The winner of the Wisconsin Governor's Business Plan competition this year is Northern Star Fire, led by Eau Claire fire captain Jeff Dykes. It's a great story. With perhaps a moral for investors and maybe entrepreneurs.
Captain Dykes designed an eight-directional electronic compass that firefighters place inside their breathing apparatus to help find their way inside burning structures. The small compass is designed to help firefighters safely navigate in smoke-filled buildings. Safe to say everyone who heard this presentation was inspired by the mission and the dedication of Capt. Dykes to the safety of his fellow firefighters. He deserves our support and assistance in every possible way.
It's not a venture-backable business, of course. Every entrepreneur should choose financing methods based on what is best for the business.
But why in this case?
It's easy to finance growth. The product is built and working and will be distributed through companies that sell firefighting equipment.
It has the potential to be a long term business and its founder should have the ability to decide to keep it or sell it based solely on his goals and personal desire.
Its growth can be forecast from sales demand and is therefore lower risk. It will be a good, solid banking customer. What's not to like?
So what's the moral? In accepting the award, Capt. Dykes was impassioned, dedicated and inspirational. He also took a swipe at investors and the idea of investing in his company.
I've written before about avoiding investors with bad terms and I'd reiterate that entrepreneurs should be fully informed about the plans and intentions of anyone they choose to do business with, whether suppliers, distributors, bankers...or investors.
Perhaps in our hyper-partisan world, we've accepted that partisan conclusions based solely on generalizations and assumptions are ok. Perhaps because we've had one experience we now have societal permission to generalize.
If you're potentially an investor, the undiversified entrepreneur needs to have great faith in your integrity and your ability to be helpful. This is, most of the time, a long term decision that the entrepreneur needs to be sure works. Investors who try and get aggressive terms lead to the kind of impressions that seem to be at play here.
And for entrepreneurs, having the opportunity to work with savvy people whose self interest align with yours can be a significant growth opportunity. But you have the right - and obligation - to get references, and understand not only terms but alignment of interests and, if "help" is being offered, the experience to back it up.