The librarian as entrepreneur

Information Outlook, Oct, 2004 by Debbie Schachter

For some time, librarians have been encouraged to behave more like entrepreneurs, to be seen as entrepreneurs within their larger organizations. How better to exhibit this behavior than to actively follow the principles of venture capital when seeking investment in your initiatives?

But What Does This Mean?

Business leaders need to be continually reminded of the value of libraries within their companies. When you, the librarian, seek funding for new initiatives, your library or information service should be viewed in terms that business leaders understand. By using the language of entrepreneurs, you can define your funding needs in terms of venture capital investment, putting a new perspective on the concept of the cost center or nonprofit organization.

This is about building relationships and seeking business expertise when you need it. This is also about developing business plans and seeking seed money for new initiatives.

What Is Venture Capital?

Venture capital, also described as risk capital, is investment usually made at the start-up phase of a new enterprise, investment that projects a high return for its investors. Due to the nature of investing in entrepreneurial ventures, it's generally viewed as a high-risk, high-return proposition, based on a relatively short-term investment. From the perspective of the entrepreneur, venture capital is also considered to be "smart money": venture capitalists are people who know how to grow an organization and can help you avoid common pitfalls along the way.

Some questions you may ask yourself about the possibilities of seeking investment in new initiatives include:

* What are the opportunities for investment in your library?

* Do you have a particular library project in mind that requires niche or specialized expertise to sell it to your superiors?

* Do you need to bring on board influential individuals to sell your project to users?

* Do you need assistance in determining the value of a new service or product to your organization?

Answering these questions will help determine whether "investment leaders" in your organization will be of value to you when planning to develop major new products or services.

For example, you may wish to develop a knowledge management system for your company. You will need investment in the way of money (capital) and buy-in (influence), plus expertise from key individuals in the organization. You will need to create a business plan for the project, which coincides with the initial stages of involving your venture capitalists. When developing a major initiative, one that will change the library's influence within the larger organization, you will need to initially sell the plan to those with influence--your venture capitalists. Do this by developing the plan and seeking their early buy-in before taking the plan to senior management, or to those who have the authority to finance the project.

Present your proposal to senior management as a formal business plan in which you are seeking approval to develop the organization-wide initiative. Describe the new product or service, the projected demand for it, and your expertise to carry it out. Within the business you plan you will include your in-house "venture capitalists." These are the early investors, investing by providing their influential support, non-library staff resources, or financial support in the plan. By having your venture capitalists on board, you will have merged your good idea and your expertise with the expertise of these influential individuals in your organization, leading to a more positive reception.

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A Few Questions

When seeking your venture capitalists, you must consider their perspective in order to achieve your investment goals. Questions the venture capitalist might ask before investing include:

* Is the product or service really needed? Would it result in a significant improvement in the work of enough staff? Can it be provided at a reasonable cost to users?

* Is there a good strategy in place to achieve success? Has a good business plan been developed to implement that strategy?

* Are the people proposing this initiative capable of making it successful? (1)

These questions may seem obvious but they are the solid basis for the development of any good business plan. They call for you, the librarian, to do your due diligence regarding the need for the new product or service, identifying how you intend to provide the service and to whom, and determining whether you have the expertise to accomplish what you propose to do. Creating a business plan for the project is a necessity if you expect to obtain additional funding or expertise to assist you in getting it off the ground.

You may be seeking multi-levels of investment. You may need to seek those who will be the first to "buy in" and, later, those who will buy in based on the additional expertise and clout that you have brought on board for your project.

For the venture capitalist, the motivation to invest in the initial stages of a project is that the projected payoff is greater for those who "buy in" early. For example, if you plan to charge users for a new service, you may need to provide this service for free, or at a reduced rate, for those who buy in at an early stage. The internal investors are your venture capitalists either by providing expertise or practical assistance in setting up the new service, or by providing investment through internal funding to cover capital costs for the service. It is key to your plan to woo investors by giving your venture capitalist a benefit for providing you with early support.