I think everyone would agree that the best way to finance a company is to not have to borrow any money or sell any equity at all. I was fortunate enough to be at the right place at the right time and that’s how my first startup got launched.
When I was a young software engineer I was called into a room with a few of the big bosses at the company I worked for called FCG Engineering. The men in the room informed me that the company was about to get sold for the second time in two years and they were planning to walk out before it happened. It was a little intimidating because they were all 15 years older than me and I was bummed about potentially losing my job as a software developer. I was invited to be part of this elite team as they explained their plan to buy the company or walk out. My journey began when I agreed to join them and that’s how I started my first company, Tech-Source that went on to be a global leader in graphics boards used in Air Traffic Control systems around the world.
I didn’t know Richard Branson back then but I realize now that I was following his advice. Overcoming the fear of having a secure paycheck is one of the first things you will face as an entrepreneur. I call myself the accidental entrepreneur because I didn’t plan on starting my own business. When the opportunity presented itself I just found myself saying yes to having the chance to keep going with a team of people I respected. It was only after that when I realized I needed to learn a whole lot more about business and leadership and software engineering began to take a back seat.
Funding the startup of Tech-Source was accomplished through negotiating a Management Buyout that included a license agreement with the parent company that owned FCG Engineering. We agreed to take a major cut in salary for ownership in the company and a license fee of 5% of revenues back to the parent company paid annually, forever. It was the forever part that I had to renegotiate a few years later when I became President of Tech-Source.
We had one customer on a maintenance contract that we serviced. Six of us ate beans and weenies servicing the one customer until we got another customer and then another customer and then the real fun began. It was exciting, scary and frustrating as I watched my friends all take higher paying jobs elsewhere and than it all began to change and my journey as an entrepreneur and business leader began.
I never set out to be an entrepreneur. It was through the gracious invitation of men smarter, more talented and wiser than me that I had the opportunity to say yes I will take this journey with you. Building a company takes a team of risk takers willing to learn and adapt on the fly. Thank you Joe Lamm, Raj Gupta, Dick Bendfelt, Ed Leal and John Cottrill for offering me that opportunity to become an entrepreneur with you 30-years ago. Thank you Selwyn Henriques for continuing our legacy of continuing to run Tech-Source now Eizo Rugged Solutions. Thank you Dwain DeVille and Brett Fadeley for being my mentors then and still today.
There are many ways to fund your early stage company. What creative methods have you used? What lessons did you learn along the way? Who do you need to thank?