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Last week our district SBA held the awards banquet for National Small Business Week, and I was given the South Dakota Young Entrepreneur of the Year award – what an honor! Obviously this has been a really thrilling experience, and one I really didn’t expect. I’ve received so many encouraging notes in the past few weeks, thanks for your kind words!

Mom & Dad, me, and the award...

For those of you who know me well, in my short career I have had serious ups and downs. Learning to run a business young in life is very difficult, and the experience has humbled and challenged me deeply. At times it has rattled me to my breaking point, and at other times I have felt the sweetness of conquering a challenging endeavor. Today is one of the screaming fun days!

I’m also aware of the source of any talent and wisdom I have been given. Deuteronomy 8:18 sums up how I feel:

But remember the LORD your God, for it is he who gives you the ability to produce wealth, and so confirms his covenant, which he swore to your forefathers, as it is today.

I’m not wealthy (we’re still in startup mode!), but I’m well aware of all that I have been given, and for that I’m thankful.

There have also been people in my life who have invested in me and shared of themselves. I want to acknowledge and thank some of the people who have helped me along the way.

First, my parents and family have been there through thick and thin. Dad allowed me to start my first company, Vetter Solutions (which later turned into DataSync), in our basement. He later helped fund DataSync before any investors would look at the company. Mom has always been supportive of me, and was there to encourage me when times were tough. The rest of the family encouraged me no matter what happened.

The team at DataSync has been relentless in working through the good times and bad. Startups are not easy, and there have been plenty of chances for them to find an easier job that pays more. I especially want to thank Michael Moser. That guy has put up with me for 5 years or more through countless strategy evolutions.

I’ve been fortunate to gain the wisdom of advisers and directors who are far more advanced than I am in business. They have helped guide me and have taken time to help me grow. Some of those people are Craig Anderson, John Hemmingstad, Rich Naser, Mari Beth Baumberger, Byron Schafersman, Colin White, John Sutton, Eugene McCord, Cris Friewald, Joe Galinanes, Todd Gagne, Will Bushee, John Brown, Paul Ten Haken, Tom Halverson and so many others (I know I’ve missed a lot of you!).

Last (but not least!), my friends have kept me grounded and stable through the jungle that is entrepreneurship. In the hard times they have encouraged me, in the good times they have helped keep my ego in check, and they have always been there to listen and offer insight. I won’t mention them by name here (for privacy reasons), but you know who you are!

In all the hubris of life, I’ve realized that “this too shall pass”. DataSync still has a steep hill to climb, and awards don’t make that easier. Another deserving person win this award next year, and I will be all but forgotten. But that is ok, I’m not doing this to win awards, but to do something worthwhile. But this is real and I’ll never forget this recognition. Thank you to everyone who has helped me along the way!

For those of you who are watching the company I run, DataSync, you’re probably aware that we raised our Series A venture funding back in December, 2008. It was quite the journey.

According to a recent article by the Angel Capital Assocation, early stage investing went down in 2008, and will probably drop more in 2009. Because of the recession, angel groups are focused on ensuring existing portfolio companies survive, so they are spending less on new startups. Raising capital wasn’t easy to begin with – fewer than 1 in 100 companies actually acquire venture funding (src: Launch Utah). That number is probably worsening every day.

So how did we do it? The answer, in my opinion, is found in more than one factor:

1. Low capital requirement – It takes a lot less capital and time to get a software company launched, compared to ‘invention’ or research type companies. This put DataSync in a great position to ask for capital now – we didn’t need a lot of dough, have fast growth potential, and an ‘annuity’ type income stream.
2. Product already in marketplace – We already have a significant and growing customer base, so investors have the assurance that our product would actually generate revenue.
3. Product sells well in a bad economy – DataSync offers software that requires very little upfront and recurring cost and has an immediate payoff to our clients. Often our clients save money the first month.
4. Great advice – The Small Business Development Center built out our financials and advised heavily on positioning the deal, the Enterprise Institute worked with our value prop for investors, and RAIN Source Capital helped wrap out the deal with their capital network. Solid, experienced advisers are key to successfully raising angel capital.
5. Unshakable belief in our vision – I believe wholeheartedly in what we’re doing at DataSync: providing businesses with the best software, consolidated it, and delivering it for a competitive price. That’s what we’re all about at DataSync. We live it, we breathe it, we’re going to make it happen. You have to have that level of belief in your vision to fight through obstacles. We have that desire.
6. ‘Hardiness’ and tenacity – Hardiness is a word we use a lot around DataSync – one definition is “capable of surviving unfavorable conditions”. It took us a year and more presentations than I care to remember to raise capital. We knew we could execute on the goals we set, so we kept knocking on doors until we found investors who saw promise in the same mission.

If you’re running a company that’s poised to succeed, but need capital to get there, take heart. A bad economy weeds out bad ideas and people who aren’t as committed as you, giving you a long term competitive advantage. However it’s not going to be easy to get there. Make sure you have a solid idea you can believe in, build a network around you to best position your company, and network around the clock to find investors who believe in your idea. You’re going to have to beat the odds. After all, you’re trying to be the less than 1 in 100 companies who actually gets funding. It’s not supposed to be easy.

I was just thinking today how much I like the power of social marketing. DataSync has undergone an astounding transformation over the past year from a bricks and morter IT shop to a full fledged Web 2.0 company. Our original marketing efforts focused on old school sales techniques: door to door, cold calling, beating the street. The result is a rough sales model that costs a ton to implement.

Enter social media. We now get thousands of visitors each month to our website. We participate in the community and value creating strong relationships. Some guys from our network team just created a new website – whatan00b.com for new linux users. We’re all about helping build the ecosystem, and it’s amazing how strong the response has been.

So for those of you who are trying to generate interest the traditional way, think again. We’ve cut marketing costs and increased traffic with using smart methods. To top it all off, we love participating! Open source is all about moving the ecosystem forward, and we’re psyched to help make that happen! If you’re interested in learning more about social media, feel free to drop me a line and I’d be happy to share what’s worked for me.