AngelInvestorsForum.com

C. Worrall




When you seek venture capital, depending on the size of the round and the appetite for risk of the investor, you may end up with an investment group rather than a single VC.

During the course of your talks with various VC firms, ask if they would consider being part of an investor group. The conversation that follows will give you a variety of information. They will probably tell you if they always, sometimes or never co-invest with other groups. If they do, ask them who else they normally invest with. If they are interested enough to have you in for a presentation, they may be willing to make an introduction to another firm.

Also, let’s say you get a ‘no’ from the VC you are talking to, but you get the feeling it’s a soft no. If you find another company that is willing to lead your round of financing, you may come back to firms that normally co-invest with others, even if they have already turned you down. Upon occasion, once an investment is blessed by another firm, the first firm may reconsider their position.

The VC should have let you know ahead of time that his firm is interested in being part of an investor group. Finding out on the term sheet that the firm only intends to invest in part of the round indicates either that the VC is a rookie or that there were some last minute qualms about the investment that caused the partners to back-peddle at the last minute.

A rookie VC may or may not be a bad thing, but if one or more of the partners is skiddish about the deal, there could be trouble through the term-sheet negotiations. Try to pinpoint what is making the partners take a lower risk position, so you can reassure them.

In general, having several well-known firms as part of your investor group is a positive. For one, you get twice the resources for the same investment, including twice the industry and future investment contacts. Additionally, if you need a second round, the investors may not be able to continue investing, but if you have two firms, your chances of receiving additional investment double.

Jordan Y


I am looking for a good internet business idea. Iam not talking about selling on eBay or anything like that. Iam talking about actually getting venture capital and starting an actual website.

Michael J. Malik




When we purchased Rockford Ball Bearing Corporation out of bankruptcy in 2006, the venture capital market was flush with cash. This spring we sought an additional round of funding for our expansion. Venture Capital is never easy to find, but especially during these difficult economic times it is getting harder. New strategies need to be implemented to find capital.

There are several ways to prepare for VC interviews for funding. Three steps should be implemented out of the gate. These are verifiable and true options:

First, explore your accounting records, tighten up the ship. Cut as many overhead items that are reasonable without gutting your research and development budget.

Next talk with your employees, make sure that their advice is being heard by management. VC firms will start by talking with your employees at all levels. They will rely more on this feedback than your managers may be.

Last, review your business plans, take an objective look. See it through your worst critic’s eyes. What would they change?

The founder of our company Joseph Malik sold Malik Bearing Company to The Harvey Family in 1975. Malik Bearing was renamed Rockford Ball Bearing in 1982 when The Harvey Family had to reorganize the company during the protracted recession of the 1980’s. The due diligence was dinner and a hand shake. Today’s VC firms spend much more investigative time talking with suppliers and customers, reading industry reports and analyzing your firm against industry benchmarks.

The ball bearing industry is a tough business, as tough as the balls we mill. The margins are tight. Venture Capitalists seek the highest and best return for their investment dollars, and it matters not which industry they deploy their currency into. Leverage is a friend to returns of rising businesses but the enemy of gamblers who treat a manufacturing company as a casino. The Harvey Family over leveraged Malik Bearing Company and had to lower debts to get back on a positive stable business path again.

The Venture Capitalists knew this history and we worked hard to offer a better road forward for our business, they agreed and funded us $42 million for our expansion plans.

jimtumbo


I have a brilliant business plan and company structure to put into operation and I am not sure how to get the capital for such a venture since my credit is not great.