Cate Costa is the Founder of Venture Catalyst Consulting, a small consulting firm that specializes in helping startup company founders plan and expand their new businesses. She also operates the New Venture Mentor blog – a weekly dose of tips, tricks, and tutorials to help entrepreneurs start and grow their businesses – and the Startup Nomad blog – a discussion of entrepreneurial ecosystems around the world – from her primary website at www.CateCosta.com.
Until recently, she also worked as a Business Consultant with the Minority Business Development Agency’s Business Center in Washington, DC helping the founders, CEOs, and executive management teams of minority-owned companies with contract procurement, financing assistance, business process improvement, marketing, and growth strategy development. Now she’s fully mobile and exploring startup ecosystems around the globe – beginning in Latin America – to see how entrepreneurs are making it happen at home, wherever home may be.
Prior to becoming a consultant she headed up the Institute for Entrepreneurship and Innovation at the Howard University School of Business and oversaw the operations of the school’s entrepreneur incubator, the Institute’s entrepreneurship education workshop series, special events that included a business pitch competition and the Google Digital Empowerment Event, the Institute’s one-on-one startup counseling sessions, and the Annual Faculty Conference on Entrepreneurship.
Her other experience includes work at a small venture capital firm, at a startup internet advertising company, and as a sole-proprietor with a contract running one of the largest revenue departments on a cruise ship. She’s had the opportunity to do business in over a dozen countries and to help numerous entrepreneurs start and grow their businesses across industries ranging from retail to artificial intelligence robotics and everything in between.
She is also a lifetime member of the National Society of Hispanic MBAs, the National Society of Hispanic Professionals, and Beta Gamma Sigma and serves as the Small Business Chair on the Executive Board of the DC Chapter of the National Society of Hispanic MBAs and previously served on the Membership Committee for the Greater Washington Hispanic Chamber of Commerce and on the Education and Training Committee for the Maryland/DC Chapter of the National Minority Supplier Development Council.
MO: Can you talk about your approach when working with entrepreneurs without any business background?
Cate: I love to work with entrepreneurs without any business background because they are the most open to assistance and I can make the largest difference for them. I have an MBA now, but my undergraduate degree is in sociology and critical social thought, so I wasn’t always knowledgeable about the ins and outs of things like an income statement or an investor term sheet. I used to sit in meetings at a startup I worked for and listen to the CFO report our performance and then have to run back to my desk after the meeting and Google things like EBITDA to understand what I’d just heard. It wasn’t that I wasn’t smart, but I didn’t know the lingo.
Because of this, I understand what it means to have the raw ability to build a business but simply be lacking a few of the basic tools, and that’s where entrepreneurs without a business background are. I have the opportunity to give them the tools that they need to succeed and it’s incredibly rewarding.
Another time, when I was working at a venture capital firm and had Board of Directors observation rights for a portfolio company, I witnessed a Board member vote against a proposed incentive plan for the company’s employees because he said that it wouldn’t work since the employees wouldn’t be able to understand what “an employee phantom equity incentive plan with a 5 year vesting period and required triggering event” was. Well, maybe not, but they would understand what an incentive plan is where they receive what is equivalent to partial ownership but without the ongoing rights of owners such as the ability to vote, that they have to earn their piece of the pie through working at the company for 5 years, and that they would only get paid out for their share of ownership if the company was sold. A lot of times businesspeople – just like lawyers – try to make things complicated so that they’re the only ones who understand. My approach to working with entrepreneurs without a business background is simply to discuss things with them in plain language.
Business isn’t rocket science. If you are smart and driven, you’ll be able to figure it out. I’m just here to be your tutor as you start to learn.
MO: Where does your passion for entrepreneurship come from?
Cate: My passion for entrepreneurship is about 3 basic things: freedom, autonomy, and an escape from boredom.
Firstly, as the child of 2 business owners, I grew up around entrepreneurship and became accustomed to my parents’ ability to have more control of their schedules (and thus their entire lives) than most of my friends’ parents. While both of my parents worked, my brothers and I never had a single basketball game, dance recital, or concert at which at least one of my parents wasn’t in attendance. We were raised to be independent but our parents were always there if we needed them to be and that was in large part due to the fact that neither had to answer to anyone but themselves. I wanted to have this same freedom for myself (now so I can travel, in the future [perhaps], so that I can be available for my children).
Secondly, I never liked lacking enough autonomy at jobs where I was an employee to be able to truly produce my best work. Office politics, others’ idiosyncrasies, and sometimes just plain old stupidity would hinder my performance and my motivation and I didn’t want to be in a role where I not only wasn’t producing at the highest level, but didn’t care that I wasn’t producing at the highest level.
Finally, I love entrepreneurship because it allows you to wear a thousand different hats every day. My companies, as well as the companies I work with, are not large enough to have separate departments for things like marketing and finance. Everyone does a little bit of everything and this keeps each day interesting. I can’t imagine going through a rote routine at an office where each day is just the same as the last.
Thus, entrepreneurship is ideal for me because it provides the freedom, autonomy, and mix of activities to keep me engaged, enjoying my work, and therefore, producing at a level that I can be proud of.
MO: What are some over-looked funding options available for entrepreneurs?
Cate: A lot of entrepreneurs become fascinated with raising money from angel investors and/or venture capitalists but, in reality, this type of funding isn’t the right fit for the vast majority of businesses. Most entrepreneurs will need to be able to get their companies up and running through a combination of bootstrapping and friends and family investment, and there is absolutely nothing wrong with that. In fact, if you can grow your company without bringing in outside investors, do it. Why give up ownership or be stuck with interest payments on debt unless absolutely necessary?
Entrepreneurs can also explore crowdfunding as an option. The popularity of this type of funding has skyrocketed in recent years and is likely to continue to grow when the SEC finally releases its rules for how the JOBS Act’s allowance of equity-based crowdfunding will be implemented. Not only does crowdfunding provide an alternative funding source for entrepreneurs, it also allows them to test the market by taking clues from the public’s response to the crowdfunding campaign as to whether there is demand for the product or service they want to offer.
Entrepreneurs should also be sure not to overlook grants or competitive awards that they may be able to win from local, state, or federal governments, universities or other non-profit organizations, or even larger for-profit companies.
For a run-down of the most popular funding options available, please take a look at my video on the topic that I created for my New Venture Mentor blog at www.CateCosta.com.
MO: Can you expand on the process behind helping a political website’s founder raise the startup capital he needed within just weeks of him approaching you with the project?
Cate: About a year ago, a law student with an idea for an innovative new political website approached me with his concept and asked for help. He knew his idea was a winner but he had no business background and didn’t know how to turn his vision into a reality. The email he sent me explained his concept and ended with the question, “Where do I go from here?”
He and I sat down and discussed his goals, willingness to commit to the project, and funding options. I drafted his business plan and pro forma financial statements and helped him present the idea to investors. In less than a month from the day he approached me he had successfully raised the startup capital he needed to build his website, was able to launch just in time to cover the 2012 elections, and has been able to partner with national brands and build his site’s following into the thousands.
I’m proud of my work with this client because he is exactly the type of entrepreneur I like to work with: smart, dedicated, and capable but just lacking the formal business background he needs. These are the clients for whom I can make the biggest difference and being able to make an impact is the primary reason that I prefer to work with startups and small businesses as opposed to working with large companies.
MO: What’s one marketing strategy that’s really worked for you?
Cate: Until very recently I didn’t market my services at all: all of my clients came through referrals. I’ve recently begun utilizing content marketing as my primary form of marketing and have become fairly active on my blog and on social media. So far I’ve been able to successfully grow my follower base and generate inquiries about my services without spending any money (just time) on marketing and as a small business, I will continue to market this way for as long as it is feasible. I’m most active on Facebook, Linkedin, and Google+ and find Linkedin Groups and Google+ Communities to be especially helpful for reaching my target audience and positioning myself as an expert in the entrepreneurship space. If you’d like to follow me on social media here are my main handles: Facebook, Twitter, Google+, Linkedin, YouTube.
MO: Can you elaborate on how you’re currently working on a project exploring entrepreneurial ecosystems in Latin America and how this could provide a platform for Venture Catalyst to expand beyond just U.S. clients?
Cate: One of the biggest perks of being an entrepreneur is that I have the freedom to travel, which I LOVE to do, so I’m currently on a year-long journey through Latin America trying to get a feel for what the entrepreneurial ecosystems in various Latin American startup hub cities are like. I get to travel from country to country and speak with the movers and shakers in the entrepreneurship scene in each of the cities I visit and then share what I find out through my Startup Nomad blog, which is a part of my main website, www.CateCosta.com.
I have an MBA, but double-majored in sociology and critical social thought in undergrad, so the socio-cultural effects of a specific society on its entrepreneurial community and of entrepreneurial communities on the societies in which they are located are incredibly interesting to me. Additionally, I have the opportunity to meet amazing entrepreneurs, investors, and supporters throughout the region. I can network while I explore potential new business and/or investment opportunities for Venture Catalyst and for myself personally. All of this while still having time to do some amazing tourist activities, which you can also read about in the Where in the World? section of www.CateCosta.com. I can’t think of a better way to combine my passion for entrepreneurship with my passion for travel.
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