startups

Wow. Haven’t blogged in a while. Maybe because I’ve been busy working on a couple different product launches at PGP. Sigh.

That said, it’s never too busy to go for a drink at Eleanor and Mike‘s for one of their signature geek parties (met both of them last year at the “vendorcon” after Bloggercon III last year). And it was there, in the presence of MJK and Alex, that I came up with a new vehicle for early-stage startup financing. It’s called dirt round financing.

Anyone familiar with early-stage (or “round”) financing should be able to easily reel off any number of terms related to financing (for example: seed stage, angel funding). As a startup progresses, so does the terminology it uses to describe who it swindled, er, pitched in order to gain its most recent round of financing: Series A, B, C, mezzanine, bridge, etc. But the new round of financing I came up with halfway through a truly combustible martini (thanks Mike!) is to these rounds what Star Wars III is to Star Wars IV: the nasty prequel required to kick off the main show.

Here’s how it works: unlike seeking seed-stage financing, at which point your only asset as an entrepreneur is the “sweat equity” you’ve built up working on prototype or somesuch, in dirt round financing your only asset is the set of vicious half-truths, little-known skeletons (their closets removed) , and other undesirables lurking in your potential investors’ pasts. Sure, it’s blackmail. But more importantly, it’s blackmail with a catchy name. Rule number one as an entrepreneur: never forget that’s it’s all about marketing.

Even though it’s being used to describe an underhanded method of enabling an entrepreneur to quit their current gig and work on a new startup for six months without skipping a meal, it’s kind of poetic. I mean, first comes the dirt round, the round of financing that lays the foundation for the seed round that comes later and ultimately gets the new venture to take root and eventually blossom. Or whither, depending on the circumstances and the inability of the entrepreneur to raise another dirt round and restart the, uh, “cycle of life”, shall we say?

Of course, upon realizing the power of this new form of financing (just think – no one will ever ask for seat on the board in the dirt round!), I immediately realized that I must make sure to include MJK in any future entrepreneurial endeavor. After all, with all the people she’s been smooching, she’s got to have some good compost to form the basis of a dirt round of funding. <grin>