Don't Marry the First Investor You Meet

Then came the second warning sign: Our investors -- more interested in publicity than publishing -- hosted community elites at advertiser cocktail parties and obtained media coverage for their friends and pet projects while we were running through our capital at about $100,000 a month.

About four months into the business, we were down to $200,000 and desperately needing the rest of the money we requested initially. But our investors would only put in enough to cover cost every two weeks and asked us to give up additional equity. Instead of dropping the investors, we pushed even harder for fear they would walk away.

Ticket Out

Finally, about a year and a half after we started, we found a way out of our venture. We managed to build the magazine enough to merge it with a successful publication that wanted to enter the Philadelphia market.

The investors, who owned a combination of stock and debt in the magazine, convinced the new stockholders to convert their holdings into stock in the new company. I left the magazine burned out and ready to take some time off.

Our publication went down permanently with the parent company two years later when the economy slowed down and advertisers stepped back.

What I Should Have Done

From a financial standpoint, none of the founders lost any money because we didn't put up any money. From a mental stand point, some of us swore off ever getting involved with a start-up again.