Jun 30

The truth about the scholarship costs of work before.

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In business financing, upfront fees are monies paid in advance to any potential lender, investor or intermediary for performing due diligence related matters, such as business valuations, accounting or other professional services to help determine the viability or risks associated with your business project or company. It can also be applied towards the closing costs associated with your funding your business project or company.

To continue, upfront fees, is one of the most controversial areas of business financing. However, if you have ever purchased any type of real estate that required mortgage financing, you would know that the mortgage company requires you to pay for the appraisal reports, home inspections, environmental surveys, and all the associated due diligence fees “upfront” prior to closing. In business financing the concept is the same.

The reason lenders or investors require you to take on all the financial risks associated with investigating your business project or company, is because they don’t want to lose their money or time investigating your business project or company.

Yes, it is true that there are lots of predators out there waiting for the opportunity to prey on entrepreneurs and take advantage of their need for business capital by offering bogus services with no intent to provide the services that are being offered. However, in any legitimate business financing transaction, there are reasonable fees that you should expect to pay.

It’s important to note, that when dealing with institutional or private investors it does cost them money to properly investigate and research your project in order for them to make a decision as to whether or not they are going to fund your company or business project. These costs include attorney fees, professional fees, third party valuations, and more.

Stop and think about this for a moment. If you’re an investor putting up your money into any project, wouldn’t you want to have all of the information that’s available in order to make the best possible decision that you can?

Moreover, institutional investors and private investors see a plethora of projects every day, can you imagine what it would cost them to properly investigate and research every project that they may have an interest in? That is why the financial responsibility is passed on to you.

Furthermore, there is also that psychological factor. This serves as a safeguard for most lenders and investors. Meaning that, if there is something wrong with your project that you know will cause most investors to back off, you probably won’t put your money into doing all of the due diligence work.

Always remember, that the wise investor will always limit his cost in investigating your company or business project because in the end your project may not be as fantastic as it may appear to be and investors don’t want to lose money on propositions or proposals.

In my experience I have seen many entrepreneurs contact investment bankers or venture capitalists with the expectation that they will work for free. Imagine walking into an attorney’s office and asking them to do work for free? Just as your lawyer, your accountant and for that matter, your doctor charges you a fee for the services offered, an investment banker, venture capitalist, etc. is also paid a fee for the services that they perform.

There are many business finance professionals who advertise various services, such as raising capital and they are paid a contingency amount for successful funding. What that means is, they are usually agents or brokers, and if they find you the capital you require they are paid a substantial fee. That fee is usually between 4% and 10%. That is fine for an agent, but it is not fine with the lender or investor doing all of the work.

In conclusion, do not be naive in your entrepreneurial journey. It will cost you money In order to obtain the capital that you are seeking. Regardless if it is long distance phone charges, travel expenses, business valuations, professional fees, due diligence fees, etc.

Like the old saying goes, “it costs money to make money”. When starting or expanding your business, you can get a lot further by simply planning and budgeting in the very beginning for the costs associated with obtaining business capital.

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Jun 30

Venture Capital Investors – Get Out terror meeting

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Entrepreneurs in search of venture capital sometimes have to work extremely hard to get that first meeting with investors. It might involve relentless networking with colleagues and business associates over a period of weeks and even months, or it might require sending executive summaries of their business plans to dozens of prospects.

When they get that first “yes”, the investor who contacts them to set up a face-to-face meeting, the entrepreneur initially feels elation, but this is quickly tempered by fear of failure. They realize they only get one shot at impressing the investor. Questions like “What should I say in my presentation?” and “What kinds of questions are they likely to ask me?” and even “How can I keep from blowing this opportunity?” inevitably start popping into the entrepreneur’s mind.

If you are apprehensive about making a presentation to investors, there are several strategies you can employ to become more comfortable. You might consider bringing one or more members of your management team with you, so you can break the presentation into segments, based on each person’s expertise, and you are not responsible for the whole thing. Perhaps you are worried about being able to answer some of the more technical questions about your product or service. Bringing your tech expert along might help minimize the risk of an awkward moment when you have to say “I don’t really know the answer, but I will get back to you on that next week.”

Being adequately prepared is the best antidote to nervousness. Make sure you have practiced the presentation with members of your team as an audience. Do this as many times as necessary until it sounds smooth and polished. It’s a good idea to have a role playing session where you invite in trusted associates or advisors to listen to your presentation and then ask questions you are likely to encounter in the real meeting. They will undoubtedly pose some difficult questions that you might not have thought of.

Putting the presentation in PowerPoint format can be a great help as well. For one thing, the investors will focus some of their attention on the slides, and not just stare at you with those cold, steely eyes that so many investors seem to have. PowerPoint also helps you get the presentation more sharply focused on the small number of key points you want to emphasize, the elements that really make the case for why your venture is a superior opportunity, and why your management team is absolutely capable of succeeding. Don’t make your presentation a rambling recitation of your Business Plan. They can read and study your Plan on their own. Make your in-person presentation as concise as possible. Start composing it by thinking of the 4 or 5 things you want them to remember when the presentation is over and you have left.

A few other suggestions for a winning presentation:

1) Before you begin, congratulate yourself on getting this far. You have already achieved something that many entrepreneurs never get the opportunity to do. Start by thanking the investor(s) for inviting you there.

2) Keep in mind you know more about your business than the investors do. Don’t get rattled by the questions they may ask. Be polite, but confident, with your responses.

3) Show them that you have a burning desire to succeed with this venture. Investors want to put their money behind highly motivated management teams with a clear Vision of how they will create a large and profitable company.

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Jun 29

Check the approval risks rental.

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Each year venture capitalists fund more than 2,500 start-up companies in the U.S. Many of these companies try to conserve their equity capital by approaching venture-leasing firms to secure equipment financing. By obtaining lease financing, these savvy firms are able to use their equity capital for high-impact activities like recruiting key personnel, product development, and expanding their marketing efforts.

What are the qualities that make some start-ups more attractive than others to venture lessors? Here are ten factors that most venture lessors evaluate to decide which start-ups to finance:

Caliber of the Management Team

Most venture lessors consider the start-up’s management team to be the most critical success factor for the venture. Though it can be challenging to quickly evaluate management talent, there are several qualities that venture lessors consider. They look for experienced managers with high integrity and a proven history of business performance.

Quality of the Venture Capital Sponsors

Another important factor for most venture lessors is the quality of the start-up’s venture capital sponsors. Venture lessors look for experienced venture capitalists with successful investment performance over a number of years. The venture capitalists should also have good reputations for dealing fairly with creditors serving their portfolio companies. Before entering new lease arrangements, most venture lessors verify that the start-ups’ venture capital sponsors are actively supporting them.

Soundness of the Business Plan

Successful start-ups usually have compelling, well-articulated business plans. Lessors look for signs that the start-ups have promising market opportunities, clear and credible projections, and reliable financial statements.

Cash Position /Monthly Burn Rate

A yardstick used by many venture lessors to measure risk is the start-up’s projected cash consumption rate. The ratio of available cash to the start-up’s monthly burn rate is a useful measure. It crudely determines how long the start-up can last before a new equity round is needed. The lessor views a transaction as less risky if the start-up can make full payments during a significant portion of the lease term without raising additional equity. Most lessors look for a ratio that supports at least 9 – 12 months of the start-up’s operation.

Equipment Quality

The quality and intended use of the equipment is an important factor for most venture lessors. Most lessors look for transactions involving equipment that is essential to the start-up’s operation. Additionally, the equipment should have acceptable collateral value and be readily re-marketable in the equipment aftermarket.

Product Prospects and Revenue Track Record

If the start-up is in the development stage and has yet to sell products, venture lessors generally look for products capable of establishing a strong market position. If the start-up’s product is already in distribution, lessors look for strong monthly or quarterly revenue growth. A poor reception of the product in the early stages, when measured against the business plan, can often signal a faulty product launch or faulty product concept.

Valuation History

A valuation history records the share prices of stock sold to investors by the start-up. Unless there is a good explanation, most lessors look for significant share price appreciation over successive offering rounds. The assumption is that the start-up is making steady and significant progress in its development, which will be reflected in rising share values.

Balance Sheet Strength

Venture lessors usually evaluate a start-up’s working capital to ensure that the start-up can make payments when due. Along with an analysis of the start-up’s burn rate, lessors use traditional working capital measures like the current and quick ratios. Lessors also look for other signs of balance sheet strength, such as: low to moderate leverage; positive tangible net worth (inclusive of subordinated debt); and minimum paid-in capital of $7 – $10 million.

Outside Professional Involvement

Most venture lessors view the involvement of reputable and successful outside board members as a positive factor for start-ups. A reputable CPA firm, law firm, institutional partners and/or service providers are also viewed by lessors as positive. These professionals can bring valuable expertise and contacts that can help the new venture to succeed.

Payment Performance

As with more traditional lessees, venture-leasing companies frown upon poor lessee payment histories. Most venture lessors expect lessees to have satisfactory payment histories, unless good explanations can be offered. Like other vendors, satisfactory payment of bills by customers is where the rubber meets the road. Whether the lessee is a start-up or a Fortune 500 company, most lessors view prompt payment as sacrosanct.

While venture lessors use additional factors to make their credit decisions, these ten factors seem to be used universally. Though most of these factors are Appropriate personnel for the test of time credit decisions and solid Lessors.

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Jun 29

Maintain this level – Protocol for joint ventures.

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One of the most important things to remember when doing a joint venture with someone is that you are creating an alliance. You are creating a business relationship that has a friendship brewing underneath. Joint Ventures explode your sales and are the fastest way to grow your business, this is all true. Yet, the most important thing you can do is keep that business relationship on the level.

Your intention during the joint venture process will determine whether you will become a popular person or company to do a joint venture with or will be tossed aside for a business alliance that has a stronger level of honesty and relationship. You must become the partner you would like to attract for a JV relationship and alliance.

Becoming the kind of partner you would like to work and deal with, someone that is solution oriented, honest, a possibility thinker with a serving others attitude. When you begin building your joint venture alliances you are building a network of business partners that will either be open to doing a joint venture with your or will be polite and brush you off. Which do you want?

When you become a strong, popular joint venture partner, your business will thrive for the rest of its lifetime because you will never run out of joint venture partners, you will have partners who talk highly of you to others who will want to work with you and you will have choices about who you would like to work with.

Learning joint ventures is a must right now because business is moving more and more into using this as a global business model. It is taking over the business world and will continue to do so for well into the future. If you want to have your business thrive and flourish well into the future, you must make sure you keep things on the level with your joint venture partner and become the kind of business alliance everyone would like to work with.

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Jun 28

Traditional venture capital company.

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What is the primary difference between a venture capital business plan and a small business or other business plan? The answer is typically risk. Venture capital business plans have much more risk than other plans, and as a result, the potential rewards from success are much higher.

When preparing a plan for venture capitalists, it is critical to try to mitigate the risks inherent in the venture. To mitigate the risks, the plan should stress areas in which the venture excels. This will give the investors validation that their chance of success is highest. To accomplish this, the plan must, among others, stress the qualifications of the management team, prove that the size of opportunity is formidable, show competitive advantage, and detail the operations plan that will allow the venture to effectively and efficiently go “from here to there.”

When venture capitalists read a business plan, they constantly ask “what if.” By giving them the confidence that the team, the opportunity, and the strategy are all sound, answering the “what if” questions positively becomes easier. This in turn pushes them to the next step which is typically to meet with the management team and assess whether it is the right team to execute the venture.

When developing a venture capital business plan it is also critical that the plan be properly edited. Most venture capitalists have advanced degrees and have spent many, many years in school. As a result, they naturally spot typos and other inconsistencies, which cast a negative light on the venture. Likewise, since venture capitalists must review so many plans per week, making them visually appealing enhances their impact.

In summary, venture capitalists are a sophisticated group on investors that “swing for the fences.” To attract their funds, companies must prepare Grammatically sound, image and words like business plans that focus on strengths and reduce risk.

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Jun 28

Management Hello – Spot for Quick Review and Evaluation.

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An enterprise can initiate a Hi-Spot review project in response to events, ideas, and activities when immediate action is necessary. A Hi-Spot review is a mini strategic plan for opportunities and threats, and may result in new initiatives or enhancements and modifications to existing plans. It is conducted within the context of a current strategic plan. Hence, assumptions for values, guiding principles, mission, vision, and other strategic statements are upheld, unless there is a good reason for change.

Events, ideas, and activities…

In the ideal world, there would be ample time to develop well crafted strategic plans that address both long-term aspirations and short-term vision offensively. In the real world, pressures from unanticipated events and changes in competitive, economic, environmental, political, regulatory, social, and technological trends can have an adverse impact on strategy. As a consequence, prompt defensive repositioning, restructuring, or reengineering activities may be necessary to respond to current threats, and to enable future offensive opportunities. Workouts, turnarounds, and profit improvement programs may be necessary to provide more general longer-term solutions.

Breakthrough ideas can arise at any time from an entrepreneur who starts an enterprise, or from any individual within, whether an executive, an intrapreneur, or an employee-at-large. A breakthrough idea overcomes an obstacle and allows for more progress in a specialty area. A breakthrough idea provides a new source of opportunity or response to a threat. Ideas can arise in any activity including planning and policy setting in the board room, research and development in the laboratory, sales in the field, production in the plant, and performance measurement in an executive’s office. Ideas can also arise from constituencies including employees through suggestion programs, and customers, suppliers, investors, regulators, competitors, and the community-at-large through listening posts. Ideas from constituencies have merit because they provide feedback to the management of the enterprise.

A review can be initiated at any time on an ad-hoc basis to determine the scope and impact of events and new ideas on research, development, sales, and production activities. In this context, the term “ad hoc” means that the review is focused on solving a specific problem. However, sometimes the term connotes an improvised solution without proper planning, which can often lead to more problems over time. Whereas a Hi-Spot review may address the consequences of improvisation, it should avoid creating such problems in the future.

Examples of activities that benefit from a Hi-Spot review include:

Responding to new entrants in existing markets
Responding to unexpected decreases in revenue or increases in costs and expenses

Beginning a new business relationship, such as a merger or acquisition with a peer or competitor, or a venture with customer or supplier

>Implementing total quality management initiatives

Implementing organizational design initiatives

Outsourcing processes and functions

Determining “mid-course corrections” to existing projects

These activities can lead to repositioning, restructuring, reengineering, workout, turnaround, and profit improvement programs as defined by a Hi-Spot review.

External events and breakthrough ideas can be quite disruptive to plans and programs that are already in place. However, plans are living documents. Ideas that merit further analysis can be examined in research and development activities, and implemented in sales and production. However, it may not be prudent to ignore the impact of ideas on strategy until the next planning cycle, especially if market share or profits are at risk.

Phasing…

Hi-Spot reviews are conducted in two phases – quick situation assessment and project definition. A project definition follows a quick situation assessment, but can be initiated in its own right for breakthrough ideas.

A quick situation assessment is often necessary because the enterprise has delayed taking remedial action and has reached a “pain point” that requires an immediate prescription. The delay can be as a consequence of fear to act or hope that conditions will improve. In addition to a follow on from a quick situation assessment, a project definition is necessary for breakthrough ideas that offer a sustainable advantage for which an immediate benefit can be realized. If responses to these ideas are not being addressed elsewhere in current plans and programs, then a project definition should be initiated.

The output from a Hi-Spot review is one or more well defined implementation projects. The rigor of the project management discipline should assure that results are realized during implementation, are focused, and are not improvised. Activities that are initiated in the implementation projects may be integrated with others in research, development, sales, and production over time.

Quick situation assessment…

The purpose of the quick situation assessment is determine a recommended solution and action plan to an immediate problem. It is best to employ a self-directed cross-functional team with a facilitator. The facilitator suggests problem solving approaches; however, the team finalizes them based upon their background and experience. The facilitator provides mentoring and coaching throughout the review.

Elements of a 10 step group problem solving approach include:

Summarizing the current situation and determining what complicates it

Framing the problem with facts and supporting evidence, and investigating the causes and effects

Developing alternative solution hypotheses – testable statements with predictions, projections, and forecasts

Developing the approach to the situation and gap analysis
Gathering the data

Structuring the results

Proving or disproving the solution hypotheses

Formulating the best solution based upon findings and conclusions

Developing alternative courses of action to implement the best solution

Presenting the best recommended solution and action plan

In performing the situation and gap analysis, topics to address include:

External - competitive, economic, environmental, political, regulatory, social, and technological trends

Internal - strengths, weaknesses, opportunities, and threats

Gaps - where the enterprise is and where it needs to be with respect to its constituencies: employees, customers, suppliers, investors, regulators, competitors, and the community-at-large

Since the situation and gap analysis is performed within the context of the existing strategic plan, other elements of strategy formulation are not addressed unless there is a good reason to do so.

A funnel approach should be used to drill down from the general landscape to specific issues and to prioritize them accordingly. The funnel approach starts with first asking open-ended questions to principals and constituencies, and then as the problem is identified, using specific questions to narrow the scope of the analysis. The approach includes employing the nominal group problem solving technique, triaging the problem and solutions, and applying the Pareto principle to prioritize ideas, issues, options, and recommendations.

The nominal group technique is a method of building consensus in face-to-face meetings with each member participating equally as follows:

Allowing participants the opportunity to write their ideas on paper

Allowing each participant to read their ideas to the team, which are then recorded on charts

Enabling the leader to discuss each idea when all have been recorded, and to clarify open points

Enabling the participants to vote for three to five ideas that have been recorded on the charts

Prioritizing the list of ideas according to the votes

Reviewing and summarizing the priorities collectively by the team

Triage is a technique used by healthcare service providers to prioritize procedures on patients based upon severity of condition. The technique can be applied by enterprises for problems and solutions associated with processes, functions, products and/or services, markets, and constituencies, and involves assigning three levels of priority:

Highest priority – most critical or highest probability of return

Medium priority – next most critical or medium probability of return

Low priority – least critical or lowest probability of return

The percentage weightings may vary according to circumstances, but a common starting point is “20-70-10″ from highest to lowest.

The Pareto Principle is also known as the “80/20″ rule – 80 percent of the effects come from 20 percent of the causes. It provides a useful mindset for making tough decisions and setting priorities.

The drill down can be conducted within the context of the framework for building sustainable advantage. The framework for building sustainable advantage is a fundamental tool for establishing the mindset and actions required to transform vision into value on an ongoing basis within an environment of change – either by causing it or responding to it.

Building sustainable advantage requires:

Establishing the governance disciplines of stewardship, strategy, and structure required to form a vision based upon innovative ideas, to enact change, and to deliver value through…

…the capabilities of people, processes and functions, and products and/or services to take advantage of opportunities in the marketplace…

…and the effective utilization of natural, human, intellectual, and financial capital resources to provide a strong foundation for all activities

If necessary, further due diligence may be necessary that examines the current position and relationships of the enterprise before the recommended solution can be enacted. If detailed implementation plans are required, the action plan can be expanded in a project definition.

The key success factor in a quick situation assessment is to establish a facilitated process that encourages involvement, but is not bureaucratic.

Project definition…

The purpose of project definition is to set direction for implementation in terms of scope, objectives, deliverables, resources, and schedule with both short and long-term components as necessary. Some short-term activities may be expendable in the long-term, but are required in order to realize benefits quickly.

A project definition is a follow-on to a quick situation assessment to develop detailed implementation plans. It can also be initiated in its own right for a breakthrough idea. A project manager is either appointed or emerges, and is supported by a cross-functional team. Some team members assigned to the quick situation assessment may continue through the project definition, and others with implementation experience may be added.

The project definition develops plans in sufficient detail so that downstream research and development activities, including analysis, design, construction, implementation, enhancement, and maintenance can be conducted. These activities may have to be prioritized against existing ones. If necessary, the scope, objectives, deliverables, resources, and schedule of existing projects may have to be adjusted. However, caution is warranted to ensure that the latest project does not get the highest priority unnecessarily at the expense of other projects.

The output of a project definition, which embellishes the output from a quick situation assessment if there was one, includes:

Understanding the problem (situation, complication, problem statement, solution description)

Scope and objectives

Approach

Deliverables including a plan for the next phase of work

Work plan (work breakdown structure, resource requirements, schedule)

Governance (project manager, steering committee, standards for performance and measurement)

Next steps

Once the decision has been made to go ahead, one or more implementation projects are executed with an emphasis on getting results quickly.

Key success factor…

It is important that the follow-on activities from the project definition be monitored with milestones and progress reporting. It is easy to lose control of such activities if they are not properly monitored, especially if new opportunities and threats subsequently arise. Therefore, enterpriship (entrepreneurship, leadership, Management) skills required will be successful.

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Jun 27

Women Entrepreneurs – 10 Keys to receive and work.

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Yeesh. Women outpace men in new businesses about 2 to 3. Latina women in particular are entering entrepreneurial ranks full speed ahead, outpacing every other demographic group.

So why the heck are women losing ground in the venture capital pool? Less than four percent of venture-backed companies are headed by women, the lowest in ten years.

Four percent.

It’s not much better for angel investors. Only ten percent of angel money goes to businesses headed by women.

As I said, yeeeeesh.

It’s not that the money isn’t there. On the contrary, there are billions and billions of dollars in new venture capital funds and new angel groups. I track those funds, and I know there is a lot of money there.

So how come women aren’t getting their fair share?

The simple answer is that venture capital and angel investment firms are run by men.

More importantly, what can we do about it? While there isn’t a magical answer, there are some real steps that women can take to make their companies a success.

1. Bootstrap the company. Well over 90% of all companies are still bootstrapped, financed by the owners. Male, female, Hispanic, disadvantaged – it makes no difference. This is still your best way to finance a company.

2. Incorporate. If you take your business seriously, others are more likely to do so too.

3. Create a strong Advisory Board. Few things say as much about your company as who chooses to put their names on it. A strong Advisory Board drawn from the industry, comprised of men and women, is a huge asset.

5. Create a strong business plan. Remember, the business plan isn’t meant to sell the business – it is meant to sell you. Your abilities, and those of your management team, are the real key to a strong business plan. Everything else is secondary.

6. Network like your life depended on it, for in truth, your business life may well depend on your contacts.

7. Create a commanding presence on the internet. The next generation will find its success anchored on the internet. Be there.

8. By-pass traditional sources of funding and go straight to corporations. Many corporations have venture capital arms with the sole purpose of identifying and promoting technologies in their fields. And, there is money in those venture capital arms right now.

9. Promote your business before it ever becomes a business. Pre-publicity can bring you to the attention of finance people in your area, and at the very least can begin to create buzz about your business.

10. Don’t shy away from “women’s businesses”. There’s a lot of money in those pocketbooks.

Yes, it is still very possible that you can have the business of your dreams. It is happening every single day for thousands of women.

By the way, did you know that about eighty percent of the Share> Error. Support Venture Business Women may start to get better results.

Possible

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Jun 27

Venture Capital Rocket Ride.

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A Rocket Ride is simply financing for fast growth to go from start to $100 million or more in a few years.

The Rocket Ride achieves this in a set of integrated and seamless steps. You use techniques that individually are well known – seed money, venture capital, going public – but in the Rocket Ride are all part of one path to provide the fastest possible company development, not simply a botched mess of separate transactions with the partner who is most convenient at the time.

Starting with the concept, the company is positioned for its growth into an exit strategy. Possible strategic buyers are studies as to their needs and what they would find most valuable. The public securities markets are studied as to what would bring the best market value as an IPO. These items are integrated into the concept and the growth plan.

From the ground floor, the company has to be set up right. That means using sophisticated legal documents that set the company up to go public or be sold from the very beginning.

To create one seamless process, you need to craft the founding documents, the articles of incorporation, the by-laws, the incentive plans, the employment agreements, and the corporate governance rules with an eye toward the exit strategy, whether it is going public or a sale to a strategic buyer.

The growth plan and each stage of financing can then be planned. However, planning is not enough. Everyone has a good plan; it is execution that separates the dreamers from the successful.

When you have the plan, the need for management talent for the team will be easy to see.

History of the Rocket Ride

My work in the investment business started out on the OTC trading desk where all kind of stocks – from the wild penny speculations to the stodgy rust-best manufacturers – were traded. More importantly, this is where most companies that were going public started to trade.

Moving up to Vice President of Trading for an New York investment bank, I not only made markets in our IPOs and the public offerings of the other houses, I had to read the prospectuses and attend all the dog and pony shows.

This experience was like a continuous stream of business school case studies in company finance. It was also an education into what investor will avoid and what they buy.

As I become an investment banker, I developed more and more techniques for venture companies, and that lead inevitably to my starting to run them.

Make no mistake, this was the school of hard knocks – you get spanked hard if you are doing something that does not work and you find out what works and what works like crazy.

Eventually, this transformed into the idea of one process, not one disjointed transaction after another.

The limiting factor in the growth of most companies is their own decisions. In the beginning, the company has infinite potential. Bad ideas limit growth. It takes experience to build a strategy that can take you all the way.

My experience tells me that the Rocket Ride is for you if:

· You have a public or private venture company

· You have an overwhelming desire to succeed

· You are always optimistic

· You are wildly impatient

· You are a fanatic about your company

· You are a visionary

· You are tenacious

· You are willing to work hard to get results

· You are demanding of others

· You put your business first, knowing success will give you all the rewards you want

· You are willing to share the fruits of your efforts with others

· You are a leader

· You are willing to do whatever it takes to get the job done, and done on schedule

· You secretly have your corporate logo tattooed on your arm

· You want to grow your company at the fastest possible rate

The steps in the Rocket Ride are done by a team. Management is expert in its core business, but may not have either the expertise or the time needed to take Wall Street by storm. Teams are needed to really have fast company growth. Each function, like finance, must support the core business.

The first financing is seed capital. Then more rounds of financing. Timing these rounds to minimize dilution is critical. Then, the major financing.

One of the benefits of doing this right is that none of the work has to be done over to prepare for going public or the sale of the company. This minimizes the use of management time. Management has to work on the core business. The money has to be there when it is needed, leaving management to focus on what they really do. Finance is, after all, only a support function.

Finally, the exit strategy. Most venture capital deals plan to do an IPO or merge with a large company. If this is done right, the company is prepared from day one for presentation to many strategic buyers, perhaps in an auction. The strategic buyers have been suitably educated as to the key importance o the company to maximize the price.

If the company is going to go public, there is the process of finding an underwriter, valuing the company, negotiating terms, and marketing the issue. The process does not end there as the company must do well in the after market trading to so the founders Removable or not, and look with great satisfaction, for all travel a reality. This is not what you want or not.

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Jun 27

Alternatives to increase capital investment growth.

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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 three months and one year as actual costs (Accounting consult with legal counsel) and costs of the major changes of ownership "about the knitting and make money on companies that focus on how the company presents itself.

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Jun 27

Investors Finder – keep the secret weapon of capital quickly!

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If you own or run a company that is trying to raise capital in the current economic conditions you’ve undoubtedly been challenged by the limited funds available. Investors are more difficult to find and the individuals that are actually willing to part with their cash are even tougher to find. You’ve talked to friends, family members, your CPA and your attorney but trying to get them to invest is like drawing blood from a stone, it’s just not happening.

There is an easier way. Most broker dealers and market makers have an emergency number in their rolodex that reads “Investor Finder”, these specialist consultants are brought in when there is nowhere else to turn for cash. A true Investor Finder has 1,000’s of investor contacts that they can call on to get funding for their clients and are constantly using online viral strategies to attract more investors to their database. An investor finder usually is not a licensed securities broker/agent or attorney; instead they are traditionally consultants that are active in the investment banking facilitation aspect of the industry. Being that they are not licensed they do not accept equity payments or percentages; instead they work on a flat fee basis. A good consultant in this genre can bring in 30 to 70 real investors per day and it’s up to the client to sell the opportunity from there.

A typical lead from an investor finder will be an investor or investment firm that is responding to the consultant’s opportunity introduction email or snail mail mailing, they have read about the opportunity and they respond one of two ways, either they are calling into a phone room to be screened and qualified or they are contacting the client directly. Many times the investor doesn’t know that they are part of the “finder’s” database but do recall signing up to receive investment opportunity updates, so either way the investor is solid and active. If you are trying to raise capital and need real Results quickly and can not afford to waste time asking for you to find qualified consultants and investors are trying to collect money from your Finder easier and faster.

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