2011 - Angel Investors

12/30/201101/26/2012

Attracting Venture Capitalist

A venture capitalist is a person who invests in a business venture, providing capital for start-up or expansion. Venture capitalists are looking for a higher rate of return than would be given by more traditional investments. Venture capital was once known also as risk capital, but that term has fallen out of usage, probably because investors don’t like to see the words “risk” and “capital” in close conjunction. Most venture capitalists are looking for a profit of 25 percent and up. In other words, the venture capitalist may have no business experience applicable to the industry your company is involved in, and is focused on the potential rate of return your company can provide. Venture capitalist prefers to invest in entrepreneurial businesses. This does not necessarily mean small of new businesses. Rather, it is more about the investments aspirations and potential growth. Such businesses are aiming to grow rapidly to a significant size. As a rule of thumb, unless a business can offer the prospect of significant growth within five years, it is unlikely to be of interest to a venture capital firm.

There are some key points that venture capitalist look for in a business. First is your management team, it plays a vital role especially in a start up business. VCs looks into how your team manages east to difficult situation. Venture capitalists assess the strength of a management team by examining the members from three different perspectives. Venture capitalists look for professional experience. People who have a very good track record, every startup should have a marketing and operational executive. VCs also looks for admirable personal traits in the entrepreneurs such as reliability, reputation, trustworthiness, etc. VCs would like to deal with entrepreneurs who have established credibility within the industry. Venture capitalists generally tend to invest in entrepreneurs whose reputation can be verified. And lastly, VCs look for entrepreneurial abilities in the team. Heading a startups is difficult than heading a large organization it’s because of the limited resources most startup have. Management team should not only be extremely passionate and willing to persevere about an idea, but also have the ability to take a calculated risk.

Second is competitive advantage, startup corresponds to the possession of rare core competencies that creates value to customers. A company has a competitive advantage if competitors cannot easily imitate their core competences. Competitive advantage is the company’s unique specialty that no other has. VCs look at the competitive advantage a startup has before they determine the startup’s growth potential. Every entrepreneur should articulate the competitive advantage of his/her business idea before approaching investors.

Third, VCs looks for the company’s potential to the market, it defines the total sales that the startup can eventually make. The market potential really depends on the market size, market needs, and market penetrability. Market needs describes the problem the startup intends to solve. Market size describes the quantity or size of the sales opportunity for the business. Market penetrability only tells how easy it is to make sales and generates revenues. It tells marketing efforts that the startup needs to exert before it penetrates into the market. Venture capitalists closely look at the market potential for a startup idea before they decide to fund the idea. Entrepreneurs should focus on clearly defining the market before approaching investors.

Fourth is Exit Strategy, startup should also initially plan for a strategy of “cashing in” on their company allowing VCs to liquidate their shares. VCs prefers either IPO or acquisition as their exit strategies. Most VCs prefers going public however not all companies have the potential to go for IPOs. They prefer to be acquired by a bigger company.

VCs not only invest in companies, but also help companies succeed. They advise entrepreneurs and assist with customer contacts, market specific intelligence, etc. A VC is successful only if his or her portfolio companies succeed. Venture Capital fare not mere financiers or investors. As partners of the entrepreneur, they contribute in any way possible for the success of the company. The key then is in choosing the right firm for the type of business that you would want to enter into. Just like in entering into a partnership, you wouldn’t want to be partners with someone whom you don’t like to work with.

More detailed information and useful advice can be found at http://www.funded.com/ Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check out website.

12/28/201101/26/2012

What is your Business New Years resolution?

What is your business New Years resolution?

Say goodbye to 2011 and say hello to 2012 but before welcoming 2012, have you listed down your New Years resolution? It’s the beginning of a New Year and most small business owners are making their New Year’s resolutions about their businesses. But before doing your list you can back track your previous resolution and see if you were able to accomplish those. Pull out your business plan and any other planning documents such as last year’s action plan and review last year’s goals. After that you can go ahead and do your resolution. We have come up of some list that you can add on your New Years resolution.

Budget, Your budget doesn’t have to be in a fancy spreadsheet with graphs and charts. A simple, hand-written list of expenses and incomes can get you started, and can be expanded later if needed. A budget will help keep you organized and have a plan as to where all your money will go. Budgets should include the amounts that go to bills, your savings, as well as leisure and other spending.

Save, saving money may sound so easy but really, its not. Getting used to money-saving techniques can be a lengthy and involved process, especially for those of us who haven’t had much experience with it. It’s also a good idea to learn how to save more money and become more pennywise. Using coupons, looking for store discounts and sales, tracking our expenses, and utilizing a budget are skills many of us have learned to do without until recently. Once you become thrifty, it’ll be hard to go back to spending so freely.

Debt free, freeing yourself from debt. Whether this is a realistic and attainable goal is really dependent upon your financial and debt situation. The easiest way to living debt-free is to cut your spending and put the extra money in your budget towards paying off your debt a little at a time. The key is sticking with it.

Start investing; having an extra income or other investment can be your financial resolution. Even if you can only afford putting away $10 a month, you can still find cheap quality stocks or mutual funds one share at a time. They are a nice introduction to the investment game and a great way to begin to secure your future.

Keep track of your Tax record, this could be the hardest task you will encounter over the year but if you are using a computerized accounting program, this resolution should be pretty easy since the software will do the work for you. Enter your accounting receipts on a daily basis. Your software is only as good as the information you give it.

We all know how important business planning is, but it’s easy to put off in the press of daily events. Hopefully this year end checklist has inspired you to get to it and made your business planning easier. Though goals take discipline and motivation, all you have to do is remind yourself how bad bringing on debt is and how nice it would be to be able to retire one day.

12/22/201101/26/2012

BANK LOAN VS VENTURE CAPITAL

Bank Loan VS Venture Capital

Before you choose whether to go get a bank loan or seek for a VCs, let’s make a quick comparison on both bank loan and venture capital. Bank loan require an APR which stands for Annual percentage rate. This is an interest rate quoted by bank in their loan document. On the other hand VCs doesn’t have one, which is equity while bank is debt. The APR for small business will depend on the length of time the company has been operating, the revenue, operating profit, net profit. Consistency makes the numbers more predictable and the bankers more confident they’ll be repaid. That, of course, assumes that the market and industry are relatively stable. So bankers seek a guaranteed return on their investment (loan) in a business. Venture Capital however it’s a win or lose proposition. The either make a return because the business is successful and is later sold or it will go to the public, or they don’t because the business goes bankrupt or it shut down. VCs measure their returns as a function of the company’s future performance. Unlike in bank loan either the term or the repayment amount is known in advance.

The benefit on bank loan is that as you pay down your loan you build creditworthiness. This makes you more attractive to lenders and increases your chances of negotiating favorable loan terms in the future. While VCs can be passive or active, passive investor are willing to give you capital but will play little or no part in running the company, while active investors expect to be heavily involved in the company’s operations. Carefully consider whether or not you are compatible, as this person will own a portion of your business.

One of the most important tools when deciding on what type of business loan your company needs is research. Researching the different types of loans available to you and your company can save you money. Business loans are hard to get, but with the right combination of perseverance, passion, dedication, and conviction in your business plan, they are not impossible after all.

12/22/201107/12/2023

Why Do We Need a Business Plans?

Business plans are very essential in putting up a business whether its big or small. Many people think of it as something you only do if you plan to apply for a loan or if you are looking for investors. Of course it’s very important to have one for this purpose. However it’s not the only reason you want to consider of not having one. Business without a plan is like travelling without a map or compass on your hand. Your business will need a foundation to start and it can be obtained from a good business plans.

Yes, you need business plans if you are applying for a business loan or if you are looking for investors. Investors and Bank always requires you to have a plan. They expect it to be the overview of your company. Your business plans will tell you if you will be approved or not. Make it as detailed and concise as possible. Running a business with a business partner also requires you to have a business plans because it will help you define the agreement between both parties. It will show that both parties has a clear understanding on what’s going to happen. It also help to get everyone involved in your start-up on heading in the same direction including your employee, partner and even your family members.

Aside from your investors and partners business plans plays a very important role on you. This will be your guiding point in order to run a good business. This will establish business milestones and should clearly state the long term milestone for the company. It also understands the forecast of your company’s staffing needs. So, that after completing your business plan you will not be surprised when you are suddenly short handed. It should also indicate the branding of your company as well as your potential target market.

Always keep in mind that in order to be successful, business planning is a must. There are so many benefits that can be obtain with the proper use of this. It will define your target market, determine your business requirement, identifies the main issue in your business, map out the whole business plans and more. People don’t realize that planning is not just for start up, loans or investments. This will be your guide towards success. You must know how to plan step by step, think ahead, set priorities and manage your money.

Why Do We Need a Business Plans?

More detailed information and useful advice can be found at https://www.funded.com/ Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check out http://www.funded.com/.

12/21/201106/28/2017

Right Investor for the Right Business

We often asked ourselves how and where to find the right investors for our new business. Choosing the right investors is like looking for your perfect mate, finding the right financial adviser can be tricky, especially if you lack experience. It helps if you know what you’re looking for: Finding an adviser you trust and respect is critical, experts say, so don’t just sign on with the first person you meet. But how do you really know the right investor for your business. The first investor that you will consider is your family member; however at some point it’s not always a good idea. Money matters are a very serious subject, and that is one you want to avoid if you want to have a good relationship with your family. Put your relationships first and look elsewhere for business investments. So, who do you look for? Here are some people or group of people you may want to consider.

Lending Clubs, this is the easiest way of getting financial support. Lending clubs are made up of a bunch of investors that loan out money to people and businesses with good credit. They are a great resource and should be the first place you look.

Commercial Banks, if you are putting up a new business you may want to consider asking for a bank loan. Before doing so you will need to have put together a solid business plan before you ever hope to get financing.

Partnership, if you are having a hard time looking for a private investor to finance you, you may want to consider looking for a partner. You may encounter a silent type partner whom they let you run your business or an active partner, who is very much involved in running your business. The best place to look for a partner is at chamber of commerce or you may want to join an organization or group of business minded individuals.

Angel Investors, One of the most common people that you will encounter if you are starting up a business. Angel investors are wiling to invest on small businesses. Angel investors will provide you with funding however; they will be in close contact with you to make sure that their investment is going in the right direction.

Venture Capital, most venture capitalist usually invests on established businesses but if you are able to convince them to invest then you should consider yourself lucky. However, if they say no, these people will able to refer with other private investors that are willing to invest on small start up business.

Remember that in order to find the right investor, you should have a very detailed business plan to present. Investors will provide funds and expertise, but they will not advise you on how to write a good business plan. The key is, don’t be timid or afraid to ask. People will help you if you just ask and if you ask enough people you won’t have any problems finding a private investor for your startup small business.

12/16/201107/12/2023

WHAT’S INSIDE YOUR BUSINESS PLANS?

What’s inside your business plans?

If you are starting a business, whether you are looking for an investor or financier or not, it is very important to have a business plan. Many business owners just jump into creating a business without researching and making a concrete plan. Inevitably, they soon find that they are out of money and have no time or clear strategies how to market their business. There are several things you should need to include on your business plan.

Aside from your business name, the first thing that you should put is the mission and vision of your company and your products and services. It defines what your business really is and what you want to achieve in your business. Second, are your marketing plan, target market and competitive analysis. On your business plan it should have a clear view on how you would advertise your products/services and how you will compete to other company. Third would be your Financial plan, a business can operate without budgets but its clearly good business practice to include it. With budgets, you will be more likely to achieve your business objectives, you will make more reasoned decisions and you will have better control on your cash flow. Lastly, it should also include the people behind your company so that investor would know whom they are dealing with.

Now that you have a business plan, make it a part of you by knowing and understanding it clearly. Build upon it continuously and refer to it often, so you remain on track to building a profitable business.

10/03/201106/28/2017

Meeting the Expectations of Venture Capitalists

Entrepreneurs seeking venture capital often approach the market a bit naively. Though there are similarities to applying for funding through traditional lenders, there are also some differences. For example, venture capitalists can set any terms they want whether they fit traditional funding models or not. For example, a bank may require returns that are 5 times within a 5 year period. The venture capitalist may require 8 to 10 times within that same time period.

Successfully obtaining venture capital requires being fully prepared to meet the special demands of venture capitalists. Since these are private lenders, they can set the bar high in order to lower risks. The venture capitalist wants to know if you are going to make money, how long it will take to see investment returns, what kind of track record or related experience you have, and whether the company management team is competent, innovative and forward thinking.

If you can answer these questions successfully, there’s a good chance you will attract funding. However, matching the company with the right investor is critical. Term sheets detail the proposed agreements and at this stage it is critical that each side ask the right questions, come to a full understanding of expectations, and agree to valuation. There should not be any major surprises during the final negotiations once the term sheets are agreed upon.

Keep Your Deal Sweet and Not Sour

As odd as it may sound, you can select the wrong venture capitalist if you do not clearly explain your business model in terms of how you plan on operating and what your long term goals are for success. It’s not a matter of fabrication, but more a matter of clear communication. A deal can go sour really fast if the venture capitalist discovers during final negotiations that the company management really plans on taking a different growth path than was explained or has plans that were not divulged and could potentially adversely impact operations.

Viewing End Goals Through Valuation

If this seems obvious then you would be surprised how many negotiations fall apart even after terms sheets have been agreed upon. One of the main areas of contention is business valuation. Business valuation is normally figured by determining the discounted cash flow and then adding the residual value of the business. The projected cash flow will extend to the end of the agreement because that is the period in which the venture capital funders expect to get their money back.

Of surprise to many businesses applying for venture capital is the fact the venture capitalists will value their business much lower than the business believes is accurate. However, the venture capitalist viewpoint is one of minimizing risk and earning a profit while a business is anticipating growth and profits and is willing to take risks to achieve their goals. The business and the venture capitalist have the same end goals but will approach valuation differently while deciding if it is possible to reach those goals. Want more info or assistance? Visit http://www.funded.com

10/01/201106/28/2017

Control and Angel Investors

As you consider the various types of funding for a new businesses or business expansion, one of the important questions that arise concerns control. How much and how often will the angel investors get involved in your business once the funding is approved? The answer depends on a lot of factors including the negotiated terms and the success of the enterprise that is funded.

Many angel investors aren’t interested in having a say in day-to-day operations. They simply want you to accomplish what the business plan said you would accomplish and earn the investment return that is expected. The investors know what progress is being made because you will have to submit financial and performance reports on a pre-established basis. This is true for all types of investors whether they are angel investors, equity partners, venture capitalists or banks giving business loans

Security Issues

Control issues really come down to how secure the angel investors feel about the success of your enterprise. Though it goes without saying that investors approving start up funding or business funding for expansion believe the projects will succeed, they are savvy enough to know there is always a degree of risk. The higher the risks, the more control the angel investors will require.

A solid business plan will be realistic and a profit must be shown at some point even if not the first year or two. The best plans though are not guarantees the initial forecasts will be met. The types of control angel investors may require include the following:

Passive investing in which investors providing business funding rely on the quarterly, monthly and annual reports and have virtually no contact with the business management or board of directors

Passive investing in which investors are available for consultation when requested

Active investing in which angel investors sit on the board of directors and have full voting rights

Active/passive investing in which the angel investors advise the board of directors as mentors

Active investing in which the angel investors assume an executive management position like Chief Executive Officer

The Full Gamut of Control

As you can see, angel investor control runs the full gamut from no participation to running the company. Some investors will take control of the majority share of stock to gain full control of the company like equity partners; however, that is not the preference of most angel investors. They are not investing to become business owners, but rather to make money. In addition, if there is more than one angel investor, the group may designate a single representative as the primary contact.

The control issue can be one of the more difficult areas to negotiate at times. Though an entrepreneur needs money, he or she doesn’t want to give up control of their vision or dream. You can take care of that issue by submitting a solid well thought out business plan that is realistic.

More detailed information and useful advice can be found at http://www.funded.com. Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need to access a vast network of business people, entrepreneurs, partners and service providers to help you start, finance and run your business, check out http://www.funded.com.

07/08/201106/28/2017

Private Equity Financing for Major Projects

If you are looking for private equity financing for a major acquisition or business expansion project, the best approach is to use a firm that raises this type of financing for businesses. There are many good reasons for making this recommendation, and they are all for the benefit of the business needing an injection of capital.

Can identify the private equity financing groups that are most likely to be interested in your expansion plans
Shortens the time frame for finding and landing project money
Able to streamline the proposal process because have knowledge of what particular investors require before considering a proposal
Can assist business through all phases of the request process
Saves business time and money by handling many of the time consuming steps required in the search for investment money
Understands the entire process from beginning to end

In fact, a professional that specializes in finding financing for major business expansions or projects can also assess the availability of other types of funding including venture capital, business loans, and even angel investors. The process involves much more than just submitting a business plan. You have to balance the timing of the request, marketing efforts, selection of potential funders, negotiation process and the closing of the deal.

Experience Equates to Time Saving Efforts

It’s true that the process of finding funding from any type of investor including private equity, venture capital, angel investors or business loans can be time consuming. It’s a process that cannot be rushed but it can certainly be streamlined. Each phase of the process can be approached methodically and with a well defined strategy which leads to a targeted and thorough proposal.

Many companies have the expertise needed to be successful at producing products or services which is why they are looking for new funding. Yet many of these same companies do not have fund raising experience. The lack of experience can seriously delay the process. There are a number of steps that must be taken and using a professional that understands these steps makes success more likely and more likely to occur sooner.

Every Step of the Way

Following are some of the major phases that must be completed when applying for private equity.

Complete accurate valuation of business and business expansion project
Identify the potential financing alternatives
Prepare time schedule
Develop in-depth marketing plan
Market the proposal to funders
Respond to funder questions
Meet with prospective funders
Prepare and review financing proposals
Negotiate final terms
Prepare legal documents
Close
Identify reporting requirements

When searching for private equity, startup funding or any other type of business funding, businesses will find that using professionals experienced at raising funding can benefit the entire process from beginning to end. If you are like most businesses, once you decide the funding is needed there is no time to waste.

06/29/201106/28/2017

Successfully Attracting Angel Investors

Successfully attracting angel investors, venture capital or equity partners requires well defined strategies that prove necessity of funding and a likelihood of profitability. Finding startup funding or major project funding can be challenging, and no one should tell you otherwise. The success of your search will be highly dependent on your ability to state your case and then back it up with in-depth analysis of the business or project based on realistic data and information.

A common mistake entrepreneurs make is using faulty data in the business plan. Angel investors are savvy and have been around the block (so to speak). In other words, investors willing to give a stranger business funding for a proposal have almost certainly developed business acumen and can spot unrealistic projections in a marketing plan or financial plan. Your business plan will be closely scrutinized and each number must be backed up with economic, marketing and financial information collected through research. It’s unfortunate that many promising proposals submitted to angel investors are turned down simply because the projections make claims that are obviously unobtainable.

Would You Ask a Banker?

One test you can give your business plan is to ask if you would be willing to submit the proposal to a banker considering business loans. The analysis that requests for bank business loans get is always in-depth and thorough. There will be dozens of forms to complete, background and credit checks ordered, and economic data compared to the data in the business plan. Business funding or startup funding is only approved when you are able to provide:

Appropriate analysis of the market as well as finances related to the business
Detailed support for claims of potential profitability
Investment alternatives including angel investors or venture capital
Clear investor entry and exit strategy
Clearly written descriptions of business activities
Convincing arguments for investing in the enterprise

The convincing arguments for investing are critical to funding approval. The business descriptions and financial statements are essential to obtaining funding, but just as important are the arguments you make. The written and oral arguments are equally important too. You ability to communicate your business vision and need to angel investors and equity partners can make or break the deal. It is a critical component of the art of negotiation.

Making a Case for Private Money

The bottom line is that approaching angel investors is the same as approaching bankers and other types of lenders. The only difference is that the angel investors are considering giving you private money. Anytime you are asking someone to lend personal funds, the presentation of your idea must be well planned and efficient. It is the first real experience your business will have in the competitive business world.