Sep 02

Report of a joint venture.

Venture Capital Articles No Comments »

If you are interested in working with startups and you want to be employed by a venture capital firm, you need to get involved!

What does getting involved really mean?

A few days ago, Matt Shapiro, an Associate at LaunchCapital, gave me a quick call. Matt just completed his graduate degree at the Yale School of Management and is the creator of the Entrepreneur’s Census, a survey that collected data from entrepreneurs and investors across the United States. I asked him for advice about how to land a position with a venture capital firm. He suggested several ways to work with startups, but he told me that it was almost impossible to become an Investment Associate working with venture capital and private equity. The industry has been shrinking and there are a limited number of firms. On a side note, he told me that the Entrepreneur’s Census gave him an avenue to expand his network and give back to the community that drives his passion.

When our conversation ended, I realized that if I want to get involved with the venture capital community, I need to give before I receive. After recognizing this incredibly important business rule of thumb, I have been taking steps to leverage my knowledge about the industry. I want to help both entrepreneurs and investors by disseminating information. You simply cannot expect people, especially high profile investors, to take you seriously unless they know you are driven to be involved and make an impact in their community. Most venture capital shops do not even have positions available. The few firms that do have openings usually seek people that went to top tier Universities and have three years of investment banking experience.

If you really want to get involved with venture capital, you need to look past the lofty job requirements and know that if you contribute to the startup ecosystem, your talents will be noticed. Wherever you are seeking employment, you need to believe that you have something to offer. Credentials do not get you employed; they only get you an interview. When I first thought about what I could do for an investor, I came up with no ideas. I concluded that…

“Investors have unbelievable amounts of money. What could I possibly give them?”

Fortunately, I reevaluated the situation. Investors want simple sentimental contributions. I created my blog because I enjoy writing about business, but I also want to help entrepreneurs and investors. As I was browsing through LinkedIn, I noticed a comment from one of my connections that said, only fifteen percent of venture capitalists blog. For most investors, it is probably incredibly difficult to blog with such intense schedules. Nowadays, you need to find a way to connect with your audience and build relationships. However, regardless of the career path you choose, fill a gap in the community and your Efforts are recognized. Branding your personal and professional level.

Tagged with: •
Aug 31

BPO Business Plan – Venture Capital Funds and other fall – only.

Venture Capital Articles No Comments »

After a day’s work, I headed to my oasis, a watering hole for the thirsty soul … yes, a beer bar! I walked up unequal steps to the sit out on the first floor that overlooks a busy street. The beer there is draught, light on the belly and prices light on the wallet. I sat down and waited for my temporary nirvana to arrive frothing at the rim.

As I looked down, out into the street, the cold beer swirled around my mouth and found its gentle path down my interior, bringing a much-needed salve to a weary me. I sat thinking about time and its quirky ways. Soon, a tall fella, an American with long hair, came and sat some distance away. He sipped morosely at his tipple. I observed him for a while and then called out to him, inviting him to join me at my table. He graciously accepted, carrying his mug of the golden liquid across. Introductions over, we started chatting about work. He said he was the CEO of a BPO and had recently been let go because his salary of a couple of lakhs (hundred thousand/s) in addition to a bonus was too high for the Canadian company that owned the business and how they had found an Indian to take over as CEO at half the expense.

He said he was now looking for funding to start his own venture. I heard his business plan and how he had customers lined up, and how the venture would break even in under a trimester. He also spoke about how he could arrange the right manpower and the other essentials to get the business up and started in a short time. He mentioned how at an average US$ 8 per manhour the company would make about 60% net and that the initial investment of about rupees 2 crores (twenty million) would be recovered and repatriated in under a year and a half – if that’s what the investors desired. He said he would bring in about US$ 100,000 of his own money, too. I became interested and called up some wealthy relatives who I thought might be keen on such a venture. They showed some interest and said they would let me know their decision within a couple of days.

I told my new American acquaintance that I needed to understand his business better and that I would ask questions, including some that might sound stupid but he would need to be patient and answer because the rich investors would expect answers to everything, especially on the accounting side of the business. He said that was no problem. Our discussions carried on for a while. I asked many questions and he answered them all to more than my satisfaction, convincing me that there was indeed a sound plan that our friend had put together.

Soon, came the question of ownership and who would own how much of the company. He said the investors would get 10% of the equity for every crore they invested. Two crores would mean 20%. ‘Hey, hey, hang on a minute…,’ my instincts said. I asked him if the investors who put in most of the money got only twenty percent of the shares, who would own the rest. He said the rest would go to other investors who brought in the next round of financing. Fair enough! But, what if there was no ‘next round of financing’ then what?

He said he was willing to answer stupid questions but he could not send me to business school. I reacted with, ‘con school’ you mean. He looked livid, but kept his calm. I persisted, ‘to recover and repay the two crores invested initially in a year and a half to an investor who had only twenty percent of the company implied that the venture would make more than 15 crores net in the period. Moreover, if you (your ideas and ability, that is) are worth so much why would your former employer let you go at all?’ I didn’t need to go to Harvard Business School to learn that! He looked lost. ‘Just drop it,’ he answered.

I dropped it, paid for my beer and strolled out into the rain … remembering to call the potential investors and asking them to ‘drop it’.

Tagged with: • •
Aug 31

Venture Capital Funds – in your area.

Venture Capital Articles No Comments »

Many firms dream of the day that a venture capital financing occurs. This is the day when they are handed a check for millions of dollars and told to go fulfill their entrepreneurial dreams. Unfortunately, for most this remains a dream. But this doesn’t necessarily have to be the case. Securing a venture capital financing can be a reality under the right conditions.

Perhaps the most important condition is that the firm develops a winning business plan. The business plan is the initial piece of information that venture capitalists review, and if it doesn’t compel them to take action, the journey towards venture capital financing ends abruptly.

Assuming that the business plan is flawless, what else is required of the management team seeking venture financing? The answer varies from firm to firm, but most venture capital firms want to see proprietary intellectual property, a large market size, management team members with expertise and experience, and a current valuation that allows for a good return on investment.

A final challenge in securing a venture capital financing is identifying the right venture capital firm. Venture capital firms typically have preferences that revolve around their location, sector preferences, stage preferences, partner backgrounds, other portfolio companies, and total assets held by the firm. Ventures seeking capital should make sure to find venture capitalists whose preferences match what they have to offer.

Raising venture capital is challenging, but fortunately, the results can far outweigh the hardship of overcoming the challenge. For firms that properly plan for and methodically approach venture capital financing, results are often within their reach.

Tagged with: •
Aug 30

Eyes and ears of the U.S. investment industry.

Venture Capital Articles No Comments »

The Venture Capital Industry in the United States has gone a long way since it was officially given the license to finance any entrepreneurial interest of any individual, or organization thru the implementation of the Small Business Investment Act (SBI) in 1958 that granted the U.S. Small Business Investment Administration (SBIA) a licensing authority to assist financing for start-up businesses, either non-profitable body as in foundations, or those vying to pursue the development of new technologies, research, or equipment in line with global centralized communications.

The National Venture Capital Association that represents the United States venture capital industry, the known trade association (NVCA), a member-based organization of venture capital firms with respective financial existing capabilities to contribute for a bulk-pulling capital to be dispensed for bigger demand in investments; especially, a package full-risk equity capital for exceedingly high caliber or high growth business that can’t capably be handled by an individual investor.

The NVCA Response to Various Aspects in the U.S Venture Capital Industry

1. Acts to mediate in the public policy interests of the venture capital population.

2. Deals with strict professional standards of the venture capital environment.

3. Keeps and provides most reliable data within the industry.

4. Takes charge in pulling together effective interactions among members.

5. Mans the sponsoring of professional developments.

The National Venture Capital Association of the United States has big-time affiliates as the American Entrepreneurs for Economic Growth (AEEG), a gigantic U.S. network that takes care of various public policy issues that have greater impact to entrepreneurial expansion and growth in both management and profit. The AEEG has produced in the past years over 14,00 CEO from their different growing companies.

Viewing the Inside of the Venture Industry and its Capitalists

Cash flow, or the management offered by professional group of investors to beginner companies or any entrepreneurship that caters to a larger risk but greater returns in investments is what we call venture capital.

This set of capitalists may comprise private partnerships, or a group of tight-held corporation who have been potentially graded to gather funding from public social origin as pension funds, insurance endowments, foundations, social securities, assets surplus assets from big corporations, wealthy individuals, private investors, and members of the industry themselves.

They Assume To Take the Following Responsibilities and Financing:

1. Take higher risk in capitalization with an open mind to harness greater profits

2. The like it, Starters, but certainly better than a large capital companies.

You sell three security services.

Four new product development and online services.

5 is a valuable asset to society by participating in school.

6 with the interests of long rotation period.

Tagged with: •
Aug 29

Four steps to obtain venture capital.

Venture Capital Articles No Comments »

Most startup companies don’t have much capital to begin with and struggle to remain open. They turn to outside investor support until they can achieve profitability. If you are the owner of a small business, then you know that getting your company funding is one of the most difficult business challenge you can face.

Seeking this venture capital is an increasingly growing trend fueled by a combination of several factors, such as: improvement in the IPO market, abundant entrepreneurial talent, promising new technologies, and government policies favoring venture capital formation. It’s no wonder why venture investors continue to launch and support the development of so many new technologies and business concepts.

Venture capital investments give you and your company the resources it needs to grow to it’s full potential since it is used for a variety of things. For example, you can invest in top notch talent, new machinery, manual laborers or you may need to invest in research or new technology. To help put you on the track towards securing venture capital, here are four steps to attract the attention of venture capital investors:

One of the most important steps is to network. It is one of the first steps in attracting that elusive venture capital. Actually business networking is an important tool for your business all around. The idea behind networking is get the the name of your company out there in the minds of people in the industry and create some buzz around your business idea. If you get the change collect business cards as a way of beginning a path towards contacts.

You are going to need an experienced team of business partners behind you. One of the things venture capitalists look at it is how well of a structured organization of a company you have and how loyal your co-workers are. Build a diverse team of great minds and sell its credentials to attract some venture capital. TA great group of team members helps to further develop that all crucial buzz which leads to venture capital investment.

Put together a professional presentation to sell your company’s goal and ideas. A smooth, sophisticated presentation should answers all possible questions clearly and avoids any challenges with solutions. This should bring your venture capitalist talks to the next step. Give your solid presentation to as many business associates as you can. Always continue to modify it so that it reaches the level of satisfaction it needs.

Media coverage brings nothing but benefits. Anytime you can to put yourself on TV or get your name in the newspaper, take it. For example, if your company is in the tech-field or involves the internet, contact review sites and magazines. Writing press releases and submitting them to local Newspaper is the best of his eyes or

Tagged with: • •
Aug 29

The option to invest more capital growth.

Venture Capital Articles No Comments »

Venture Capital is a specific term that refers to funding obtained from a venture capitalist. These are professional serial investors and may be individuals or part of a firm. Often venture capitalists have a niche based on business type and or size and or stage of growth. They are likely to see a lot of proposals in front of them (sometimes hundreds a month), be interested in a few, and invest in even fewer. Around 1-3% of all deals put to a venture capitalist get funded. So, with the numbers that low, you need to be clearly impressive.

Growth is usually associated with access to, and conservation of cash while maximising profitable business. People often see venture capital as the magic bullet to fix everything, but it isn’t. Owners need to have a huge desire to grow and a willingness to give up some ownership or control. For many, not wanting to lose control will make them a poor fit for venture capital. (If you work this out early on you might save a lot of headaches).

Remember, it’s not just about the money. From the perspective of a business owner, there is money and smart money. Smart money means it comes with expertise, advice and often contacts and new sales opportunities. This helps the owner, and the investors grow the business.

Venture Capital is just one way to fund a business and in fact it is one of the least common, yet most often discussed. It may or may not be the right option for you (a discussion with a corporate advisor might help you decide what is the right path for you).

Here’s a few other options to consider.

Your Own Money – many business are funded from the owner’s own savings, or from money drawn from equity in property. This is often the simplest money to access. Often an investor would like to see some of the owner’s fund in the company (”skin in the game”) before they’d consider investing.

Private Equity – Private Equity and Venture Capital are almost the same, but with a slightly different flavour. Venture Capital tends to be the term used for an early stage company and Private Equity for a later stage funding for further growth. There are specialists in each area and you’ll find different companies with their own criteria.

FF & F - Family, Friends and Fools. Those closer to the business and often not sophisticated investors. This type of money can come with more emotional baggage and interference (as opposed to help) from its providers, but may be the fastest way to access smaller amounts of capital. Often multiple investors will make up the overall amount needed.

Angel Investors – The main business angels vary from venture capitalists in their motives and level of involvement. Often angels are more involved in the business, providing ongoing mentorship and advice based on experience in a particular industry. For that reason, matching angels and owners is critical. There are substantial easily locatable networks of angels. Pitching to them is no less demanding than to a venture capitalist as they still review hundreds of proposals and accept only a handful. Often the demands around exit strategies are different for an angel and they are satisfied with a slightly longer term investment (say 5-7 years compared to 3-4 for a venture capitalist).

Bootstrapping – growing organically through reinvesting profits. No external capital injected.

Banks – banks will lend money, but are more concerned about your assets than your business. Expect to personally guarantee everything.

Leases – this may be a way to fund particular purchases that allow for expansion. They will normally be leases over assets, and secured by those assets. Often it is possible to lease specialist equipment that a bank would not lend on.

Merger / Acquisition Strategy – you may seek to acquire or be acquired. Generally even a merger has a stronger and a weaker partner. Combining the resources of two or more companies can be a path to growth – and when it is done with a company in the same business, can make a lot of sense – on paper at least. Many mergers suffer from differences in culture and unforeseen resentments that can kill the benefits.

Inventory Financing – specialist lenders will lend money against inventory you own. This may be more expensive than a bank, but might allow you to access funds you could not have otherwise.

Accounts Receivable Financing / Factoring – again a specialist area of lending that may allow you to tap into a source of funds you didn’t know you had.

IPO – this is normally a strategy after some initial capital raising and having proven a business is viable through the development of a track record. In Australia there are various ways to “list”. They are useful for raising larger amounts of money ($50m and up) as the costs can be quite high ($1m plus).

MBO (Management Buy Out) – This tends to be a later stage strategy, rather than a startup funding strategy. In essence debt is raised to buy out the owners and investors. It is often a strategy to gain back control from outside investors, or when investors seek to divest themselves from the business.

One of the most important things to remember across all these strategies is that they all require a significant amount of work in order to make them work – from the way the business is structured, to dealings with staff, suppliers and customers – need to be examined and groomed so that they make the company attractive as an investment proposition. This process of grooming and derisking can take Some between three months and one year as actual costs (Accounting consult with legal counsel) and costs of the major changes of ownership "about knitting and making money in companies that focus on how the company presents itself.

Tagged with: • • •
Aug 28

7 steps to attract capital through social media.

Venture Capital Articles No Comments »

The Internet and Social Media are moving entrepreneurs closer and closer to sources of start-up capital. Whereas in days past your funding relied on knowing someone, or knowing someone that knew someone–today it is about getting to know someone.

Listen First

Angel Investors, Venture Capitalist, and Private Equity principles are increasingly Web social. They have blogs, Twitter, and follow lots of folks on Friend Feed. Networking was always a core principle in their success, but now they can scale. This means not only can they meet and follow more people and opportunities, but you can also listen to what they find compelling.

Following and watching investors can quickly focus you in on who and how to target your pitch. Or, even give you ideas for creating a new start-up.

Join the Conversation

Now that you have a good idea of who you should be talking to and what they are interested in it is time to join the conversation.

Blasting a strange VC a presentation is probably not going to be terribly productive. However, engaging intelligently in their discussion will. Here are some easy ways to join the conversation:

Comment on their blog
Answer their Twitter questions
Discuss topics on their Friend Feed
Comment on blogs they read
Twitter people they follow

Add Value to the Discussion

Venture capitalist are an inherently curious sort. If you can help feed or answer their curiosity you will draw their interest. Inherently your expertise will surpass that of most venture capitalist–that is why they would invest in you–so help them out.

These are a few sure fire attention grabbers:

Talk about the market you are in
Talk about what causes your market to move up or down
Talk about their portfolio companies
Talk about what one of their companies should do next

Remember, don’t just target the investor or VC directly engage with their colleagues, portfolio companies, competitive companies, and their entrepreneurs.

Tell Your Story

Now that you are in the conversation and attracting (even passive) attention from investors. Tell your story. Talk about your projects, your ideas, and your starting up. Keeping a bright  idea under a bushel basket attracts about $0.

Don’t forget the little details. VCs like to hear what you spend money (talk about office leases, chair purchases, Mac or PC), how you design teams (talk about titles, office design, individuals), and how you fail (talk about downtime, blown sales, flubbed marketing ideas).

Manage Your Young Brand

Do you remember me saying that venture capitalist were inquisitive? That means you need to have a place for them to lurk around and learn more about you. Make sure you have a website or blog that talks about your start-up. It should look professional and be clear about your unique value proposition.

This should be the link in all your social profiles and blog comments.

Be Ready

Like curiosity, investors are notorious for short attention spans too. If they tap you on the shoulder you probably only have one brief shot at tipping them. Have the following ready at all times:

5 minute elevator/telephone pitch
1 page executive summary
1 page financial summary (projection & ask)
Class 10 slide PowerPoint.
URL social media pitch.

Dress

Contact details. Even if you have or not (it), they lost communication for discussion and questions. It is amazing how often nurtured relationships payments instantly.

Tagged with: • • • •
Aug 28

Investment in joint ventures.

Venture Capital Articles No Comments »

There are two types of people in the world. These are the rich who have money and those that don’t. When the person has money, there will be no problems going on a shopping spree in New York or hop on board a plane to see paradise in the Bahamas. The average Joe can also do that but will have to same that amount over a few months or even years.

If the rich individual doesn’t do anything to preserve the wealth, this will soon disappear. This is the reason that being a venture capital investor seems to be a good idea.

A venture capital investor is an individual who would like to help fund an entrepreneur. There are two kinds namely the person who will wait to receive such a proposal while the other is out there hoping to see something interesting.

In the end, the venture capital investor will be reviewing the business plan to make sure it is sound and also meet the entrepreneur in person to clarify some issues. There are some people who might take advantage of the individual so a background check will be done even before the meeting takes place.

The venture capital investor who is well aware of the trends for example in the information technology will not want to do business in a field that is unknown to that individual.

This means the person will only gamble on a high-risk investment in the preferred comfort zone. This approach is advantageous to the entrepreneur because the years of experience in that field can be useful in the partnership.

What does a capital venture investor get from all of this? In exchange for the money being shelled by the individual, there are also a certain number of shares that will be given to get a seat among the board of directors.

This will ensure that the investor can play an active role in the direction of the business to be able to safeguard the money that was invested into the project.

As the company grows, the money invested by the investor will be returned and the profits will be shared increasing the current wealth of the person.

Being a venture capitalist is a win-win situation for the individual and the entrepreneur. After all, two heads are better than one in making the day-to-day decisions so the company will become profitable in the long run.

Tagged with: •
Aug 27

Venture Capital – move to the right as soon as possible.

Venture Capital Articles No Comments »

Venture capital is a type of equity funding, meaning that an investment is made in a company for the purpose of receiving shares in said company, along with other collateral (usually an insurance policy). Selling shares of one’s company also means sharing ownership and ultimate control over the business. The more shares that are sold, the less control the original owner has over the company. This type of funding may be attractive for new companies with limited credit and operating history that may have difficulty raising capital in public markets or from debt funding, such as bank loans.

If relinquishing control over your company doesn’t seem very attractive, you should consider another form of business funding. On the other hand, depending on the stage of your business’ development, and your end goals, venture capital could be the right solution for you.

After a period of significant growth, many small business owners are not equipped with the expertise to take their businesses to the next level-either maximizing growth or selling it for profit. A venture capitalist can bring managerial and technical expertise to aid businesses that are ready to take the next step. In a nutshell, venture capital is a useful tool for entrepreneurs hoping to build a company to flip for a quick profit. If your goal is to build a lasting business (that remains under your control), alternative funding options should be considered.

If venture capital sounds like a viable solution to your funding needs, just remember, venture capitalists reject 98 percent of all proposals presented to them. The market is highly competitive, and if your proposal is approved, the lengthy process-usually 6 to 18 months-has just begun. In order to obtain equity funding, you must present a sound proposal to outline the strategy and vision for your company.

Areas of interest for potential Investor
Management Force -.
– The strength of the brand.
Strategy -.
– Target market.
Competition -.
– Customer canopy
– Innovation
– Suggestion
– Intellectual property.
– Barriers to entry.

Tagged with: • •
Aug 27

How to obtain capital growth of Flash.

Venture Capital Articles No Comments »

Most companies are able to finance operations and growth by using their own funds or by having the owners make additional capital contributions. Some companies do this by choice – they dislike the idea of getting business financing. Most companies, though, do so because they have no other choice. They just cannot obtain conventional business financing.

Many companies that run into cash flow problems do so because there is a timing gap between expenses and revenues. Usually expenses are immediate, but revenues are delayed for 30 to 60 days. Revenues are usually delayed because of the common practice of offering net 30 payment terms to clients. This timing gap can affect the availability of funds for other projects or worse, may force the company to delay certain critical payments.

One possible solution is to use a business loan (or line of credit) and use it to cover expenses when available funds are low. However, business loans are usually hard to obtain and can have inflexible limits. Furthermore, the loan application process can require that you provide the institution with substantial documentation and can take a long time to close. Many times, a better solution is to use receivables factoring to accelerate your revenues.

Factoring accelerates your revenues by providing your company with an advance for your net 30/60 invoices. This provides the necessary funds to cover operating expenses. The accelerated cash flow strengthens your company’s financial position enabling you to capitalize on new opportunities.

Qualifying for accounts receivable factoring is relatively easy since the main collateral are your invoices, which are backed by the reputation of your clients. It’s also more flexible than other forms of financing since it’s dynamic and moves in parallel with your billings. This enables your financing to grow, as your company grows. Accounts receivable factoring is an ideal solution for companies in the Employees in the service sector, manufacturing and transportation.

Tagged with: • • •
Previous Entries
preload preload preload