Worcester Business Journal

wbjournal.com | June 24, 2019 | Worcester Business Journal 17 S ilicon Valley investors and their ilk seek the next big thing to grab market share, and produce fame and Jeff Bezos-sized wealth. ey call it disruption. But when it comes to raising investment capital for a startup, should the one-size-fits-all Silicon Valley model be your guide? is model of investing in startups works for only a cadre of well-connected venture capitalists. e firms invest, coach, and implore entrepreneurs to build fast while sprinting toward the finish line: a $1-billion IPO. VCs control the process, money and promote this model as the way to raise capital, scale and grow. Rarely is their way questioned by the media, lawyers, accountants, the army of advisors, or graduate schools cranking out MBA students like internet spam. Bucking the trend No two businesses are the same. Yet, startup entrepreneurs are blindly following arbitrary rules from investors oen leading them off a cliff. One venture-backed entrepreneur is speaking out. Rand Fishkin, founder and former CEO of Moz, wrote the book "Lost and Founder." He raised more than $29 million. Fishfin says, "Silicon Valley startup advice is flat-out wrong, By Juliet Feibel To celebrate the nonprofit's 40th anniversary, Arts Worcester Executive Director is writing four business advice columns in 2019. Her first one on entrepreneurial artists appeared in the March 18 WBJ and can be found on WBJournal.com 30) Nonprofit doesn't mean no profit. Revenues should always exceed expenses, no matter how worthy your mission or how great the programming. 29) Budget conservatively. Success in a single year sometimes depends on the quality of art, which is hard to determine for a spreadsheet. Triumphs of the previous year are not necessarily repeatable, and that another 2008 might be around the corner. 28) Be transparent. The last three years of our fi- nancial statements, our Form 990, and our strategic plan are all available on our website. When people understand how your organization operates, they can trust it and invest in it. 27) Develop and thank your brain trust. These are the people you turn to when you need to know how to build a facility, develop a planned giving society, or improve your HR policies. Although advice doesn't come with a dollar sign attached, recognize your experts for the important donors they are. 26) You cannot say "Thank you" enough. Every nonprofit depends on gifts and donor relations, but the arts are more a social industry than most. The smallest gift deserves the same enthusiastic "Thank you" as the largest gift, and no one is ever tired of being thanked. 25) Don't be afraid to spend money to make money. Our exhibition cards are exquisitely designed and printed, and they don't come cheap. But they are a tangible indicator of the quality of our artists and exhibitions. Some donors give solely in order to continue receiving them. 24) You don't go into arts administration to make a quick million, but arts nonprofits can offer employees a work environment of unmatched joy and flexibility. Those are important benefits. 23) Respect and love your city's journalists. Give them a scoop if you can. Be succinct and quotable. Understand the burdens under which they operate. 22) Pursue every opportunity you can with the Massachusetts Cultural Council. It has limited funds to disperse, but endless supplies of knowl- edge, support, and guidance. Funding from them is valuable beyond the dollars they give. Advocate for them with your state legislators. 21) Keep an eye on your mission and your strategic plan. Doing so will save you and your board from chasing funds for programs costing you more than they bring in, and keep you from being distracted by this year's shiny new thing. Know what you do well, why it's necessary, and do that. For the next column in Fiebel's series on the creative economy, check out the Sept. 16 edition of WBJ. K N O W H O W Don't follow Silicon Valley startup advice 10 1: W O R K P L A C E V I O L E N C E BY SUSAN SHALHOUB Special to the Worcester Business Journal A ccording to the Bureau of Labor Statistics Census of Fatal Occu- pational Injuries, of the 5,147 fatal U.S. workplace injuries in 2017, 458 were cases of intentional injury by another person. Workplace violence can be a threat or an actual act of physical violence, harassment or intimidation at work. Emergency plans, mock-trainings and zero-tolerance policies are essential. Here are other ways to keep the work- place safer. Understand what it means. ese are the four kinds of workplace violence: Criminal intent, where the perpetrator isn't necessarily connected with the company or its team members, but is violent in the commission of a crime; also situations where a customer or client is the perpetrator. "A large portion of customer/client incidents occur in the healthcare industry in settings such as nursing homes or psychiatric facilities; the victims are oen patient caregivers," writes Chris Ceplenski at HRDailyAd- visor.blr.com. e third type is when an employee attacks another employee at work; and the fourth type is when the perpetrator has a personal relationship with an employee, but not the business. Risky business. Factors increasing the likelihood of violence, according to the Occupational Safety and Health Admin- istration: roles where workers exchange money with the public; serve alcohol; work late at night; or work in high-crime areas. Healthcare professionals, law-en- forcement personnel and delivery drivers are among those more at risk. "Work- ing alone or in isolated areas may also contribute to the potential for violence," according to OSHA.gov. Watch employee behavior. Be aware of co-workers who abuse drugs or alcohol; exhibit a decline in job perfor- mance or increase in absenteeism; make suicidal comments; are resistant to change at work; are paranoid; or com- plain about alleged unfair treatment. "Some people commit violence because of revenge, robbery or ideology – with or without a component of mental illness," according to the National Safety Council at NSC.org. Anthony Price is founder and CEO of LootScout. He is the author of the book, "Get the Loot and Run: Find Money for Your Business." Reach him at anthony@lootscout. com. W W Running an arts nonprofit 4 0 T H I NG S I know about . . . ... Arts & business BY ANTHONY PRICE Special to the Worcester Business Journal W mangled by survivorship bias, and only applicable to a tiny subset of companies and founders (even though it's dispensed to everyone with one-size- fits-all uniformity)." e media is a reliable partner. Rand Fishkin states, "e media, the hype, the legends of how Silicon Valley startups work are just a carefully craed model home. ey're a set of pieces, painted by interested parties for their own benefits, built to hide embarrassing flaws. None of it is real." Jenny Kassan, an attorney advising mission-driven enterprises and author of the book "Raise Capital on Your Own Terms," says, "Entrepreneurs are some of the most creative and innovative people on the planet, so why should they accept a standardized, cookie- cutter funding model?" Small returns not wanted Startups reaching $20, $50 or $100 million in revenue don't make the investment cut. ese smaller companies are considered failures from a VC perspective. Simply because they will not return enough capital to the VC's limited partners who provided the capital. e baseball analogy is VCs must always hit grand slams. Read Tomer Dean's piece on Medium: "e Meeting at Showed Me the Truth About VCs and How ey Don't Make Money". Alternatives to the Valley model have sprouted up. Since April 2009, projects on Kickstarter have raised the profile of reward-based crowdfunding with more than $4.2 billion pledged by 16 million people. Overall, 161,193 projects have reached their funding goals – including this author's project. e JOBS Act was passed in April 2012 and led to regulation of crowdfunding in May 2016, allowing small businesses to seek an investment (debt or equity) up to $1,070,000 each year from the public on internet platforms such as Wefunder, Republic and Start Engine. Silicon Valley-style investors will insist there is only one way to attract investment to a startup. But this doesn't work for most. "Using a one-size-fits-all approach to bringing on investors is one of the surest ways to make your life a living hell," says Kassan. "Never trust anyone who tells you there is only one way to raise capital." Silicon Valley's model should not be your template. You must source capital aligning with your business.

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