Advice to entrepreneurs looking for early stage capital?

• Be prepared on your presentation to VCs, and focus on why your business will make money for investors.
   
• Conserve capital, and reaching as many milestones as you can on your own without investors’ money.
   
• Be Committed as Investors try to determine the level of commitment the management team has to the business. Part of that commitment can be financial, both in terms of willingness to commit personal resources to the venture, and the willingness to forego compensation until the cash flow of the venture becomes positive.
   
• Have an Good Management Team as some investors cut their risk, by only putting money behind the very finest management teams. A great team with a mediocre idea succeeds more often than a great idea with a mediocre team. The strength of the management team is even more critical to them when the new venture will be trying to gain a foothold in tough economic times.
   
• Be Patient and Persevere as the number of entrepreneurs looking for capital has declined, but at the same time, investors have become much more cautious. The bottom line: nothing succeeds like perseverance.

Example

Two entrepreneurs visit an investor about separate deals. You ask them each what progress they have made while they have been working on their respective projects. 

• One entrepreneur answers that he has been able to finish his business plan as well as find a means to generate cash flow in his industry which is being used to move the main project further along. Now he needs more money to fully capitalize on this developing opportunity.

• The other entrepreneur can only point to the  business plan he's polished to perfection, and the opportunity lying before him. 

Which entrepreneur would you be more impressed by? 

The first has shown that he is a doer, and the other has provided nothing in the way of evidence that he can generate any cash flow.

If you are not a recognized entrepreneur when knocking on investor's doors, you'll find it hard to generate enthusiasm among investors.

Lesson: cash flow wins far more respect from investors than the any business plan.  If you are not an industry star you can begin to build your credibility up by finding a means of creating cash flow in your industry. 

• Realist: "I need to prove myself first as an entrepreneur, then people will give me money."
• Dreamer: "People need to give me money first, then I'll prove myself as an entrepreneur."

Real entrepreneurship is about cash flow creation