Venture Capital Magazine

Rahul Rana


Venture capital firms are comprised of individual partners. These partners make investment decisions and typically take a seat on each portfolio company’s Board. Partners tend to invest in what they know, so finding a partner that has past work experience in your industry is very helpful. This relevant experience allows them to more fully understand your venture’s value proposition and gives them confidence that they can add value, thus encouraging them to invest.

Fortunately, most venture capital firm websites list their partners with great pride. Each partner typically has a bio that includes their educational credentials, business accomplishments and investments that they have made. In identifying the right venture capital partner to contact for your company, try to find the partner that, from their background, will truly grasp the opportunity and can really add value.

Once you have identified the most appropriate venture capital partner, it is important to figure out how to contact them. As partners are often inundated with business plans, having a personal connection and/or introduction is often the difference between getting heard and not getting heard. For instance, if you attended the same university or worked at a company that they did, call or email them and use this as the introduction. If not, it is important to network. Call people that may have been associated with the partner and ask for an introduction.

Getting the partner’s attention is the first key hurdle in raising venture capital. The second hurdle is getting them to believe in the opportunity, and finally, giving them the enthusiasm and information needed to convince other partners in their firm that investing in your venture represents a sound investment.

In Business Planning, Competition is Good

When developing the competition section of your business plan, companies must define competition correctly, select the appropriate competitors to analyze, and explain its competitive advantages.

To start, companies must align their definition of competition with investors. Investors define competition as any service or product that a customer can use to fulfill the same need(s) as the company fulfills. This includes firms that offer similar products, substitute products and other customer options (such as performing the service or building the product themselves). Under this broad definition, any business plan that claims there are no competitors greatly undermines the credibility of the management team.

In identifying competitors, companies often find themselves in a difficult position. On one hand, they want to show that they are unique (even under the investors’ broad definition) and list no or few competitors. However, this has a negative connotation. If no or few companies are in a market space, it implies that there may not be a large enough customers need to support the company’s products and/or services.

Business plans must detail direct and, when applicable, indirect competitors. Direct competitors are those that serve the same target market with similar products and services. Indirect competitors are those that serve the same target market with different products and services, or a different target market with similar products and services.

After identifying competitors, the business plan must describe them. In doing so, the plan must also objectively analyze each competitor’s strengths and weaknesses and the key drivers of competitive differentiation in the marketplace.

Perhaps most importantly, the competition section must describe the company’s competitive advantages over the other firms, and ideally how the company’s business model creates barriers to entry. “Barriers to entry” are reasons why customers will not leave once acquired.

In summary, too many business plans want to show how unique their venture is and, as such, list no or few competitors. However, this often has a negative connotation. If no or few companies are in a market space, it implies that there may not be a large enough customers need to support the venture’s products and/or services. In fact, when positioned properly, including successful and/or public companies in a competitive space can be a positive sign since it implies that the market size is big. It also gives investors the assurance that if management executes well, the venture has substantial profit and liquidity potential.

liors2

Lior Levin interviewing Adeo Ressi the founder of thefunded.com. They talked about venture capital, entrepreneurship, incubators, innovation and more.

Mohit


Mr Rajeev Chandrekshar who Sold BPL Mobile has his new venture named Jupiter Capital Based in Banglore. Please let Me know the contact Details of Mr Rajeev and Jupiter Capital with Address, Plone number and most importantly E-Mail Address ……

Amy Grace Remollata


Borrowing from banks is every small entrepreneur’s nightmare. One gets turned down for bank loans for a variety of reasons, including lack of assets, collateral and business experience. Don’t despair, however. There are several common types of alternative sources of capital for setting up a business available to young companies.

Savings and Investments

The first source you should consider is your own savings and investments. One disadvantage though of self-financing is that if things did not turn out the way you want them to be it will be your money that goes down with the ship.

Angel Investors

Angel investors are affluent individuals who provide capital for a business start-up, usually in exchange for ownership equity. These individuals are looking for a higher rate of return than would be given by more traditional investments (typically 25% or more).

Angel investors are an excellent source of early stage financing and high-growth start-ups. They are often willing to tread where there is too much risk for banks and not enough profit potential for venture capitalists. And since angel investors are often retired business owners and executives, they can also provide valuable management advice and important contacts.

Peer to Peer Lending

Peer-to-peer lending is a means by which borrowers and lenders may transact business without the traditional intermediaries, such as banks. It can also be known as social Lending, ordinary people lending money. The process may include other intermediaries who package and resell the loans–examples are Prosper.com and Zopa-but the loans are ultimately sold to individuals or pools of individuals. Prosper.com, which is available in the US only, offers business loans for small companies.

An enabling technology for peer-to-peer lending has been the internet, which connects borrowers with lenders, for example through an auction-like process in which the lender willing to provide the lowest interest rate “wins” the borrower’s loan. (wikipedia.com)

Money pool

Instead of a bank loan, borrow smaller sums from several family members, friends, or colleagues. The lenders have no legal ownership in the business, but can act as advisors and cheerleaders for your venture. Remember though that nothing causes tension in a family like lending money that is never paid back.

Credit Cards

Many business owners use their credit cards to fund their businesses. Credit cards offer the ability to make purchases or obtain cash advances and pay them at a later time. But as a long-term financing method, they can be expensive. Most credit cards will charge you 2% to 4% of the face value of a cash advance as a “fee” making this method of financing very risky.

Bootstrapping

Another source of capital for setting up a business is bootstrapping. It is a way to finance a business by saving rather than borrowing money. It’s being as frugal as possible so your business can be started on as little cash as possible.

The use of private credit cards is the most known form of bootstrapping, but a wide variety of methods are available for entrepreneurs. Other forms of bootstrapping include owner financing, minimization of accounts receivable, joint utilization, delaying payment, minimizing inventory and subsidy finance.

While bootstrapping involves a risk for the founders, the absence of any other stakeholder gives the founders more freedom to develop the company. Many successful companies including Dell Computers were founded this way.

Venture Capital

Venture capital is not suitable for all entrepreneurs. It is an option for small companies that have a seasoned management team and very aggressive growth plans; however, venture capitalists will rarely invest in small businesses that have no intention of going public. If a company does have the qualities venture capitalists seek such as a solid business plan, a good management team, investment and passion from the founders, a good potential to exit the investment before the end of their funding cycle, and target minimum returns in excess of 40% per year, it will find it easier to raise venture capital.

The venture capitalist objective is to invest in a company for a short period of time – say 5 years – and then cash out of the business while making a significant return on their investment.

n zed


Im trying to finish a 20 chalet with additional 20 room eco resort in New Zealand, 100% off grid.
Its highly elevated, with massive coastal & ocean views from a safe distance away. Its surrounded by native rainforest and full of ferns and birds. A spring fed river that runs continually runs through it. It generates its own power through multiple methods, purifies fresh water in and waste out, has seedbank, full garden/orchard & working micro farm, food storage, winery, oil press, sat-comms, library & complete medico station. Its also fully defendable and secure.
My idea was to complete it, open for business as a top end getaway, then sell individual chalets to carefully vetted buyers, chosen for skills and attitude. However Im running out of funds fast. Is there a market for eco timeshares of this nature in a country like NZ in todays current global climate?
Do I try and sell 10 chalets to ten people on spec? Or am I better to find a single investor wanting 49%-50% of the venture?
Thanx Vaugn, cheers Fred. In answer to your question, Fred, its along the lines of privacy from inquisitive paparazzi, or for persons who consider very real threats to their personal security. The property is easily secured. Merry Christmas

OhashiMedia

Presentation from Göran Eriksson and John Garcia. Sorry, camera stops recording after 1 hour so there is a small bit of footage missing.

Peter Gallagher


I am now the C.E.O. of a multi-national venture capital firm.

Blondey


(Please don’t make this question about Bush – Just Answer the question)

The 2008 presidential race is off and running. It is popular to bemoan the lack of qualified candidates in the race. I wholeheartedly disagree. Many of the candidates have much valued experience in business, military and government. In 1984, Mitt Romney founded Bain Capital, one of the nation’s most successful venture capital and investment companies. Bain Capital helped launch hundreds of companies on a successful course, including Staples and Domino’s Pizza. Like Rudy Giuliani who was mayor of New York City, Romney also has executive experience as Governor of Massachusetts. John McCain was an officer in the military and is the senior senator from Arizona serving since 1987. All three of the declared republican front runners have very thick resumes as you should when applying for the most powerful executive position known to man.
Imagine if the republican front runner was a new member of congress with no military, business or executive experience. People would rightly challenge his/her lack of credentials. Likewise, suppose the Democrat front runners were Barak Hussein Osama and Hillary Rodham Clinton.

Past Presidents;

Bush 2 – Executive experience as twice elected Governor of Texas. Business Experience. Military experience flying Jets in the Guard.

Clinton – Executive experience as Governor of Arkansas.

Bush 1 – Executive experience in Business and as head of the CIA. Served in WW2.

Reagan – Executive experience as Governor of California

Carter – Governor of Georgia. Military experience.

JFK had a thin resume but at least he served in the Military.

Hillary – ?

Obama – ?

Len McDowall


In this continuing series of articles on how to write a Business Plan or Information Memorandum to raise capital, Part 6 discusses business plan content specifically ‘Research and Development’.

Research and Development

If the product or service of the business requires any design or development before it is marketable the extent of this work needs to be disclosed in your business plan. Similarly, if future prospects depend on the successful development and introduction of new products it is important to state the nature and extent of such work and the time scales involved. Although existing products will be of considerable interest, venture capital investors will be equally if not more concerned with product succession, given the likely length of their involvement with the company and hence will expect to have the R&D strategy outlined in the plan.

The points for consideration to include in your business plan:-

• Current status of the development program.

• The in-house expertise the company has in the area and whether any development work is to be sub-contracted.

• The person responsible for overseeing development and his experience/expertise in this field.

• Identify any major anticipated problem areas and the approaches to their solution. State what effects these may have on the development timetable.

• Outline future development work on new products.

• Present a design and development budget both on a cost and time basis. Allow some contingency as costs are often underestimated.

• Clearly state the accounting policy with respect to R&D and if costs are capitalized present the case for this.

The content of Business Plans will be covered further in subsequent articles by Len McDowall.

© Len McDowall, Integral Capital Group 23rd October, 2007

www.integralcapital.com.au

Low Jeremy


Arkansas is a very diverse state. You have a lot of things going on for this state. The state has a lot to offer to visitors, travelers and even for entrepreneurs. You can see in the state a lot of opportunities for outdoor adventures such as cavern or cave tours and a lot of mountain trails and scenic routes to hike, walk and drive.

And for entrepreneurs, the state opens up a lot of opportunities. Arkansas is rich with small towns that lure not only travelers but can be an investor’s new base of business as well, such as Fox and Charlotte towns.

Venture capital is a great way for small businesses to get the funding they need. Venture capital is more commonly sponsored by the wealthy investors and at times professionally managed investment fund. Government backed Small Business Investment Corporations (SBICs), or their subsidiaries like different investment banking firms, insurance companies, or corporations also act as sources of venture capital.

What these investors do is that they invest their money on companies that are still starting up and seems to have great potential of becoming big and earning a lot in profits.

However, venture capital could be somewhat difficult for small businesses to obtain, without the proper proposal that is. It is always standard procedure for investors to require entrepreneurs a formal proposal where the latter can based a proper evaluation of the business’ potential. Venture capital brings several advantages to small businesses.

Among them include management assistance and lower costs, these above the funds the venture capitalists put into their businesses. However, venture capital is still not the lone answer to all the problems small businesses have especially regarding their capitalization. Venture capital is only one strategy, there are other ways to settle things and improve the capital outlay of a small business.

But since the venture capitalist is investing on mostly speculations, the risks are great. That is why venture capital is also called risk capital. This is why investors study extremely well the proposals of small businesses before approving or giving them their investments.

To top it off, investing on such companies is basically a stand alone thing. The government does not provide any form of protection for venture capitalists whose ventures have become a failure. Still there are a lot of areas where venture capitalists choose to invest. This widens their scope and small businesses can find their place. Most of the investments venture capital look favorably upon includes industries and technology areas.

Every country’s economy has always been enhanced by the growth in its entrepreneurship; done so, with high return of investments (capital venture) at 100% or more. The start of the capital venture in the United States came about when a consequence of a very stiff structural restrictions in their banking system in the 1930s, resulted to deprive them of the private merchant industry that was uncommon to a highly developed nation such as the U.S.

The making of the Small Business Investment Act of 1958 paved the way to allow the U.S. Small Business Administration (SBA) to give licenses to the Small Business Investment Companies (SBICs) for purposes of providing financial assistance and management to small entrepreneurships especially to beginners in business all over the United States.

Thus, Capital Venture has been professionally acknowledged; although in 1946 its start was gird toward investing at Digital Equipment Corporation by the American Research and Development Corporation (AR&D), founded by General Georges Doriot, first American to promote the capital venture industry. Its tremendous success that made double investment capital in subsequent years elevated the rise of numerous other venture groups, that pushed licensing legal under the Federal laws, aforementioned atop this paragraph.

A number of associations and clubs were founded, and posted capital venture clubs/groups in various states, with respective visions to finance not only small-time business amateurs; but, invest bigger capital on some mining industries, manufacturing some latest technologies, projects in the educational system (schools), health affiliated structures, numerous clinical equipments, and many modern-day demand in novelties.

A close study on Northwest Arkansas concerning project breakthrough in infrastructures and highly trained-skilled manpower on the latest technologies, were aired out to their legislature. The unprecedented increase of population towards 2020 in this side of the U.S need a pressing inflow of financing that will be held as a subject to contend within, the right selection of capital venture investors to subsidize bulk of expense on researches, and to develop better-trained workers for the projects in focus.

Places in subject for these developments include the big cities of Knoxville, capital of Tennessee; Austin, Texas, and Huntsville, on which survey charts outpaced Benton and Washington counties in economic growth during the past 10 years. This has been relayed out by the Arkansas Capital Corporation Group as studies are held in forum on the economic outlook of the NW Arkansas.

The approval of creating the “Arkansas Capital Venture Funds” thru their legislature recently fronts best expectations of the opening of new businesses, and will be highlighted with the coming in of new private capital venture groups.

Pulling together of capitalization to the best advantage may even proceed to a better position to call the attention of the Universities around to increase the development of students on broad “research” that will eventually lead to open high-technology companies that may serve better opportunities on high-skilled, or better-paying jobs.