Entrepreneurship And Today’s Financial Crisis

Mark G. Heesen
President National Venture Capital Association (NVCA)

A new day has come for entrepreneurs. The rules have changed, and those navigating the waters of starting and managing a new business venture will find a fresh set of value drivers. Gone are the days of plenty of hype and little substance. Businesses today must put forth sustainable value propositions and establish a roadmap for achieving sound objectives.

Today we are welcoming a “back-to-basics” mentality from entrepreneurs and investors alike. This shift is a much-needed response to the economic conditions we are currently experiencing. There is no bear market on good ideas and no bear market for innovations and creative entrepreneurs. So regardless of where we are in the inevitable business cycle, this much is true: To effectively build an organization, you need a clear vision as to where you want to go and a solid business plan that gets you there.

Operating in an economy that is emerging from a recession requires entrepreneurs to enter the market with their eyes wide open. The landscape isn’t pretty; but there are plenty of opportunities for those with rational expectations. For instance, the time horizon for a company to “exit,” either through an initial public offering or acquisition, has returned to a minimum period of five to seven years from inception. For many, this journey to a successful harvest will be much longer; therefore commitment and persistence is the name of the game. Entrepreneurs who are focused solely on the potential windfall at the end of the day will not only be disappointed when it doesn’t arrive on time, but they are also more likely to make operating mistakes at a critical time in their venture’s evolution.

The ability to manage effectively in uncertain times and when problems arise will help entrepreneurs and business executives keep their strategic heading. Such maneuvering requires flexibility and an aptitude for seeing beyond the crisis du jour to the ultimate objective, building a company with sustainable value. These challenges aside, we must not forget that some of the most successful start-ups began during a recession. Those companies that can survive this environment, make difficult but deliberate decisions, and remain focused will emerge stronger than most.

Whether or not you are searching for outside investors, understanding what successful venture capitalists look for in a start-up company will help set you on the right path. The first, and perhaps most obvious, criterion is strong management. Having a great idea is not enough: Your team needs to be in a position to execute differently. Each executive should bring a level of expertise to the table. That goes for the Board of Directors as well. Corporate directors are now presumed accountable for certain company operations including audit and compensation. They can also be indispensable in other areas, such as the sales process.

Today, sound management is when both the Board and the management team set milestones for the company and often review progress against those goals. Knowing that you are on the right track is important; realizing that you may be on the wrong one is crucial.

Entrepreneurs embody the American dream. Fired with ideas, they have been the engine to our economic growth and subsequently have set our economy apart from all other nations. Entrepreneurship is the vehicle for creating new jobs, generating revenue, advancing innovation, enhancing productivity, and improving business models and processes. Despite the challenges, entrepreneurship has never before been more vital to our economy than it is today. It is our best offense for economic progress and our finest defense against the status quo. Promoting entrepreneurship is in everyone’s best interest.

Roadmap to Entrepreneurial Success promotes entrepreneurship and provides the necessary tools for both the new and experienced entrepreneur to stay on course and succeed. It facilitates the strategic focus required to win in the game of business. Launching a new business venture is risky, and nothing is ever guaranteed. Roadmap shares good management practices, offers thoughtful insights, and will serve you well throughout the life of your venture. Regardless of your role at your organization, you will find that the decision-making process is subject to a higher level of scrutiny all around. Entrepreneurship is not for the weak at heart. As we say, the risks are plentiful, but so are the rewards for those who make it. Enjoy the journey.

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About Mark Heesen
It is a privilege to have Mark prepare the opening comments here. As President of the National Venture Capital Association, Mark Heesen is responsible for all Association activities, including leading its professional staff, working closely with the NVCA Board of Directors and venture capital community, developing Association policies and strategies, and directing the Association’s national legislative and regulatory efforts. In addition, Mark oversees the management of NVCA’s affiliate organization, the American Entrepreneurs for Economic Growth, which now represents 14,000 emerging growth companies.

The National Venture Capital Association (NVCA) is the trade association that represents the venture capital industry. It is a member-based organization established in 1973 to foster a better understanding of the important impact venture capital has on the US economy and to stimulate the flow of private risk equity capital to emerging, high growth potential ventures. Its membership consists of venture capital firms and organizations who manage pools of risk equity capital designated to be invested in young, emerging companies. Currently, the NVCA represents 400+ member firms, representing the majority of venture capital invested in US based companies. Today, the NVCA is the venture community’s leading source of advocacy, networking, professional development and information.

Since 1991, Mark has worked on behalf of the venture capital community to enact a wide range of policies that benefit the venture capital and entrepreneurial communities, including a significant capital gains differential, securities litigation reform, accounting treatment of stock options and merger accounting, reform of the FDA pre-market approval process, among others.

Prior to coming to the NVCA, Mark was an aide to a former Governor of Pennsylvania and was Deputy Director for Federal Funds reporting to the Texas Legislature. Mark received a law degree with an emphasis in taxation from the Dickinson School of Law in 1984.