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Posts Tagged ‘raising capital’

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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One of the most powerful forces for managing people, and determining the direction of a business is compensation. That which can be measured and that upon which people will be paid, are both core drivers of a business. The goal of this element is to seek a healthy balance between keeping the entrepreneur focused and driven vs. comfortable and overly satisfied. Is the Management Team paying themselves an excessive amount of money? Do they have a clear bonus structure or is their comp plan way off base?

money

Ideally, we’d like to see a compensation structure that keeps the entrepreneur and his team committed, focused and driven to succeed. There should be strong long-term and short-term equity incentives for all employees as well as below market salaries with detailed strategic bonus structure in place.

wall-street

The boys (and girls) on Wall Street have been getting into huge trouble these days because of their absurdly high compensation packages despite taking on TARP funds. In many ways this is analogous to the way we look at new ventures. If the company is making no money, or losing it for that matter, than is it fair that employee salaries be above market value?

This is just one of the key criteria forward-thinking investors use when evaluating the strength of entrepreneurs and their new ventures. How do you measure up? Go to www.venturephenomeproject.com to read all 80 criteria and swap knowledge with other entrepreneurs & investors.

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The purpose of this element is to uncover what can be one common way to rapidly expand and grow a business: the second serving. One of the easiest ways to grow revenue is to sell the consumer a second offering after completing the first transaction. What to look for here are types of secondary offerings, some are automatic (subscription) and some are IP based (printer cartridges) and others are more associative (chips and dip). And others might include product upgrades or add-on services.  The more likely and the frequent follow-on transactions occur, the faster and more profitable the business can grow as a result of lower overall customer acquisition costs and increased customer lifetime value.

handcuffs

Some questions we ask when looking at a new venture: Is the business a one-off transaction or is it the holy grail of razors handles and razor blades? Sometimes the desire to “lock up” the consumer into a proprietary world can scare them off. Handcuffs can either be scary or they can be fun, it’s all about context.

soft-handcuffs

Are you selling razors and razorblades? Go to www.venturephenomeproject.com and share your experiences with investors and entrepreneurs.

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This  element is designed to look for a key trait in the management team of nearly all successful new ventures: speed. While some people can drive a car comfortably at 100 MPH, others start to panic and constantly ride the brakes. Key entrepreneurial instincts and the ability to move quickly (combination of confidence, analysis, and risk) are core to moving nearly all business ventures forward. Can the team keep up with the aggressive pace a start up demands? Or are they a group of “over-thinkers” who have a tough time making decisions? What questions do you ask to find out if the management team has what it takes to accelerate?

speed-limit-100

There is certainly a balance we look for in this category.  Swiftness of execution is an essential component for any startup, but there is a good deal that needs to be sorted out before the plan is followed through.  A great analogy here is to think of painting: preparation is 80% of the work. Obviously, figuring out how to turn the crank and make money with your business as quickly as possible is the goal, but putting all your resources into a plan you suspect is the right one before actually knowing for sure is a recipe for disaster.  In other words: you must first do the planning before you can start executing at full speed.  You don’t want to be sprinting down a dead end, do you?

dead-end

How fast are you going? Go to www.venturephenomeproject.com and share your experiences with investors and entrepreneurs.

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thefunded-logoAdeo Ressi, the founder of the TheFunded.com has joined a long list of entrepreneurs and investors that say that the venture capital industry is broken. However, Ressi decided to put his (didn’t use outsider funds) money where his mouth was and built a site that allows entrepreneurs to critique and rate the actual audience that was evaluating them…the investors.

Ressi argues that airing the venture industry’s dirty laundry will ultimately improve the efficiency of the funding process as well as the rocky relationships that exist between investors and entrepreneurs. TheFunded also allows entrepreneurs to view and share term sheets, to assist one another finding good investors, and to discuss the many facets of operating a business. While many entrepreneurs applaud Ressi for clearing out the cloud of smoke that surrounds the VC world, many simply see TheFunded as only an arena for disgruntled entrepreneurs to vent.

“The problem with sites like TheFunded.com, or any site with user reviews is that the reviewed product will always be at a disadvantage. For every unhappy customer, they tell 9 of their friends, and for every happy one they tell 3. The odds are against the VCs here. Of course the majority of turned away entrepreneurs will put a negative review – it’s a form of vengeance. But those that did have a happy experience will have little reason to post anything. They have already researched for information from the site, got what they were looking for and will not likely return without proper incentive.” Ian Bell, Entrepreneur

Because of this lack of positive reviews, many entrepreneurs accuse the VCs of gaming the system where they’ve asked entrepreneurs they’ve backed to submit a favorable commentary about them and their fundraising experience. This boosts the firm’s rankings on TheFunded’s leaderboard, and has resulted in many in the industry to question the sites credibility.

For example, if a disproportionate number of members enter the site to provide a single comment on a given firm’s profile, this sends a red flag to TheFunded’s system. TheFunded looks for other behavior, too, for example, unusual semantic characteristics of the written fund reviews, such as excessive use of exclamation points and superlatives. It also looks at how many entrepreneurs voluntarily admit they were asked by their VC to submit a review (entrepreneurs are asked this when they provide a comment, and they check a box to say they’ve been asked).

Before this site can truly becomes a quality resource for the start-up community, they’ll need to become more respected (from both sides) by attracting additional traffic and even more helpful reviews to their site (Psst…a new Toyota Prius has over 160 consumer reviews on Edmunds.com compared to just 30 entrepreneur reviews of Kleiner Perkins on TheFunded.com). Unless these numbers pick up, it’s hard to look at this site without some real bias. At the end of the day tough, the TheFunded has definitely made Investors way more aware of their perceptions in the venture marketplace, and if that’s the nudge they needed to become more transparent and helpful to entrepreneurs; they deserve some applause, but not quite a standing “O” just yet.

“If their tool did such a good job, they’d raise a fund themselves and beat the tar out of us.” – Paul Kedrosky, investor & entrepreneur

“It’s a wantrepreneur focused product. Real VCs and real companies with a legit shot at VC money wont use it.” – Jeff Martens, strategic consultant

younoodleThe above quotes are referring to the highly controversial YouNoodle.com, an online platform for start-ups and early stage ventures. The feature that has sparked a lot of debate in the investment community is their YouNoodle Start-Up Predictor that analyzes data on early stage ventures and generates a report on what that start-up will be worth in three years. For real? Yes, they’ve developed a software program that claims it can predict the valuation of early-stage start up companies (yes, companies that haven’t come within a whiff of a dollar in revenue…). The model relies on basically four areas: 1) the team; 2) financial factors; 3) the concept; and 4) advisors. How’s it work? The entrepreneur fills out the survey and provides a little detail, and like pulling a rabbit out of a hat, presto…YouNoodle spits out a valuation. Smells about as real as the future predicting information Miss Cleo (the famous TV psychic and shaman), provided after calling her “900” hotline. misscleo

It’s hard for us to look at this with a straight face. Seriously. Has the venture community been Punk’d? After all, a “noodle” is defined in the dictionary as a fool or simpleton. Can you really believe that two teenagers working on a few lines of code in the basement have developed a $2.75 million dollar idea? Ridiculous. Be very afraid of this tool, looking at some number on the screen followed by a huge string of zeroes right next to the name and your start-up feeds the entrepreneurs ego like nothing else can. Think about the Far Side cartoon where the kids are all eating ice cream in front of the windows of a gym filled with overweight people sweating on treadmills. It’s pretty sick. We think it’s nothing more than a way to grow their real ambition – – yet another social network for entrepreneurs. If it isn’t, then why haven’t their own founding members run themselves through their magical predictor?

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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compforcapitalThis section wouldn’t be complete if we didn’t mention the plethora of contests and competitions out there for entrepreneurs. Most of these are business plan writing competitions that target upstart entrepreneurs to enter in hopes they are going to get in front of a panel of investors who will then choose their venture and write them a big fat check.

For young entrepreneurs, it seems that every college with an MBA program is promoting one of these. But again, if you happen to enter one, don’t just fall under the spell of dollar signs. Most of the competitions offer entrepreneurs the opportunity to: 1) help crystallize their thinking (and making them more investor ready); 2) receive feedback and advice from forward-thinking entrepreneurs and investors; 3) network with fellow entrepreneurs and distinguished investors; and 4) sharpen their skills in analyzing, writing, and presenting their business plan. Again, the more value one of these contests provides back, the better it makes the entire process for starting and funding a company.

riceThe Rice University Competition has become one of the premier collegiate competitions in the world; with over 35% of its entered teams (since 2001) going on to successfully launch their business. These impressive numbers can be directly attributed to the counseling and feedback all of these teams received at the competition. Now that’s entrepreneurial education done right.

“The support of business leaders and successful entrepreneurs ensures that tomorrow’s leaders can pursue their dreams by utilizing such an investment to refine their business plan and presentation, potentially develop a prototype or begin the patent process, and build the foundations of a viable business – ultimately attracting additional capital and fostering the spirit of entrepreneurship in the US,” explains Steven C. Currall, PhD, and Founding Director of the Rice Alliance for Technology and Entrepreneurship.

Alternatively, many VCs and Angel Groups are now holding “segment specific” competitions to generate quality deal flow in hopes of surfacing the next big thing. Entrepreneurs submit their innovative ideas on everything from gaming to green energy to senior products & services to social media. The winner can usually drive home with as much as $100,000K of start-up capital in their front seat.

One interesting newbie on the competition front is Ideablob.com. Run by Advanta, one of the largest credit card companies in the States, Ideablob is a place for entrepreneurs to post their ideas and get real-time feedback from their peers. The site was developed around the premise that there are tens of millions of entrepreneurs and small business owners in the United States, but no real way for them to network and bounce ideas off of each other. Eligible individuals can submit their business ideas to ideablob.com, and based on votes from the ideablob.com online community; which includes other innovators as well as friends, family, colleagues, associates, teachers and mentors – one idea every month will win $10,000. Here’s to growing the blob and mentoring entrepreneurs in the process!

googlelunarxprizelogoLooking for something a little more unconventional? As of this writing there were already 16 announced teams registered for the Google Lunar X Prize competition. The Google Lunar X Prize will reward the first privately-funded team to land a rover on the moon (and travel at least 500 meters across its surface) with the $20 million purse. If no one is able to complete the mission and send video, data, and images back to Earth by December 31, 2012, the first prize drops to $15 million. The big challenge for these braniacs will be to do it affordably. Many are already raising money and even turning to corporate sponsorship to help get their idea on the launch pad. Let the countdown to liftoff begin.

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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