Launchpad vs. Shark Tank

By Ryan Zdanis, Executive Vice President and Partner at Launchpad

Last year, Entrepreneur.com ran a story called 7 Lessons Every Young Entrepreneur Can Learn From 'Shark Tank'. These lessons, including ‘be passionate’, ‘know your pitch’, and ‘think big’ are all undoubtedly sound pieces of advice for any young would-be entrepreneur.  However, although the Shark Tank idea and model can result in a nice Venture Capital boost and be helpful to businesses, it still stops short of a delivering a well-rounded benefit. 

Why? Because most shark tank investors are taking equity in companies in exchange for cash, yet they offer minimal guidance, strategy and help along the way to make the product or business most profitable.

This lack of strategic partnering between new entrepreneurs and investors is a huge reason why many companies fail.

Don’t just take my word for it:  A 2011 Ernst & Young  report, ‘Nature or Nurture - Decoding the DNA of an Entrepreneur’ found that funding, people, and know-how are the biggest barriers to entrepreneurial success. 

“The other two most-cited obstacles [aside from funding] are people and expertise. As a result, entrepreneurial leaders are well-advised to build “ecosystems” – networks of resources to address these three areas.”

The report also says,“Entrepreneurial leaders who embark on more than one venture gain valuable insight and lessons into how to make a new business successful.”

So then, what would a successful investor-partner look like? A firm that can offer the full trifecta of entrepreneurial ingredients:  funding, people, and experience.

This is why the concept of Launchpad was born. 

Launchpad is very different from a shark tank investor, or VC firm. 

Launchpad went out specifically to seek veteran entrepreneurs who have been extremely successful in their space to build its Board of Directors.  From application development, marketing and guidance, to taxation, legal issues (trademark protection, patent protection), office space, global presence to human resources and payroll, Launchpad provides and covers it all. 

An entrepreneur myself, I helped build my first venture to a nine digit valuation. The operative word here is "helped." My three other partners had dramatically different  expertise, but our collective efforts built Merchant Warehouse to a $115 Million start-up from my basement in Cromwell CT to 250 employees in downtown Boston in ten years. 

All partners were extremely advanced in terms of knowledge in our space but all four of us had very diverse qualities and attributes, including business model creator, search engine wizard and technology mogul, logistics guru and sales motivator. 

We used to call ourselves North, South, East and West. 

This diversity was extremely valuable in building a powerhouse company and a great platform for growing and making sure we covered all pieces necessary for growth along the way.

The Launchpad model is very similar. Instead of providing just cash and maybe some entrepreneurship guidance, like a Shark Tank model, we can provide a suite of resources way beyond what our clients ever realize is even important or available to them.

A VC model is not nearly as diverse, does not offer nearly as many solutions or options and often leaves the investor out of the decision-making process once the money has been granted.

There are many great ideas coming from young entrepreneurs with minimal capital, and who do not want to be tied to a VC firm.

A start-up with a great idea can only do so much with a chunk of cash. Often times a new entrepreneur isn’t educated on how to achieve maximum utility from that cash.  With a model that focuses on leveraging an entire business ecosystem, the customer doesn't have to figure out how to spend VC money which can be not only stressful, but not easy to do.  

Not every business is going to be a hidden gem, and the selection process will be rigorous, but with a Launchpad type of model, the client can work collectively with an entire resource hub that can either take their idea to market or will commit to try to grow as much as possible right alongside of them. 

How Crowdfunding Fits in

By Michael Newman, Lead Product Engineer, Launchpad

Crowdfunding is changing the playing field too. With funding sites like Indiegogo, or Kickstarter, you don’t necessarily have to complete an entire development cycle before you go to market. Just get it close enough (still a fair amount of work and capital goes into it) but have people who really like the idea pre-order it and pay for the final production push.  

There are several benefits to utilizing crowd sourcing in this capacity 1) you can save a large cash outlay by first seeing if your product has legs before investing heavily in a production run. 2) The process of utilizing a crowd funding campaign in itself is a PR activity. If your campaign is wildly successful, you will get a lot of attention. 3) It’s just cool to be a part of something. You’re not just buying something off the shelf that already exists. You’re putting your money and confidence behind a product that you want to support. 

You become a fan of the business model and hope they succeed.

Crowdfunding is a good low risk tool for introducing and testing the waters for a project, but what if it’s wildly successful? Research shows that just 25% of the campaigns delivered rewards on time. Projects can be late for many reasons. You will encounter obstacles that will challenge your deadlines. With sound strategic guidance and experience you can set realistic goals, and make sure you don’t leave out critical tasks that would just increase the delay.