Entrepreneurship Taught at the Crib June 2, 2008Posted by jgarciaalvarez in Access to Capital, Entrepreneurship.
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.