When it comes to helping minorities secure their intellectual property, raise funding, form strategic partnerships, bring products to market and scale their businesses, Solomon Ali is the guy you want to know. A noted financial consultant, Ali is a CEO in the technology and energy sectors, with a portfolio of businesses that include a smart home automation company and a holdings company that licenses out 16 live and active technology patents.
The author of several e-books including “Surviving the Bad Economy,” and “The Ultimate Encyclopedia of Financial Intelligence,” Ali is credited with acquiring NDR Energy Group, one of the largest minority owned companies in the United States, and growing its gross revenue intake from $10 million to $80 million.
We caught up with Ali recently to discuss the “slanted financial system” he says minority entrepreneurs face, and how his strategies have brought success to his ventures and patents.
TNJ.com: Tell us a bit about your work in the technology and energy space.
Solomon Ali: My work in both spaces begins and ends as a financier and investor. My objective is to invest in the intellectual property side. I don’t want to build a better camera. I want to license you the opportunity to do so. With this focus, our team was able to grow an IP position from conception to domination in the space of smart home technology communications.
Through a new marketing venture, we also focus on access to emerging safe home technologies for minority families. It’s our mission to provide affordable state of the art smart home technology and security for everyone.
In energy, it’s all about establishing a presence and foothold that minority suppliers such as myself can be proud of. Capital and credit lines are always a concern as well as an established network of suppliers, traders and end users that don’t have a measurable minority presence. My objective in energy is to remain competitive by being strategic in our customer base and pace of growth. Our initial trajectory took the company from $20 million to $75 million in sales revenue per year.
TNJ.com: Is there a unique approach you took to fund and scale your business?
Solomon Ali: I went into my recent ventures with a great deal of business experience, but very little funds. I started a private equity firm with $250.00 and went on to begin funding the energy company for over a million dollars in less than 2 years. I continue to fund to this day. I identified several investment opportunities that would allow me to use my own cash and make investments that I could turn around and fund my new companies with, including the technology group that received over $3 million in funding in a span of a few years. This entity now funds itself.
This was definitely a difficult strategy, but the challenges were worth the ability to gain or maintain the control of the entities. I bootstrapped it like many Black founders, and it worked.
I’m a huge advocate of funding and using “OPM,” but with that you also give up control of your operations and sometimes the equity in your company. It’s a balancing act for everyone. In the end, when you believe in your concept you just do what you have to do. In order to scale, I’ve had to have serious review of all practices each year and decide which are working and which aren’t. Sometimes, I’ve had to open the entities to joint ventures or outside relationships that are focused on certain aspects of the business while my focus is on participation in the marketplace and professional relationships.
TNJ.com: What are some of the problems Black founders face in seeking funding for their companies?
Solomon Ali: ACCESS TO CAPITAL. It’s just a fact that most black entrepreneurs don’t have access to the financial instruments and strategies to capitalize their companies.
The first option for many who are starting a business is to access their home equity. For many black founders, there is no homeownership or ability to access the equity.
We don’t have established professional relationships with financial and marketing pros who can help tell the story of our company. A professional set of accounting records and marketing strategy allows potential investors/banks to see where the business is and the ability to scale and service the debt.
Many founders are intimidated by this side of their business. If that’s the case, its best that they bring someone (CFO) whose sole focus is the financial health and funding of the entity.
TNJ.com: How do people determine whether their startup is “venture-backable?”
Solomon Ali: By speaking with or soliciting feedback from future or current customers. They will be quick to let you know if your concept addresses a need.
Seek out advisors in your industry who can break down your plan and current operations and advise on the funding options.
Ask yourself the question “what’s in this for potential investors”. How do I handle those relationships?
Ask does venture capital address my most pressing needs for growth or is it just a band aid.
TNJ.com: What’s the best way to approach venture capitalists when many of them prefer referrals?
Solomon Ali: Venture capitalists receive hundreds of emails and review pitches every day. Some of the best approaches involve;
Reach out to clients or companies who have received funding from the investor. If you develop a relationship with them, they may be willing to refer you.
Follow the investor on social media. You can see where their interest lie and they will be able to see all of your fantastic milestones and get a feel for energy surrounding your company.
Attend conferences where either the investor or their business development partners are out seeking new opportunities.
Work your business work your plan. Investors like to invest in successful companies. Your growth will attract investors who want to be a part of your success.
TNJ.com: Are there any non-traditional funding sources worth exploring?
Solomon Ali: Venture capital requires a 5 to 10 times return on investment and an aggressive strategy for exit in 5-7 years. If you aren’t willing or prepared to aggressively focus your business on growth and sales, you should seek other sources. Sources that allow you a more long term approach include:
Angel Investors and Investment Groups
Friends and Family including social networks like Greek organization affiliations.
More traditional and long term funders are;
Small business loans
Lines of credit
If you are open to creativity, you may want to explore a joint venture or big brother relationship. This would allow you to grow your company by accessing the financials of your joint venture partner.