Great, you just had your AHA moment, probably in the shower. You yell Eureka. You just figured out the best new business idea you would like to pursue. Awesome. Now what? One important question is how will you fund this venture? The answer, of course, depends on the idea. Will a credit card suffice? Do you need help from friends and family? Or, perhaps an Angel Investor to help realize your dream.
J. Paul Solitario – Managing Partner at Cerium Capital LLC is someone that has lots of experience in Small Business and Entrepreneurial Funding and fortunately for us we had the opportunity to pinch a few minutes of his time to discuss this topic.
Please tell us a bit about yourself: First and foremost, I am a family man. I like to do lots of things. Whenever I’m not working I like to travel, run, fly fishing, and spending time with my family. Still, work does take a lot of my time.
You sound like a regular guy. Yes, but I really do work a lot. Successful entrepreneurs understand this very well.
What exactly does Cerium Capital do? Cerium Capital is a unique middle market investment bank that specializes in meeting the needs of companies generating up to $100 million in annual revenues. Our services include mergers and acquisitions (M&A), the private placement of debt and equity capital, market intelligence, and developing personalized exit-planning strategies.
Your experience is vast and impressive. Obviously, there rarely is only one secret ingredient to experience, but if there was, what do you believe be most valuable to you? Why? You are right. There is no secret sauce. There are no shortcuts when it comes to experience. I have been part of my ventures, some successful and some not. Nevertheless, the experience I gained cannot be attributed to a single event/point in my career. Each new step has tough me something important, something that I couldn’t forego.
Congratulations on your Financial Services Champion of the Year award for 2012 for your efforts to support small business. What does it mean to hold such title? This had to do much with my personal exposure in the community. Personal exposure is highly important. I try and focus on effective exposure and allocation of my personal time. I like to do what I am best at: Networking, Finance, Starting and Sustaining Various Ventures. Although I enjoy being involved in the community, and am actively involved in community development, I understand that I am more effective at allocating resources to where they are needed most.
Can you elaborate on working with entrepreneurs to develop operational, growth and exit strategies for their businesses? We start with a blank sheet of paper and ask the questions: What do you want to do? What do you really want to do? What do you want from this? What do you want to accomplish? Genuinely answering these questions is paramount in our ability to be effective.
How do you evaluate potential opportunities? It really depends on the opportunity. It is important to have a strong team. This includes not only the entrepreneur, but also his or her team. Who are the stakeholders? What is their involvement? Additionally, it’s important that we understand the business and its fundamentals.
Would you share a business opportunity that got away? I had the opportunity to invest in a speech recognition software company. They had a solid team and seemingly a great product. I did not invest because I did not completely understand how the technology works. Later on I learned of the company successful exit.
Knowing that they succeeded, do you stand by your decision not to invest? Absolutely. Even though this would have been a rewarding venture, it’s important that I pursue opportunities I fully understand. There are two main reasons for this: one they are easier to evaluate, and two, if we understand what we are working with we can support them effectively.
Do you have a hidden gem that did not appear great, yet ended up being a successful venture? Yes. Currently, we are working with a startup out of Wake Forest, NC, that we hold the license for and are about to take public. We believe it will be one of our best. (Did not reveal name for insider reason)
What is your acceptance rate for new deals? About one in a hundred. It is extremely difficult to find ventures we believe will succeed. This doesn’t mean that only 1/100 will succeed. Effectively evaluating opportunities in an industry with extremely low rates of success is very important to us.
Can you please elaborate on new venture funding? Say you and I want to start a landscaping business. First we would see if the purchase of any equipment is necessary. If it is, can we afford it on our own? If we can’t will a credit card or short-term line of credit suffice? Next will be to pursue family and friends? More often than not, VC and Angel Investment would be the very last thing and a rare occurrence at that.
Frugality is extremely important. I recommend: The Lean Entrepreneur: How Visionaries Create Products, Innovate with New Ventures, and Disrupt Markets by Brant Cooper. In the beginning: Choose garage over office, push mower over riding mower, old printer over new printer, old PC vs. new Mac. All these amount to great savings and thus less need for additional financing.
I agree completely, this concept of frugality is not well practiced among new entrepreneurs. No, it isn’t. It tells us lots about the entrepreneur and his or her priorities, which, as mentioned above, we look very closely at.
What is the one element you must have before pursuing a venture: the make or break factor? There really isn’t one. Every business venture is different. However, going back to evaluating: before we make an investment, we want to see cash flow. It doesn’t matter if you have a great product/idea. Cash flow trumps all. Show me how you can generate revenue first.
What advice do you have for aspiring entrepreneurs? Surround yourself with a great team, the more diversity the better. No one can do it alone. We all need help. Carefully selecting our team will make or break a venture. Having a great idea like Facebook helps but that is extremely rare. Hard work, passion, and devotion usually go a long way.
Don’t forget the cash flow. Good luck.
Paul Solitario has over thirty years of experience in many aspects of corporate banking, corporate finance, entrepreneurship, and wealth management services. His experience includes being a Managing Partner at Tobin Solitario Investment Banking Group and Senior Vice President in the Private Client Group at First Citizens Bank. Additionally, Paul has served as a Vice President in First Union Capital Market’s Healthcare Finance Group and founding member of First Union’s Private Banking Group. During his extensive career, Paul has gained valuable experience in working with entrepreneurs to develop operational, growth and exit strategies for their businesses. Recently, Paul was named the Small Business Administration’s 2012 North Carolina Financial Services Champion of the Year for both North Carolina and SBA’s Southeast Region IV including Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, and Tennessee. Mr. Solitario’s experience extends beyond funding. He has started a few ventures of his own: Including PPN Wireless, Cerium Partners, and Cerium Capital.
Copyright Victor Bubuioc. www.bubuioc.com . Reproduced with permission.