Like a first date, business owners meeting with private equity meetings can be over quickly, Stuart MacDonald, founder of Expedia and venture capitalist, says.
“I use the three-finger rule:
- Is it easily profitable,
- Easily sustainable and
- Does it matter to customers?
It’s a simple thing, but you’d be surprised at how many do not have a valid viewpoint.
Like dating, Stuart is not going to tell the owner of the business, but will quietly end the coffe meeting.
Mr. MacDonald is just one of hundreds of Canadian financiers who, upon meeting entrepreneurs and asking all the obvious questions, have been stunned at some of the answers.
It pains Stuart MacDonald to hear an entrepreneur utter something like, “We have no competition,” or “The product sells itself,” or “Within five years, Google will buy us.” Hearing those, he quickly pulls the plug.
The Toronto-based angel investor, who started Expedia.ca, has endured endless pitches for financing and has the capital heft to show for it. These days, he spends his time running Tripharbour.ca, the cruise ship search engine, and meeting with entrepreneurs who need financing.
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