Small Business Finance Forum

Southeast Venture Conference - Call for Applications to Present

noreply@blogger.com (Tiffany C. Wright) — Thu, 15 Dec 2011 17:44:00 +0000

Here's an excerpt from an email I received:

The deadline for companies to apply to present at the next Southeast Venture Conference is next Wednesday, December 21st.

Conference will be held Feb 29th - March 1st, 2012 at the Ritz Carlton in Tysons Corner, Virginia.

We'll have close to 60 presenters again this year from a range of industries such as Internet, Gaming, Bio-IT, GreenTech, Software, Communications, Medical Devices and Mobile.

If you think your company, one of your portfolio companies, a client or someone else you know is a good prospective fit to present, just have them drop us a line - we make applying super easy and quick.

We look forward to hosting some of the best emerging tech companies from the region again at SEVC 2012!

Details on submitting:
www.seventure.org

Process Credit Cards on the Go

noreply@blogger.com (Tiffany C. Wright) — Thu, 15 Dec 2011 13:23:00 +0000

Square

I was reading American Express' newsletter article, 12 Cool Holiday Gift Ideas for Business Owners,

when I saw something of interest. I don't think it qualifies as a gift idea. Well, maybe if you give gifts like a frying pan to your wife or a battery powered screwdriver for your husband. (Yes, I'm stereotyping here. There are some of us who could go with either and others for whom it's the opposite!)

Anyway, there's a portable credit card reader that's available from SquareUp.com. Look at the photo to see how easy it is to use. This reader allows you to utilize your "smartphone to process credit cards on the go". You don't need a credit card processing machine...which you'd have to connect to power somewhere and set up at a table. And you definitely don't need a cash register!

This is probably great for those who are having a yard sale. (Whoever heard of credit cards at a yard sale?! Well, this makes it possible/easy.) Or great for a business owner or employee who is selling only a few items, say at a conference, seminar, etc. If you will potentially be scanning tens of credit cards, obviously it's better to go with a credit card processing machine.

And oh, by the way, this handy dandy gadget by SquareUp.com, called a Square, is free! You just pay a 2.75% processing fee per transaction.

Another Struggling Retailer to Be Purchased by PE Firm

noreply@blogger.com (Tiffany C. Wright) — Thu, 08 Dec 2011 12:26:00 +0000

If you pay attention to women's clothing retailers, you'll know that Talbots is struggling and has been doing so for some time. Their stock price keeps trending downward. Well, help may be on the way. According to TermSheet (that again!) Sycamore Partners, a private equity firm, "has offered to acquire struggling women’s retailer Talbots (NYSE: TLB) for $212 million. The $3 per share offer represents a 92% premium to yesterday’s closing price for Talbots". That means Sycamore Partners is offering nearly double what the stock has been trading at. Why would they do that?

Apparently, per TermSheet again, Sycamore already owns close to a 10% stake in Talbots. In order to induce the other shareholders, including large institutional and small individual investors but especially the former, to sell without incident or a fight, they have to pay what shareholders would consider a "fair" price. The things you have to do when you have many, many shareholders, some with serious clout.

Private Equity in the Last Decade

noreply@blogger.com (Tiffany C. Wright) — Wed, 07 Dec 2011 17:12:00 +0000

According to TermSheet which, in turn, is quoting PitchBook Data, there's some interesting statistics coming from the private equity world during the last decade ending 2010. That includes the following:

Although ~81% of the actuals DEAL QUANTITY originated from medium to mid-sized businesses, over 90% of the actual CAPITAL INVESTED went to large corporate deals of >= $1 billion.

EBITDA multiples peaked in 2008, which was the market peak for private equity. Money was pouring into PE firms and a number of them were chasing the same deals. That led to an egregious inflation in multiples, up to a high of 11.5x EBITDA!!! Wow! What happened to the 3-5x EBITDA that was the de rigeour at the beginning of the decade? Oh, what's that? That's the sound of the glass breaking as those low multiples were thrown out the window!

For more information and statistics, check out PitchBook Data's study.

Profitability - A New Tool to Analyze Your Quickbooks Data

noreply@blogger.com (Tiffany C. Wright) — Wed, 07 Dec 2011 13:01:00 +0000

According to Inc.com, Profitably is "a Web tool that automatically pulls QuickBooks financial data and generates reports on employee performance, customer profitability, cash flow, channel profitability, etc. You’ll get more charts and spreadsheets than you can imagine, all without manual data entry."

I also like this excerpt from the same article: The author's friend, an accounting expert and business owner "went straight to one of the dots in the “dog” section of the chart; “dogs” are high-volume, low-profit customers. He clicked to see detail, saw the P&L (more L than P by far) for that customer, and started cussing." Hah! I'd say that speaks volumes.

Always wanted to more deeply analyze your Quickbooks data but didn't know how to slice and dice the numbers? Looks like the Profitably tool can do it for you. (www.profitability.com)

To read the entire Inc.com article, click on the title: Master Your Financials: No Financials Required.

Buddha Quote for Entrepreneurs

noreply@blogger.com (Tiffany C. Wright) — Mon, 05 Dec 2011 13:26:00 +0000

"We are what we think. All that we are arises with our thoughts.With our thoughts we make our world."

Buddha (c. 563- c. 483 BC)

Getting Seed Capital for Startups

noreply@blogger.com (Tiffany C. Wright) — Mon, 28 Nov 2011 17:07:00 +0000

Here is 30-minute interview with Daniel Scott, founder of Gazelle Labs in St. Petersburg, Florida. (Note: NOT in Silicon Valley or Silicon Alley or Silicon anything!) Gazelle Labs is a "mentor-driven, three-month, seed stage investment program that provides selected companies with up to $18,000 each in seed funding", according to Karen Rands, the interviewer and founder of Launchfn, an early stage coaching firm. Check out the interview on BlogTalkRadio. Karen Rands on Blog Talk Radio

Get Your Customers to Invest Via Direct Public Offerings (DPOs)

noreply@blogger.com (Tiffany C. Wright) — Mon, 28 Nov 2011 13:57:00 +0000

Do you need to raise capital to grow your company? Have you tried tapping into your existing customer base? I’m speaking of offering customers an ownership stake in your business through direct public offerings or DPOs. DPOs are governed by SEC Rule 504 of Regulation D which allows companies to raise up to $1 Million every 12 months.

Advantages:

You give up a smaller portion of equity for the same amount of capital that angel investors would inject. You typically even give up less than you would using a more traditional private placement.

Read the rest of the article, Tap Your Customers Via Direct Public Offerings (DPOs)

Happy Thanksgiving!

noreply@blogger.com (Tiffany C. Wright) — Thu, 24 Nov 2011 13:02:00 +0000

Happy Thanksgiving to all of you! If you are residing in another country besides the U.S., any time is the right time to give thanks. If you are in the US, enjoy the time with family and friends.I most definitely am.

If life seems crappy around the holidays and you are getting depressed, please, please, please go volunteer at a soup kitchen, food bank, or other location or visit a senior citizen's home, children's group home, hospital, or just do little acts of kindness for others. It WILL make you feel much better...to see how well off you truly are and to see the gratitude people express for thinking of them.

Happy Thanksgiving!

(My posts will resume on Monday, Nov. 28.)

A Craigslist-Inspired Company

noreply@blogger.com (Tiffany C. Wright) — Wed, 23 Nov 2011 13:12:00 +0000

I'm a huge fan of craigslist. Tra la la la la! That's me singing craigslist's praises! (Believe me, you'd prefer to see my singing in writing than to hear it in person.) Anyway, I was aware of one company, Airbnb, which got started after a few things came together, including renting out their apartment for several days using craigslist. Here's another one, described in an Inc.com article:

Company: Getaround

"How it Works: Car owners earn money by renting out their unused vehicle through a peer-to-peer rental service. People in need of wheels for a day can get a car for a few dollars an hour. How it Makes Money: Getaround charges a 40 percent commission for car owners."

Is this an alternative to Zipcar? Sounds like it.This sounds like a viable option for people residing in bigger cities such as San Francisco, where Getaround is based. Need a minivan to haul around the nieces and nephews you are watching for the day? Try Getaround. Need an SUV to transport all your friends to and from a party at the same time, try this company.

Want to know about more craigslist-inspired companies? Read the Inc. article, 7 Startups Inspired by Craigslist.

Angie's List IPO

noreply@blogger.com (Tiffany C. Wright) — Tue, 22 Nov 2011 13:34:00 +0000

As I previously "reported", Angie's List went public last week. (Actually, I reported that Angie's List was scheduled to IPO on 11/17/11.) Did you know Angie's List was an Inc. 500 company? Well, I did not until I read an Inc. article about the company. (I'm an avid reader of Inc. and save the Inc. 500 issues but my brain can't retain lists of 500 companies year after year!)

Here's an interesting excerpt from the interview with Angie Hicks, the founder of Angie's List:

"I started going door to door in 1995 to sell subscriptions to a magazine and call-in service, in which people would submit reviews of the work someone had done for them. Our website went up in 1999. By 2006, we were operating in 30 markets. Now, we're in 124." and

"We are seeing more competitors spring up, like Yelp. But when people ask me who our biggest competitor is, I tell them it's when you go ask your neighbor for a referral, instead of coming to Angie's List."

To read more, go to the The Anomolous IPO: Angie's List.

(For those of you who said, What the he__ is anomolous? Actually, according to Dictionary.com, there is no such word. I believe the Inc.com staff writer meant anomalous, which means "deviating from or inconsistent with the common order, form, or rule; irregular; abnormal:")

Great Video on Equity Partners

noreply@blogger.com (Tiffany C. Wright) — Mon, 21 Nov 2011 17:52:00 +0000

I repeatedly preach the need to think long and hard about co-ownership...and how you NEVER enter into a 50/50 equity split.

Here is an interesting video about equity partnering to start or grow a business. I wholly agree with the initial comments and find the later suggestions compelling.

Dealing with Divisive Employees

noreply@blogger.com (Tiffany C. Wright) — Fri, 18 Nov 2011 13:20:00 +0000

"Divisive people are destructive and toxic. They’re like an infection which drags down morale and then performance and has potentially serious repercussions for the business. Deal with them as soon as you notice or the problems is brought to your attention."

This is excerpted from the following blog article I wrote: Dealing with Divisive Employees . Click on the link to read the article in its entirety.

More Corporate Venture Funding

noreply@blogger.com (Tiffany C. Wright) — Mon, 14 Nov 2011 13:53:00 +0000

I've posted information about pursuing venture funding or strategic investment from Corporate America. Well, here's another update: according to Term Sheet, American Express participated in the Series C funding of Clickable. Clickable operates an online advertising platform. Check them out at www.clickable.com

Speaking of Corporate Venture Funding

noreply@blogger.com (Tiffany C. Wright) — Mon, 07 Nov 2011 15:27:00 +0000

Last week I wrote about pursuing angel and strategic investments from large corporations. Well, in case you hadn't heard, I thought I'd pass along this tidbit, courtesy of Dan Primack's Term Sheet,

Citi (as in Citi Group or Citi Bank) not only has a corporate venture fund, they're trying to mirror the VC big boys. Citi has set up a venture funding office in Silicon Valley...and hired people from Battery Ventures and Menlo Ventures to help run it. This comes after they closed their venture fund (more of a PE fund) in Tokyo earlier this year due to poor deal flow and had significant turnover in their Citi Venture fund based in India.

Endgame: If Citi is your bank, they may be able to provide equity financing in addition to debt (bank loans)...or perhaps a hybrid of the two.

Angie's List to IPO

noreply@blogger.com (Tiffany C. Wright) — Mon, 07 Nov 2011 04:58:00 +0000

Have you seen all those tv ads for Angie's List? Well, apparently they are working. I have a friend who used Angie's List to find a subcontractor in Boston...and that was before I saw the ads. Her mention of Angie's List was the first time I heard of them.

Fast forward. Angie's List will go public via an IPO on November 17, before Thanksgiving. Angie's List, based in Indianapolis (how about those Midwest IPOs? Groupon, based in Chicago just went public.), plans to raise $114 million+/-. It's not profitable, due to significant marketing costs, but it's growing like gangbusters and needs money to fuel that growth (and pay off/release some of their investors).

So keep your chin up. There's hope for your business' funding.

Corporations as Angels

noreply@blogger.com (Tiffany C. Wright) — Thu, 03 Nov 2011 16:00:00 +0000

I read an article in the October 2011 issue of CFO Magazine that intrigued me. The title, Just Call Me Angel: Smaller companies in search of cash have a new source: big companies, says it all. According to this article, some corporations have amassed a large horde of cash. And you don't maximize shareholder value by sitting on a pile of cash. You have to do something with it that generates returns for the company. However, unless you are an insurance company, you can't just invest in anything. You have to invest in something that is related to your business.

You can make partial acquisitions of companies in your space who give you something you need - market penetration, access to preferred customers, etc. You can invest in smaller entities that are developing new technology or methodologies...and have them serve as a de facto research arm.

According to the article, corporations are on track to invest their most in a decade, with nearly $1.4 billion in funding flowing out of corporate venture arms during the first half of 2011. (This is NOT to be confused with M&A activity. This is purely investment in smaller entities.) Small companies seeking angel investment can tap into this by identifying larger companies in their industry who may be interested in their technology, market, or service offerings. Then focus on what your company can provide the larger corporation that it doesn't already have. Make sure the company has some cash before you approach it and make the pitch. Another term for this venture funding by corporations: strategic investment. Fancy that. Not quite as new as the article's subtitle implies.

60 Minutes Interview with Steve Jobs

noreply@blogger.com (Tiffany C. Wright) — Thu, 03 Nov 2011 11:46:00 +0000

I missed the 60 Minutes interview with/about Steve Jobs. I didn't even know it was coming. (Ok, I admit. I haven't watched 60 Minutes in a few years. A news junkie, I am not. However, somehow I manage to stay on top of domestic and international current events. Oh yeah. I subscribe to Fortune, the Atlanta Business Chronicle, the Wall Street Journal, and Inc. And I read Yahoo! news online. And watch Jon Stewart and Stephen Colbert...and occasionally check out other options.)

Sorry for the diversion. If you didn't TiVo or DVR it, you can check out the interview online. 60 Minutes devoted a whole program to Steve Jobs and the entire 60 Minutes' interview with Walter Isaacson on Steve Jobs is available online in two parts. Watch Part I or Part II at your leisure.

Term Sheet's Liquidity Event

noreply@blogger.com (Tiffany C. Wright) — Wed, 02 Nov 2011 21:40:00 +0000

I am a subscriber to "Term Sheet", the daily synopsis on deal activity in the angel realm (somewhat), venture capital and private equity by Fortune writer Dan Primack. I just saw that Mr. Primack and Fortune will host Term Sheet's first ever event, which they are calling the Liquidity Event. (Hah!) If you are seeking funding, would like to introduce yourself to some of the local venture capital and private equity folks, or just want to meet finance people or fellow entrepreneurs, then I recommend you attend. And guess what? Tickets are only $10! So, on a cost basis alone I highly recommend you attend. In addiiton, the proceeds will be donated to a non-profit chosen by...the attendees. According to the notice I received, 125 people have already bought tickets so they may be in danger of selling out. So hurry if you are in NYC!

Details:

What: Term Sheet's Liquidity Event, an event featuring cocktails with an open bar (liquids, get it?) and conversation, sponsored by Golub Capital (www.golubcapital.com )

When: Tuesday, November 15, 2011, 5-8pm

Where: New York City

Cost: $10

Get your tickets (and more details) at http://termsheet.eventbrite.com.

When to Use Debt vs. Equity

noreply@blogger.com (Tiffany C. Wright) — Fri, 28 Oct 2011 10:16:00 +0000

In general, when you do not have a steady source of cash and you are a rapidly growing business, I strongly recommend you keep your debt to a minimum. Why? There is no consistent source of cash flow to make interest or principal and interest payments. Therefore, equity is better for start-ups and for rapidly expanding companies. It is true, of course, that with equity you end up paying out more if you grow and paying out heaps more if you grow significantly. But what’s better? 100% of $2 million? or 30% of $20 million?

(The answer: the latter. $6 million is definitely better than $2 million!) The overall objective for any business seeking startup or expansion capital is to bring in the most funds while retaining the greatest ownership percentage. Only dilute as it makes sense.

To help you better understand, let me provide you with an overview of debt and equity.

To read the rest of the article, go to Debt vs. Equity?

Intuit's Love a Local Small Business Contest

noreply@blogger.com (Tiffany C. Wright) — Thu, 27 Oct 2011 22:11:00 +0000

Win a Small Business Grant from Intuit

Are you looking for some small business funding and a means to additional PR? Well, Intuit is offering both through its "Love a Local Business" Contest. Only small / medium businesses need apply.

The 411 on this small business contest: Intuit is selecting one winner a month for a $25,000 small business grant. It's not equity. It's not debt. It's just yours! The contest ends on December 31, 2011.

Following are the details, directly from the Intuit site: http://lovealocalbusiness.intuit.com/sbo)

1st step: vote for your business. (i.e., Nominate yourself.)
It's easy — just share a few brief thoughts about why you love serving your customers and your community.

2nd step: get out the vote.
Use the tools in the Winner's Playbook to increase your chances of winning. Each vote is like a raffle ticket (only one vote per fan): the more votes you get, the more chances you have to become one of nine Finalists who wins a $25,000 Intuit Hiring Grant. At the end of the contest, judges will review all the nine winners and select one Grand Prize winner for an additional $25,000 grant for a total of $50,000!

Your words could make the difference, so make sure your business is represented, and good luck!

NO PURCHASE NECESSARY. Legal residents of the 50 United States (D.C.), 18 years or older may submit a nomination. Submit nomination before 12/31/11. Void where prohibited. Official Rules

Venture Capital Returns Continue Upward Trend

noreply@blogger.com (Tiffany C. Wright) — Thu, 27 Oct 2011 03:44:00 +0000

This excerpt from a press release issued by the National Venture Capital Association features a quote by the association's president that highlights some of the comments I've made in the past about IPOs and the trickle down effect on investing. Here is the quote: "In order to achieve the level of historical performance that (venture capital) limited partners have come to expect, we must have a thrivings IPO market and acquisitions, and the former essentially closed mid-August of this year. Many fine companies await the market'sstrengthening so that they can access the capital needed to continue their growth trajectories."

According the data compiled by the NVCA, returns were up significantly as of June 30, 2011 due to easier exits through IPOs and the resulting higher valuations of venture capital portfolio companies.

Want to read the press release in its entirety? Click here.

Small Business Funding Programs for Urban Entrepreneurs

noreply@blogger.com (Tiffany C. Wright) — Wed, 26 Oct 2011 10:29:00 +0000

Here are a few corporate small business funding programs that you may be able to take advantage of:

MillerCoors’ Urban Entrepreneurs Series challenge. (I must disclose that I have been a regional screening judge for this program in the past.) The Urban Entrepreneur Series is a business plan competition and awards $150,000.

Starbucks has recently created a new campaign called Create Jobs for USA “to create and sustain jobs”. Starbucks has earmarked $5 million of its own money for this program.

Read the rest of the post describing the programs in their entirety at Corporate Small Business Funding Programs for Urban Entrepreneurs.

Pitching a Venture Capitalist

noreply@blogger.com (Tiffany C. Wright) — Tue, 25 Oct 2011 19:19:00 +0000

Have you been invited to pitch to a venture capitalist? To a group of them? Well, if you have, congratulations! Here are some of the main points to keep in mind when making that presentation.

Main points:

Don't assume everyone knows what your company does.
1. Just because you are highly familiar with your company's area of expertise doesn't mean others are. Be able to explain what you do in layman's terms. Don't assume all VCs are techies. Some aren't.
Stay on track.
1. If you are fortunate enough to get a presentation opportunity, know that VCs typically give you a specified amount of time. i.e., 30 mins or 1 hour. Be on time and remain on task. The VCs may inadvertently sidetrack you but gently bring them back.
Go with the flow.
1. When presenting to VCs, you'll often get questions throughout the presentation. There's no: "Wait until the presentation is over to ask questions." Know your presentation enough to jump around to answer the questions and be able to return to where you left off.
Understand the entire presentation. You should be able to explain the numbers.
1. Your CFO or someone else may need to answer the in-depth questions but if you can't answer basic questions about your financials, exit strategy, etc. you'll look like you don't have a good grasp of what drives your company.
Show that there are risks.
1. Sometimes people are afraid to show they're not teflon. Instead of looking like they're strong, they come across as being too cocky and not knowing their market.

The above is based on the Inc.com piece, How to Sell an Idea to a Venture Capitalist. Click on the link to go to the article.

Seeking a CFO? Wall Street is Laying Off

noreply@blogger.com (Tiffany C. Wright) — Tue, 25 Oct 2011 14:50:00 +0000

Wall Street is laying off investment bankers. Although most of America isn't aware of this, Wall Street has been letting go of people on a fairly consistent basis since 2008. According to the Wall Street Journal, New York City has lost 22,000 securities-industry jobs since January 2008. If you live in Manhattan, especially lower Manhattan/Battery Park or the Upper east and west sides, you will have been aware of this for some time.

True. The turnover in investment banking is high. Not as high as in consulting but still high. (Many of my Wharton peers left consulting after 2-3 years but lasted significantly longer in the i-banking sector.) Many last 10-20 years then move into something new. All of this presents opportunities for those seeking CFOs.

I've noticed many small and medium businesses in the south and midwest seek CPA-holding CFOs. That's great if you want a controller and only pursue bank loans as a means of financing but if you want to ratchet your growth to the next level, a financing-focused CFO is a better bet. (You can always have a CPA-holding controller report to your CFO.) And if you aspire to join the ranks of the mid-sized companies being covered on Wall Street (albeit to a much lesser degree than their larger peers), a CFO with an investment banking background may be the answer to your prayers.

So if you have been considering pursuing a financing-focused CFO, take heart. Many investment bankers may be willing to make the leap to a smaller entity...and even move out of the northeast. Investment bankers want quality of life too. If you're interested and don't know where to find these i-bankers who may be considering change or have been laid off, check out some of the financial associations and see if they provide job postings. Also, check with the alumni groups and career offices - alumni services of the schools that supply many to Wall Street like New York University, Wharton, Columbia, Chicago, Harvard and others. Good luck!