Steve Valentor
Steve Valentor is the Founder and Managing Director of Polynomial Ventures, a Chicago based venture capital firm. In our conversation, we explore his experience as an entrepreneur and his unique perspective as a venture capitalist and teacher at DePaul University.
Funding Your Business
“The best guidance that you can give entrepreneurs is figure out how much money you actually need and get only that amount with a little bit of a buffer. If you take too much money too quickly, it, it will really screw up your business.”
-
Description text goes here
-
Build a business plan and find an investor
-
How to Win Friends and Influence Others, Dale Carnegie
Think and Grow Rich, Napoleon Hill
The Intelligent Investor, Benjamin Graham
“If you have a bank account, you have customers that are willing to pay you money. If you can solve a problem that somebody has, you're literally in business,” explains Steve Valentor, founder and president of Polynomial Ventures, a Chicago based venture capital firm. Steve has 30 years of experience within the technology industry and his venture capital firm focuses on early stage tech. In today’s episode, Steve talks about what entrepreneurs and aspiring entrepreneurs need to know about money, company valuation, and attracting potential investors.
The venture capital industry has a very high rate of return, however, it also has a high amount of risk involved. Investors are looking specifically for businesses that will likely be able to return the full amount of money invested. The majority of start-up businesses will fail in the long run, so it is important to really think about what problem you are solving, who your customer base is, and what your valuation is for your company. Not every entrepreneur needs to go the venture capital route to get their business rolling. Many businesses are not suited for that route and instead can seek other means of investment that are not necessarily cash-based. Someone may be willing to supply you with an extra real-estate property for example, or suppliers may be willing to cut deals with you in order to get your business going.
There are many ways to fund your business, but one important thing to keep in mind is the more money you borrow, the more you will have to return to your investors. Really figure out your valuation for your company and do not take more money than you actually need. Learn more about dos and don’ts for new entrepreneurs and find out what qualities venture capitalists are looking for in an investment opportunity.
Quotes
“Every business area is ripe for entry by new ambitious, creative people that want to make a difference and change the world.” (7:04-7:11 | Steve)
“I wouldn't recommend that anybody does a sole proprietorship or classic partnership in this day and age. Always set up a corporation, so that you have a corporate liability protection. And that's really all you need to do. If you have a bank account, you have customers that are willing to pay you money, if you can solve a problem that somebody has, you're literally in business.” (13:54-14:19 | Steve)
“If you have good relationships with your suppliers, and you say, "I need to get these raw materials so that I can build these into products for my customers. I’ve got orders from my customers, and if you give me this material, I'll show you what I'm going to do with it when I ship it to my customers and they pay me, I will pay you immediately," there's a lot of suppliers that are willing to help you to get into business.” (15:15-15:28 | Steve)
“The more money you bring into your company, the more money you're going to have to return to your investors.” (17:45-17:50 | Steve)
“When we invest, we look for each investment that we make should have the capability of returning the entire fund. Because you never know which companies are going to succeed, so to mitigate some of your risk and some of your exposure, you have to say, well, since I don't know which one is going to succeed, I better make sure the ones that do succeed are going to be able to pay back the fund.” (18:18-18:43 | Steve)
“The venture industry has been returning 30% over the last 50 years on average. That's remarkable. But to do that, you have to take these enormous risks.” (20:49-21:00 | Steve)
“One of the first challenges that you face with entrepreneurs is getting them to understand the subtleties of the percentages of ownerships of the company and the values of the company. And a lot of people don't have a really clear understanding of this until they study a little bit of finance.” (25:12-25:36 | Steve)
“You have to start thinking of stock not as percentages of your company. You have to think of them as an asset that can be traded for whatever other assets you need at that particular point in time, whether it's skill, or cash, or components or materials, or real estate or whatever you need.” (26:41-27:01 | Steve)
Please don't forget to rate, comment, and subscribe to Be Helpful Podcast on Apple, Spotify, or wherever you listen to podcasts!