I have learned that decent business ideas + execution + capital make successful companies. The trick is the capital piece disproportionately favors entrepreneurs who have some means to begin with. How many stories have you heard of xyz business being bootstrapped on credit cards, friends and family or like myself, home equity lines of credit? Or how about the phrase “skin in the game”, which refers to how much the founders themselves have invested in their own operations. For many angels, skin is a critical litmus for investing.
Obviously then, these bootstrappers are more or less bankable to begin with but how do the capital markets serve an entrepreneur who is NOT bankable? Micro finance has started to answer a long overdue need yet with interest rates at positively criminal rates, (global average ~ 35% but in some markets it surges as high as 60%, according to CPAG Microfinance Blog), it’s actually a miracle so many people are brave enough to start businesses at all.
So in a sense I feel like I’m back to square one. I’m still on the hunt for new models both for business building and the capital markets. I believe technology and the rise of locavesting are two areas of hope. More to come on these topics soon.