AngelInvestorsForum.com

nader r


ALSO why do VC’s provide financing at all I mean say you need money for your business and I give it and I want a 51% stake in the company as the venture capital firm but I am PAYING FOR THE WHOLE THING how does this help me?

wade


I am a Republican-conservative(political only) and am interested in getting into politics. I do not want to be Governor or anything, but I do live in a Capital city. Is there anything I can do to volunteer or make an appearance in the political realm? I have no political experience, and am not really qualified to run for any office. I do want to make a difference and have my voice heard.

Dave Kauppi


I tried and I gave up. When we started out high-tech Merger and Acquisition Practice, I thought it a natural fit to also offer finder services for Entrepreneurs seeking Venture Capital Funding. That service is no longer available. Why not you ask? We failed miserably. Our firm has successfully completed several small high tech M&A deals at great multiples, but finding venture capital turned out to be a very frustrating and unproductive experience.

Unfortunately many high tech entrepreneurs have eventually landed on our doorstep totally drained from their experience of trying to raise venture funding themselves. Quite frankly, the process has caused several of these businesses to fail. According to venture industry statistics only 2% -3% of firms seeking venture capital actually are successful in receiving funding. Only 2 out of 10 of those firms that receive funding provide the target returns for the Venture Firms. Since their failure rate is so high, they are looking for a 30 to 1 return on their money in their three or four year exit period.

It is generally not a good idea to alienate my readers, but the biggest problem that entrepreneurs have is that they are inexperienced about this whole process. They generally have unbridled optimism about the value of their company, idea, product, or technology in the marketplace. These entrepreneurs are usually the inventor or the author of the computer code and are not sales or business development guys.

They do not understand the sales process. After all, raising Venture Capital is the ultimate sales job. These tech-focused individuals will be strung along by the Venture firms unless they have a track record of starting a company and making investors rich. In that case the Venture Firms fight for their place in line to give you money. I would often speak with high-tech entrepreneurs who just completed “a great meeting” with XYZ Ventures. They would excitedly tell me that XYZ asked them for a report on this, pro-forma’s for that, projections for this, a competitive analysis of the major players, etc. They would then schedule another meeting.

Our entrepreneur is thinking they are on the verge of landing the big one. My response is, “How much are they paying you for educating them on your space.” The image that comes to mind is when you were a kid and were using a magnifying glass to burn up ants on an ant hill – kind of sadistic torture.

For you tech guys out there, this is not Field of Dreams – If you build it they will come. It is business and the mantra is – If you sell it they will come. Get over your bias of not valuing the sales process and go tap the best available sales and marketing person you can find to partner with you. Build a customer following that demonstrates a trend rather than a couple of isolated successes. Then go find a large strategic partner to acquire you at fantastic multiples. Work through your non-compete period and then launch your next great idea. Go to the venture guys from your new-found position of strength and tell them to get in the queue to provide your venture capital.

Rob


Hi,
I am trying to find a good place where I can find out about companies that recently got invested in to by venture capital/an angel and the like in the UK (particularly London).

It’d be great if someone could help!

Big thanks,
r

Low Jeremy


There are a lot of companies who have smaller divisions underneath its umbrella. Take for example Johnson and Johnson, which produces consumer goods at the same time, has a pharmaceutical wing called Janseen Pharmaceutical.

Sometimes, the only way for a company to expand is with the help of an entrepreneur. As a result, the investor becomes a capital venture firm who will be doing this not only to jumpstart something new but also to make some money from it.

A capital venture firm is very similar to someone who will act as an investor. This is because the objective is still the same. The people in charge will be reviewing tons of business proposals until one is found that is close to the visions of the company.

There are two kinds capital venture firms. The first as explained earlier will wait till the proposal will be mailed. The second is when representatives of the company act as scouts and look for potential businesses. These people may attend trade fair and conventions or simply get the news from a rival company.

After a background check has been done, the management team will contact the entrepreneur so a meeting can be set to talk more about the idea that was envisioned by the person. If everything sounds good, then the funding will take place similar to how a student in school is able to get a grant in order to conduct the project.

The difference here is that the capital venture firm will hold a certain percentage of shares in the business. This means a team of people will be working with the entrepreneur in seeing things through. This is done to protect the investment given by the company to ensure its success in the long term.

One of the industries being funded regularly by capital venture firms is the information technology industry. Despite that, the chances of someone in another field who would like the same thing to happen is still possible because there are also companies out there looking for the next big break.

Everyone becomes a winner when a capital venture firm and an entrepreneur sign an agreement and turn that idea into a reality. This is because despite the risks involved in starting something new, the determination of the entrepreneur and the experience of the capital venture firm can easily tackle the bumps on the road by steering clear from it.

Richard worked as a mechanic for one of the biggest car manufacturers in Detroit. Given the employee’s 20 years of experience, this person has moved from one section of the plant to another making some people think that Richard can possibly assemble a car single-handedly.

Unfortunately, the poor sales performance in the past few months of the company has forced management to make a big sacrifice. This will involve slashing 20,000 jobs from the workforce and Richard was on the list.

Rather than wait for the pink slip to come in, Richard opted for early retirement. With the money saved, this individual can start a business, which was something always inside this person’s head.

The plan was to open a shop that restored old automobiles as well as serviced existing ones. Though it was a fact that there are a lot of entrepreneurs that do this, the research Richard did showed that there were not that many of these in the neighborhood.

Richard had a fat check coming in, as part of the retirement benefits but the startup capital was not enough so this person decided to get venture capital funding.

Venture capital funding is when a startup business or an existing one needs funds from outside people to sustain or keep it growing. While there are banks that can help do this, it is easier to deal with private individuals since the interest rates are not that high and these supporters become strategic partners.

Who are the people to tap when it comes to venture capital funding? Given Richard was engineer who worked on cars, it wasn’t hard to talk to one of the former bosses and other people who also love automobiles. Richard first wrote a proposal with the location of the site, projected start up capital and sales that will happen in the succeeding months and years. Since these investors saw the potential of the business, it wasn’t long before the additional money needed was given.

After three months of renovating the old building, the shop was already operating and the customers started to come in. Servicing cars was easy in fact, people who worked at the plant would drop by and have the automobiles done there. It took longer to restore old cars since the parts were hard to find.

Within a year, more than half of the amount that was borrowed from the partners was already paid. As long as the service given is maintained, it was possible for Richard to pay everyone off and perhaps even expand the business.

marlanazakon


I am thinking about investing into a company that’s in it’s IPO stage. I checked out their records and it shows a trend of declining income. The company currently has 231 share holders and has no venture capital. (I was told that the CEO has invested all of his own money into the company). Is this a wise investment choice? Of course they make it souund like the potential to make a lot of money is very high. It’s an internet company and it already has the website in existence.

Terry Fitzroy


What should you expect when you approach a venture capital firm for a loan? How about if you are approaching them for investment purposes? This article will attempt to cover both aspects of what you can expect from a venture capital firm, and how to get the most out of the ones you will encounter. First of all, what is a venture capital firm? They are also referred to as private equity investors. A venture capital firm is a company that handles investments from several individuals by using their money to invest in up and coming small businesses that need money to get going. They have lots of experience when it comes to this, so listen up if you want info on how to take advantage of their services.

Firstly, you need to know how to prepare yourself for approaching a venture capital firm. If you are an investor looking to get help with your investments from a venture capital firm, then the first thing you need to get ready is how much money you would like to invest with their company. If you have other investments, decide how much of your total investment money you would like to put at risk with this type of venture. You should go into the meeting knowing up front that it will be very risky. As usual however, the bigger the risk, the higher the pay out is. The money they invest is going into other small businesses, so your return is largely dependant upon the success of those small business owners. If their business goes under, unfortunately, so does all of your money.

How can you benefit from a venture capital firm as an investor? Here is what you should ask when you go into a meeting. Tell them you’d like to take a look at their portfolio of businesses, and do some research on each of them. Call each individual business if you have to in order to get more information about what they plan. They are entitled to keep trade secrets to themselves, but if you let them know that you are a potential investor and you would like to know more about their company, it is truly amazing what sort of information they will give you. Call around, and when you find someone with a bit of backbone, and that give off the impression of having their act together, then go with them. There is a high chance that they will succeed and you’ll receive a great return on your investment.

How can you benefit from a venture capital firm as a small business? If you have a great idea and need some money to start off your new business model, then pitch it to a reliable venture capital firm. If they like it, they’ll often times give you 100% of the start up funds you need to make it happen. Isn’t that great? Now, consider that you will have to forfeit some of your profits to them, but it is a good option if your idea is really big, and you have no other choice.