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Posts Tagged ‘funding’

NorthSharkTank

North was recently quoted dropping some knowledge in the article, Real-Life Lessons From Shark Tank on Entrepreneur.com.

Here’s an excerpt:

Know when to pitch. Entrepreneurs with a well-developed product and proven financial success have the best luck with the “sharks,” says David Brody, a managing partner at the venture analysis firm North. “Nothing builds momentum like demonstrating you know how to make a cash register ring,” Brody says. Krinzman cited the entrepreneurs who failed to net funding for their “fun house” in Times Square as an example, saying they sought capital in the idea phase of their business planning.

READ THE FULL ARTICLE HERE

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entlogo-2009North was recently quoted dropping some knowledge in the article, 5 Lifelines For You Startup on Entrepreneur.com.

Here’s an excerpt:

Evan Solida was stuck.

Solida, founder of Cerevellum, which sells digital rearview mirrors for bicycles, had posted his business plan on several websites promising to connect him with investors in exchange for a few hundred dollars.

Time passed. Investors never came.

It’s a familiar dilemma for many startup companies: Solida knew he needed help but didn’t know where to find it.

“You almost feel like you’re at a used car dealership,” Solida says “You’ve got all these people who know you’re out there looking for something–in this case, money from investors–and they prey on that.”

Solida eventually found North Venture Partners, a consulting firm that helped him streamline his product offerings, set up an advisory board and take other steps to professionalize his business plan.

North is one of many resources available to startups seeking direction and funding.

CLICK HERE TO READ THE FULL ARTICLE.

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Innovation is the backbone of our economy.

Without it, we simply won’t have the game-changing economic growth needed to end the global financial crisis.

Even with nearly six million new businesses started every year, the process for creating American innovation remains remarkably inefficient.* The time, effort, and capital wasted on genetically-flawed businesses represents the loss of tens of billions of hard investment dollars and millions of jobs, with only small fraction of companies actually surviving the gestation process.

With so much as stake, creating successful new ventures simply cannot be a congressional afterthought, or a hobby for the wealthy. To accelerate economic growth, the time is now to focus on creating sustainable new ventures faster and with more efficiency than ever before.

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Borrowing from the scientific principles that led to the mapping of the human genome, the Venture Phenome Project is building a Phenotype map of the genetic and environmental factors that ultimately influence the success or failure of a new venture. By tracking and measuring these factors over time, this collaborative research effort is able to “crack the code” on early stage investing.

What Does This Mean To You?

For entrepreneurs, this represents an opportunity to get rare visibility into what a strong venture investment looks like through the eyes of an actual investor. After all, if you’re an entrepreneur and aren’t building your business around the actual criteria you’re being evaluated on, who does that benefit?

For investors, the Venture Phenome Project is a platform for learning from and sharing wisdom with both seasoned investors and forward-thinking entrepreneurs. No one benefits by spending time focused on a venture that has bad DNA. This is your chance to improve your venture evaluation process. By shedding light on the critical factors that influence successful investments, you can make more informed investment decisions.

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If you’re interested in becoming a more efficient investor or entrepreneur, here’s the good news; the results from this interactive research project are open to the public. The information gathered on this site is yours to consume. To make the process more impactful, the best insights will be aggregated into a bi-annual publication to provide a concise and clear blueprint of the venture Phenotypes and their significance in the creation of value.

At the end of the day, all of us (investors and entrepreneurs) are seeking the same result; a significant return on both invested time and capital.

We’re in a state of crisis. The time to optimize entrepreneurship is now.

Check it out, and leave your thoughts…

www.venturephenomeproject.com

* SBA’s Office of Advocacy, 2006 County Business Patterns

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needleinhaystackThe scarcity of capital for early stage companies in recent years has lead to the creation of literally thousands of businesses focused on helping entrepreneurs raise money for their start-ups. At North, this subject is close to our hearts, as we’ve made it our mission to make the entire process for fostering, filtering, and funding entrepreneurial innovation more efficient.

While some individuals and companies are taking strides to optimize entrepreneurship and inspire innovation, others unfortunately seem to be falling into the all too familiar trap of playing “follower,” when today’s economy desperately needs leaders. While there’s certainly value to extract from a few of these businesses, many unfortunately are coming up short of industry expectations, launching the exact same set of features and functionality as those that came before them.

“They have taken their cue from the Gold Rush when the truly crafty business-people made money not from prospecting but by selling shovels to the prospectors. Likewise, today’s money-raising services have found a low risk means to separate the cash-starved entrepreneur from any money he or she may have left.” – Antiventurecapital.com

In this section, we highlight a few of the emerging ideas, ventures, and individual brand names that either have or are in the midst of trying to bring much-needed efficiency to the early stage venture market. Are any the long-awaited silver bullet that is going to help accelerate economic growth when now we need to create innovation faster than ever before?

You be the judge. Let’s take a closer look at the Pitch Farms.

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We’ve already spoken at length about the recent proliferation of the “Pitch Farms,” those online destinations that promise to connect start-ups with the investor community. If you’re an entrepreneur, you’re probably very familiar with the usual suspects that offer up their virtual cork board for some type of fee (usually a recurring monthly one): FundingPost, FundingUniverse, EFactor, and GoBigNetwork to name just a few.

David Rose, Founder and CEO of Angelsoft, considered one of the “smarter” pitch farms, outlines both the opportunity and the shortcomings of these destinations when he said, “…there are many, many web sites out there which purport to connect, or ‘match’, entrepreneurs seeking funding with potential investors. By our own count, there are probably three or four dozen, and that’s without looking very hard. The reason there are so many is that it’s like shooting fish in a barrel: how many starving entrepreneurs wouldn’t want to come to a web site that promises them cash?!”

Mr. Rose originally launched Angelsoft to Angel groups software that enabled submissions, file management, and group communication tools. It was a lot of the infrastructure that traditional Angels needed to scale and to update their current submission processes and makes them more “new economy ready.” However, Angelsoft has since morphed into another massive deal farm for the start-up community. Perhaps pleasing their engineers on staff, they now offer up a dizzying array of features and software updates. So many in fact, it makes an average Angel investor feel as though they’re playing around on their kid’s Facebook page.

angelsoftscreenshotEven with the questionable, confusing, and clearly off-target features, it’s not hard to tell that Mr. Rose has his sights on consolidating the entire early stage venture market. With 442 Angel groups, over 14,000 investors, and a staggering 2,000 new venture applications per month, they now have an Open Deal pitch for $250 a pop that allows an entrepreneur to get their plan in front of all 14,000 investors with the click of a mouse (if those investors were actually logged on and could even find their way to the Open Deal room…).

“The sad reality, however, is that while it is extremely easy to get hungry entrepreneurs to list their plans, it is well-nigh IMPOSSIBLE to get investors to show up on the other side of the curtain…for the simple reason that (a) the ratio of investors to entrepreneurs is about 1:1000, and (b) investors are so deluged with opportunities that they simply don’t go out LOOKING for plans; plans come to them!” says Mr. Rose who in his own words admits he’s got an efficiency problem on his hands.

Recently Angelsoft started to actually push deals onto the unsuspecting investors of all the third party Angel groups that use their software. This pushy intrusion comes in the form of a bi-weekly unsolicited email filled with recent venture submissions. Angel groups that signed up for Angelsoft to help manage their Angel group now find themselves competing for their own investor members attention with the unrequested (and often unwanted) deal flow being shoveled onto their members by an Angelsoft email server that seems to have its dial stuck on “spam.”

“With Angelsoft, all of the personal aspects of Angel investing seem to be removed from the equation. My materials are submitted through Angelsoft forms, and then disappear into some system that encourages a group of busy angels to evaluate the opportunity in a black box. Do they like it? Do they hate it? Do they even read it? I have no idea, since I have never heard anything!” comments a disappointed entrepreneur.

For all the aggressive email action and striking numbers on this site, one has to wonder, is it really delivering on quality deal flow or just polluting the Internet with more “not ready for prime time” quantity? As of this writing, Angelsoft reports that just 1.32 percent of start-ups on their site have been funded, and that the average number of “views” for each submission is only 5.3 (Which means an average submission is viewed by only 1 of every 3,000 investors that Angelsoft claims to represent). For entrepreneurs and investors, the verdict is still out on whether this site is more “soft” than true “Angel.”

The following excerpt is taken from Breaking Through The Broken: The Transparent Guide To Overcoming The Inefficiencies In Early Stage Venture Capital.

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The following excerpt is taken from Breaking Through The Broken: The Transparent Guide To Overcoming The Inefficiencies In Early Stage Venture Capital.


kickingtiresBuying a used car is an exciting process, but coming home with buyer’s remorse is easy if you don’t do your homework. To avoid a financial disaster, not to mention having a two-ton paperweight parked in your driveway, it’s prudent for any buyer to bring an experienced mechanic with them to look at the car before an offer is made. Why not do it yourself? Unless you’re a gear head with extensive knowledge of the vehicle you’re looking at, you’re better off shelling out the 300 bucks to make sure you’re not going to have to sink thousands into the car as soon as you get it home.

A quality mechanic with experience in checking out used cars will have a systematic inspection process that will cover all the bases in terms of the integrity of the car. Their trained eye will surely find the spots where the previous owner slapped on some Bondo to cover up where they were sideswiped, and can sniff out the sawdust in the engine.

“When excited buyers get emotionally caught up in the vehicle purchase, they often miss mechanical, cosmetic, and safety issues during visual inspections and test drives…to eliminate much of the anxiety and get an accurate picture of the condition of the vehicle, many buyers choose to have a pre-purchase inspection (PPI) done before the sale is final.” – JD Power & Associates.

Did you know that 1 out of every 10 used vehicles has hidden problems from its past? This well-known fact has led to the building of two successful businesses that assist the consumer when making a decision about a used vehicle. If you’re in the market for a used car and haven’t yet heard of CARFAX and AutoCheck, take notice. For just a few bucks you can perform your own PPI over the Internet.

carfaxCARFAX’s pitch is that you don’t have to rely on a stranger’s truth in advertising to find out about the mechanical and driving history of the vehicle they want to sell you. A CARFAX Vehicle History Report includes: 1) Title information; 2) Accident History; 3) Odometer Readings; 4) Lemon History; 5) Number of Owners; 6) Accident Indicators (like airbag deployments); 6) State Emissions Inspection Results; and 7) Service Records. All the critical information you need to avoid driving home with a lemony scent. AutoCheck tries to differentiate their service by attributing a score to each vehicle, although the services are basically one in the same.

“Many used car buyers quickly dismiss the thought of buying a CARFAX report because of the money, but let’s get real, the $25 spent on a quality vehicle history report is the best investment you will ever make. There are thousands, no probably millions, of drivers who wished they had spent the measly $25 to look into a car’s history instead of spending thousands of dollars on a car that has a damaged history, salvaged title, or is even a lemon!” – Jake Newberry, automotive industry insider.

So we’ve looked at three separate industries where big-ticket buying behaviors have driven the creation of tools and techniques that enable both sides of the equation to benefit. Athletes know what criteria they will be measured on and can train accordingly. Real estate agents know the impact a third party inspection will have on the transaction so the can gauge whether or not they want to provide it, or push it onto the uninformed buyer. And CARFAX has created a way for buyers to pull an honest background check in an industry where the deceptive salesman is legendary.

In each of these our last three blog posts, we see lessons from worlds of Real Estate, Professional Sports, and the Automotive Industry that need to be applied to early stage investing. These systems, tools, and processes ALL serve to accelerate trust and enable transactions. Entrepreneurs and investors, we hope you all took good notes.

If you’re interested in learning more about how a Venture 360 due diligence engagement can make you a more effective and efficient investor or entrepreneur, please contact us by sending a short email introduction to northventure360@dontgosouth.com and we’ll set up some time to talk shop.

Side Note; I also happen to know someone that is looking to purchase a used 2008 or 2009 Prius Package #5 in dark grey or silver. They’ll pay cash. And yes, they’ll require a VIN# as they’ll be conducting there own due diligence on the vehicle before they invest:).

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Professional sports franchises spend thousands of dollars on scouting, background checks, and running draft prospects through a series of mental and physical tests before they decide to invest millions of dollars. General Managers look at everything before risking their pick on an expensive draft pick. This is even truer when it comes to making a first round selection.

kwamemisseddunkTake the story of Kwame Brown. Back in 2001, the Washington Wizards had the honor of drafting #1 in the NBA Draft. With their pick they decided to choose Brown, becoming the first team to ever select a high-school prospect with the first overall pick. While still playing in the league, Brown’s career just never lived up to the hype. When drafted, Brown was 6-11, an imposing 250 pounds, and a gifted athlete. He was strong, had quick feet and a ton of potential. But after Washington selected him #1, many scouts said they questioned whether his small hands would hinder his play. They noticed in pre-draft workouts that Brown was having trouble catching passes and he missed quite a few dunks.

Small hands? Yep, out of all of the upside of this young man, it’s his small hands that wound up being the primary liability of this particular investment. With professional sports, like early stage ventures, you have to look at the entire investment (right down to the little details) before moving forward with a big decision. Sure, some mental and physical attributes can be suppressed or enhanced later on, but when that attribute is fixed, like hand size; you’re stuck with it. Ironically, whose decision was it to draft Brown? Michael Jordan. Yep, MJ was just given the title of President of Basketball of Operations and Brown was his first ever draft pick. So it just goes to show you, you can be the greatest basketball player of all-time and still be a mediocre evaluator of talent…

The National Football League (NFL) has developed a unique system for their 32 franchises to evaluate and score college seniors who may potentially become NFL players. “The Combine”, as it’s known, is a standardized system of physical and mental tests which, along with full medical examinations, gives teams a huge amount of objective and standardized data which they can use to weed out and ultimately select which players could be a potential fit for their locker rooms.

“I think it’s the total picture you get from the combine. The combine is another means of helping teams make good decisions, and the escalating cost of signing first-round draft picks makes the decision-making process all the more crucial. Teams spent a total of $160 million on signing bonuses for last year’s first-round picks. They want to make sure they know what they’re doing.” – Tony Dungy, Head Coach, Indianapolis Colts

peytonmanningryanleafIt also happens to be that Dungy’s former star quarterback Peyton Manning was part of one of the most well known draft debates of all time. Back in the 1998 NFL Draft it was all about who do you take #1, the safe choice with “pro-ready” skills (Manning from the University of Tennessee) or the wild card with all the upside (Ryan Leaf from Washington State). Most analysts agreed that Manning was the more mature player and should be the consensus top choice. Turn’s out they were right and then some. Manning just earned his third NFL MVP award to go along with his Super Bowl ring and Ryan Leaf, who played only 25 games in his career, has become known as one of “the biggest bust in the history of professional sports.”

Of course, each professional team has different wants and requirements, but the implementation of a standardized setting has allowed personnel directors the opportunity to systematically evaluate the upcoming draft class. Because the tests are standardized, the players are able to focus their efforts on performing well in specific areas. Obviously, there is no substitute for on-field performance, but for players coming from less-than-storied programs their performance at the combine can drastically improve their stock in the draft. The transparency of the system is what allows players to improve and provides them with instant feedback at to how they have done compared to other players.

What does this mean for the venture market? Well, consider the fact that in sports standardized tests like the 40-yard dash can be applied to all players. Coaches and scouts have a common benchmark upon which they can look at players from all over the country in a standardized way. What this system can offer is a way for scouts to filter out the over-hyped big school superstar, as well as discover that small school player with remarkable physical ability; an effective standardized measurement of a complex set of attributes. Who said football players aren’t smarter than Venture Capitalists?

Key takeaway; Don’t draft entrepreneurs with small hands? Nope. Before investing your time and money in a new innovative venture, conduct your own up close evaluation and make sure that venture’s strengths significantly outweigh its weaknesses. Wash, rinse, and repeat.

Excerpt taken from Breaking Through The Broken: The Transparent Guide To Overcoming The Inefficiencies In Early Stage Venture Capital.

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Many new gimmicks and stunts marketed at entrepreneurs now exist as ways to rise to the top of the sea of investment opportunities. While we have to admit there is an intoxicating rush from pitching your innovative venture in front of an audience, the end result usually feels more like a hangover. Investors leave with more questions than answers, and entrepreneurs are left wondering if their choice of wardrobe sealed the fate of their company. Whether it’s a trade show, mixer, or conference they’re usually marketed around the emotional value proposition of “meet real investors.”submityouridea

Just in case you weren’t paying attention, any investor worth his salt is already plugged in to a complex social network from which he or she plucks prospective deals. What makes you think you’ll actually find a reputable investor or advisor at one of these events? Oh, and you think that entry fee is paying only for the catering service? These events are run by businesses looking to make money. They don’t necessarily care if you close a deal while you’re there, only if your registration check clears. And this just in, handing a spiral bound PowerPoint to an investor in an elevator is about as effective as a guy throwing himself at a female bartender in a packed club on a Friday night.

You should also know by now that the Internet is full of charlatans, scam artists, spammers and a myriad of other people with questionable morals. And because there’s not a lot known about the investor process, entrepreneurs don’t really know whom to trust when they scour the web looking for funding. They’re always suspicious of something that’s offered for free (like a new online business plan farm) and are just waiting for the hidden fee to rear its ugly head. Free usually means you need to put in a credit card and spend the rest of your life trying to cancel a recurring charge for $19.99 a month. If you’re going to invest in outsourcing your capital raising work (which is not unreasonable) try to make sure that the approach is smart, that you are going to get the feedback you need to improve over time, and try to save the fantasy of a lottery ticket for the check out counter at 7-Eleven. internetscam

And lastly, if you happen to be sitting on the couch in the early am, with your computer in your lap, watching TV and one of those “We’ll Pay Money For Your Idea” infomercials comes on, you should probably view it the same way you do a fake ad on Saturday Night Live. Of course not every “invention” firm has bad intentions, but let’s just say there are a larger number of scam companies than those actually helping the entrepreneur. So do your homework and background checks. If after submitting your materials for consideration you’re having trouble making contact with a live and knowledgeable voice, it’s probably not worth your time.

Excerpt taken from Breaking Through The Broken: The Transparent Guide To Overcoming The Inefficiencies In Early Stage Venture Capital.

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