5 Reasons to Invest in Startups Early

Ted Alling joined Young Presidents’ Organization in 2013 and is partner at Lamp Post Group, a venture incubator that helps aspiring entrepreneurs take their ideas from the planning stages to reality through financial investment and business guidance. Below are his five tips for successfully advising startups.

1. Knowing How to Build a Team Helps
Despite bringing financial acumen, many investors have never cut their teeth building a company and a team. Everything can look right on paper, but if the right people aren’t on the team, even the best idea with the best capital is doomed. At Lamp Post Group, where our investment team has run companies, we spend more time advising our portfolio on relationships versus strategy. We’ve found, over and over, that the right people will find a way.

2. Once an Entrepreneur, Always an Entrepreneur
If you are made to lead a team, build companies and make something out of nothing — it can be deeply unsatisfying to just write a check, hope that it all works out and a return is made on that capital. For our team, being entrepreneur investors often means we are investing in people over ideas and sticking with a quality team even if they fail.

3. Nothing Beats Helping Others Get What They Want
You’ll have more fun and enjoy more financial success when you stop trying to get what you want and start helping others get what they want. That’s a good way to explain our version of “working capital.” If we can pave the way for other people in their 20s to do what they love and build companies that make people’s lives better, we are successful early investors.

4. Sales is Still the Weakest Link of Most Startups
I was the first sales person for the first company I founded. When we merged last year, we had 400 full-time sales people across the United States. We understand the gritty side of making a deal — the dozens of phone calls and emails to crack the door open with a potential customer. A misguided attitude still exists in startup culture that if you build a good enough product, it will sell itself.

5. We have Already Wasted Time and Lost Sleep
The way we look at it, we have stressed out about cap tables, screwed up hiring and firing decisions and lost sleep over making payroll so that we can hopefully steer startups away from the same brutal experiences.

The author of this article is Deborah Stoll from Young Presidents’ Organization (YPO).

This article is brought to you by YPO’s Deal Network, a global business network that brings together more than 6,600 chief executives for education and deal support/transacting.

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