Shortening “The Leap”
Part-Time Ways You Can Ease Into The Entrepreneurial World
In July, I took the leap. I quit my safe corporate job to become a full-time entrepreneur as a cofounder of Intramotev, a startup focused on making autonomous, zero-emissions freight rail a reality. So far, it’s been one of the best decisions I’ve ever made. There are plenty of reasons people choose to jump into an entrepreneurial career — freedom to pursue specific interests and passions, escape from mundane corporate culture, the chance for significant financial returns, and many more. But these upsides often come with substantial risks and a departure from stability. For many, taking this leap directly from a stable career to an entrepreneurial life can be too extreme. Fortunately, though, drastic action is not the only option for those who want to start exploring the startup world.
Something I never learned in school — undergrad nor MBA — is that many paths exist that can transform the entrepreneurial “leap” from a head-first plunge to wading calmly into a pool. I’d like to highlight some of the best ways to start getting involved in the tech entrepreneurship arena without quitting your day job, and without being exceedingly wealthy.
Become an advisor
Everyone has certain specialized skills. Often, an early-stage startup founder must be a jack-of-all-trades, even if he or she would prefer not to be. Their companies may not have the capital to hire people for specialized functions, so many rely on advisors compensated with equity (typically 0.25% — 0.5% before dilution by future fundraising). This presents an opportunity for folks who are interested in entrepreneurship but aren’t ready to take the big leap. Talk to founders of companies that are interesting to you, find out what they need, and if you can, offer to be helpful in some way. At worst, you’ll get your hands dirty and understand more about early-stage companies, and if things go well, you may be offered advisor equity. Even if you don’t have experience in advising startups, find your angle based on your skills, keep talking to founders, and eventually it will pay off. Advising has a ton of benefits no matter your end goal. Expanded empathy for founders will make you a better investor, it will help you determine if you want to eventually found a company of your own, and it will expand your network to help you be first in line for interesting job or investment opportunities.
Invest
Thanks to updated securities laws like Reg CF, investing in startups has never been easier or more accessible. A great way to start is through crowdfunding investing sites like StartEngine, Republic, and others. Investing can help you understand how to evaluate early-stage startups, which is vital if you ever want to found a company and raise money, invest professionally, or even consider taking a job at a startup. It’s also a great reason to reach out to founders and offer support. Again — at worst you learn something and help support your investment, at best you could end up an advisor or employee.
If you determine investing is your thing, you can do small-check angel investing on your own or look for likeminded people interested in investing together (just like we’ve done at SBIG, LA’s first democratized investment group).
Manage a Special Purpose Vehicle (SPV)
This one is a bit more niche and advanced, but is fairly unknown outside professional investing circles and worth shedding light on. A Special Purpose Vehicle, commonly known as an SPV, is an entity created for the specific purpose of making an investment in a single company. If your efforts in advising and investing lead to an opportunity you’re really excited about, you could raise and manage an SPV to invest in that company. SPV managers typically take a percentage of any investment profits (known as carried interest or “carry”) for their troubles, so it can be a lucrative effort. You may need some connections to folks with enough wealth to be willing to throw thousands of dollars at a risky startup, but it may be easier than you think to accumulate enough money to be interesting to a fundraising founder, especially if you have a pitch to add value as an investor. Companies like Assure offer solutions that are relatively low cost and turnkey, making SPV administration accessible to more people and another viable option as a part-time path to the entrepreneurial world. Note that this may stray into “financial adviser” territory as you’re taking a fee for an investment product, so consult an attorney in your state if SPV formation is something you’re considering.
Any of these pursuits have substantial risk — and could result in a loss of your time or money, but I’m confident that the wealth of experiences and connections made through these efforts will outweigh the worst potential outcomes. These part-time paths will help you learn more about the tech entrepreneurship world without leaving your day job. Ultimately, you can determine if “the leap” is for you, and if it is, make it much shorter than may be today.
Nothing in this post should be construed as financial advice. Consult an attorney and/or financial adviser before considering any investments or involvements with private companies.
