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Entrepreneurship Taught at the Crib June 2, 2008

Posted by jgarciaalvarez in Access to Capital, Entrepreneurship.
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(I borrow this concept from Juan Carlos Florez, with whom I had a conversation last week about the entrepreneurial character)

Entrepreneurs raising debt or equity growth capital know they have to fill out various questionnaires and to personally answer an overwhelming number of questions. Debt providers have tightened their loan processes and will not lend a dollar without bullet-proof collateral provisions.  Equity providers will check, recheck, and rerecheck, their company valuation before suggesting a $price$ and a set of requirements to the entrepreneur and/or management team. Rightfully, debt and equity providers are diligent about where they invest their money. However, in this meticulous process, they sometimes forget to ask the simplest question of all: “please tell me about yourself…”

Since we are born, and before we reach the age of seven, our brain is like a sponge recording all types of “entrepreneurial behavior”: information, emotions, and feelings. In family reunions we hear stories about the grandfather who immigrated and worked in two jobs before starting his own shop, the uncle who borrowed money from the family to start a business and eventually went broke, or the aunt who got fired and has now started baking and selling cakes to her friends. We are also aware, or at least intrigued, about what our parents do after they drop us off at the kindergarten, and before they pick us up from our grandmother’s house.

I think lenders and investors are leaving on the table key pieces of information about entrepreneurs’ characters. For many of us, Entrepreneurship 101 started at the crib. The seeds of what drives our entrepreneurial behavior and resilience to tough times were planted in our early years.  Therefore, debt and equity capital providers could include key questions like, “how did your grandfather make a living, what businesses is your mother involved in, or what percentage of your family relatives are entrepreneurs”, in their due diligence process. Perhaps then, we can reshape how “capital-readiness” is defined today.

Comments»

1. Tim Ramsey - June 2, 2008

I recently came accross your blog and have been reading along. I thought I would leave my first comment. I dont know what to say except that I have enjoyed reading. Nice blog.

Tim Ramsey

2. Loan holder - June 2, 2008

Nice blog.Keep up with the good work!

3. Franz Campo - June 5, 2008

Nice blog, and even more interesting because it binds american entrepreneurship theories with the typical colombian entrepreneurial environment. I would like to add that investors should focus not on how the entrepreneur is going to pay in case of failing, but on how the entrepreneur is going to start again in case of failing the first time, in order to get enough to give the investor what he expects in the second or even third chance. Sadly, many investors don´t look forward on the second but on the first, have a short sight.


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