduate work I took a class called “Math for Non-Math Majors.” A class with the word advanced in front of the word finance was daunting to me. Well, I’ve had a week to meditate on the syllabus, and I’m happy to report, I think I’ll be just fine. The syllabus calls this class “Entrepreneurial Funding” which seems less scary and there really isn’t anything too hard about the concept of money in and money out. The advanced concepts, as they relate to entrepreneurship seem really helpful and exciting. I’ll get to learn more about topics like:

• Updating a Chart of Accounts
• Managing Cash Flow
• Crowd Funding Strategies
• Valuing a Company
• Funding Sources
• & Harvesting-The End Game

To help inspire me, I’ve been googling entrepreneurial financial wisdom. Blogger Choncé Maddox came up with a great list of 5 Inspirational Money Quotes from Entrepreneurs on her blog Due.

So, I’m not nervous about the class anymore. All of these things make perfect conceptual sense, and as I learn more, I’m sure I’ll be even more jazzed about the prospect of helping my husband grow his business through what I learn. After all, I have two things going for me:

1. I LOVE money.
2. AND…unlike dogs, I have pockets.