Tips for dealing with that alien species known as venture capitalists. Plus: clash of the daily deal titans, and the rest of the day's news.
Each day, Inc.'s reporters scour the Web for the most important and interesting news to entrepreneurs. Here's what we found today.
Entrepreneurs are from Mars; VCs are from Venus. That's why today's VentureBeat offers tips for entrepreneurs in dealing with the alien species known as venture capitalists. Former VC-turned-entrepreneur Tomer Tzach writes that approaching VCs is a lot like preparing for battle. "Expect casualties," Tzach writes. "[M]eet with as many (tens) VCs as possible so that according to the numbers and of course, the quality of your offering, you can potentially get to the term sheet level with two VCs." He also recommends targeting lower-ranked VCs at first, because they're less likely to take the risk with you anyway. That way, Tzach writes, "you can get some practice under your belt, and if you make a mistake, it won't be critical." Finally, remember that the VC world is political, and it's crucial to "play your cards right." According to Tzach, "If you can somehow covey the feeling that you are sought after by many VCs, it could definitely help you." Want the VC perspective, and to learn how to be better to your entrepreneurs? Check out also what Tzach posted yesterday.
Clash of the daily deal titans. Groupon, with its $25 billion IPO valuations and $950 million series D funding, is a true juggernaut in the daily deal space. But is it unbeatable? LivingSocial, which has raised $232 million in funding, says no. And it has the data to prove it. Mashable reports that the Amazon-backed competitor is growing quickly enough to "seriously challenge Groupon," based on a chart compiled by LivingSocial that reveals how the company's market share has been steadily increasing since 2009. "Currently, for every $10 of deals sold on either platform, $4 of them take place at LivingSocial," Mashable notes. "If both companies continue to grow at their current rates, LivingSocial's portion of sales will overtake Groupon's in January 2012." We're not the ones crunching the numbers, but it should be noted that Groupon's decreasing market share doesn't necessarily mean it's losing sales. It's clearly going to be a tight race, but can LivingSocial really keep up the huge growth figures? Let us know which you'd put your money on below.
Blame Wall Street? Sure, Wall Street is to blame for the financial crisis, the proceeding recession, and probably the new strain of H1N1. Well, here's another bit of blame to throw its way. According to Beta Beat, Wall Street is luring start-up talent away from their true calling as successful entrepreneurs by using large salaries as bait. Data provided by a Kaufman Foundation report supports this theory, focusing on the rate that science, math, and engineering students have taken careers in finance and the negative feedback loop between the financial sector and entrepreneurship. According to the talking heads in NYC's Silicon Alley, this is the factor that's preventing the East Coast tech scene from become as prominent as the West Coast's Silicon Valley.
Twitter tax break shines spotlight on a bizarre stock policy. Did you know that in San Francisco, there's a rare provision that taxes companies when employees cash in their stock options? Neither did most small businesses, the New York Times and The (San Francisco) Bay Citizen report. It only came to light recently, since city officials offered Twitter a payroll-tax break as incentive to stay in the city. The timing's right, since Twitter is expected to go public soon, but the exemption—which would freeze payroll taxes for six years along Market Street, Twitter's future home—is making other companies jealous. Zynga, the game-design firm that's one of the city's fastest-growing companies, is in fact threatening to leave San Francisco unless it gets a similarly good deal.
SBA chief focuses on business survival. In the midst of U.S. representatives on both sides aiming to cut next year's funding to the Small Business Administration, small businesses are still in need help. SBA chief Karen Mills remains focused on finding ways to make it easier and quicker for small business owners to get funding. "It's not government that creates jobs, it's small business," Mills says. The Wall Street Journal interviewed an optimistic Mills about emergency loan provisions, the effect of new acts on small business and the health-care bill. She said: "Two years ago, small businesses were saying 'I need a loan because I'm worried about my business.' Today they're saying 'I need a loan because I want to expand, buy that new piece of equipment and hire that next person.'"
Will taxing Web sales help small businesses? According to Rhonda Abrams, who is president of The Planning Shop and publishes books for entrepreneurs, the lack of a Web sales tax is creating an unfair advantage on the Internet for big businesses over small companies. In a column for USA Today, Abrams argues for the implementation of a Web sales tax on all products sold on the Internet to level the playing field for entrepreneurs and small businesses that can't compete with the big businesses online. Where do you stand on the issue? Feel free to let us know in the discussion section below.
CHRISTINE LAGORIO-CHAFKIN is a writer, editor, and reporter whose work has appeared in The New York Times, The Washington Post, The San Francisco Chronicle, The Village Voice, and The Believer, among other publications. She is senior writer at Inc. @Lagorio