Joe Cohen has built start-ups, run large companies, invested in new businesses, received venture funding and observed what’s gone right and what’s gone wrong among countless entrepreneurial ventures. A luminary in business, he’s learned a lot – also about how businesses can really identify the most appropriate funding.
While traditional bank finance may be hard to source post-2008, digital technology is enabling the rise of a more social, plural, democratic financial landscape that, in many circumstances, may be much more suitable for a mid-sized or small business than traditional bank finance. Joe Cohen shares his observations on the new ways of finance, and a generation of businesses that are most effectively raising the right money for growth.
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He’s done it all: Cohen talk about starting his first business, with little knowledge or confidence… “I grew up as an entrepreneur. Then I went to work in a corporate setting, and later went back to start my own business. I didn’t know much about starting a business – I didn’t understand the dynamics of raising money.”
What did he learn” “Really understanding the investment community, how they work, what’s important for them, will really help you navigate your way through.
“For those of you who work in the tech sector: people say ‘I got funded’ as though that was the ultimate goal. The thing that I learned to think about was, ‘what do I need the money for?'” Receiving the money is worth a celebration, but what is really important is finding the best way to use it. “As entrepreneurs we’re all optimists, but we also need to be honest with ourselves, and think about what is the potential of our businesses. That will help you get to the answer to ‘what do I really need capital for?'”
Cohen talks about his own investment experience. He once turned down an investor for a contract with a large industrial player; and soon discovered that it was a mistake. “We got very close to closing an amazing deal, and I realised a day before we were supposed to sign that they were not telling me the truth. I realised we were probably going to end up with a large industrial player owning half of our company, and then losing interest soon.
“We were running low on cash; two investors had given us term sheets originally, and I went back to the one who had a better brand for us. We got very close to closing, but a day before they called (…) and the deal didn’t go through.
“People who are going to be transparent and up front with you are often worth more than terms and money.
“Money is often the enemy of creativity because if you can buy something you don’t have to make it.”