Small Business Growth: How is it done?
If you have ever wondered how to grow a small business more aggresively, wonder no more. Here's a free series on how on sophisticated entrepreneurs and managers do it.
Revenue-based Financing Can Be Used for Startups
Find out how you can use revenue royalty certificates to close nervous investors and finally launch your startup.
Find out more at Revenue-based Financing for Startups
How to Finance Your Startup With Crowd Funding
There's an interesting story here on how to combine creative financing with crowd funding to get the startup capital needed to launch.
If you're looking at small amounts of capital, this is a route well worth exploring.
The Wall Street Journal has covered crowd funding.
Get Two Free Jay Abraham books
As you probably know already, Jay Abraham is one of the great marketing wizards of the age. Today he is allowing me to share free copies of two of his books with you. You can download them instantly.
So, here are the links for the pdf copies:
Getting Everything You Can Out of All You've Got
There's absolutely no catch.
Enjoy.
What is the best business plan writing software?
If you have used business plan writing software, what would you recommend? Here's a list of the top business plan software programs:
I first heard about John Paul DeJoria back in the mid 1980 and have followed his career on and off ever since. Here's a man who belonged to an L.A. gang member in his youth and was at one point homeless. Today he's a billionaire. This is a video worth watching because Paul explains how he started his company without any money. He exemplifies what the Smart Startup Guide is all about.
John Paul DeJoria: 2011 Entrepreneurship Conference Keynote
Using Pitchdecks to Raise Capital
When attempting to raise capital from either angel investors or a venture capital firm, it helps to have a short clear and concise pitchdeck to use. Here are a few examples of pitchdecks.
Revenue Participation Financing for Startups and Growing Small Businesses
Since I first discovered revenue-based (aka Revenue Royalty Certificates) back in the mid-1980s (yes, 1980s), it's surprising to hear people now talking about it as if it was something new. Here's just the latest piece thrown onto the pile.
"Royalty Financing": The New, New Thing in Venture Capital
Basically, the idea is this: Someone lends you money (in this case, $100,000), but instead of a fixed interest rate, you agree to pay the lender a percentage of your gross sales (not net profits) each month -- 2 percent to 6 percent is customary. The royalty payments may continue for a specified time period (generally three to five years) or until the lender has received all of their money back plus a 20 percent return on their investment (in this case, $120,000 in total payout). Once the time period expires or the desired return has been achieved, the loan is considered fully paid, and you stop making the royalty payments each month. (Source)
...
So where do you find royalty investors? A number of firms are setting up venture funds built entirely around the royalty financing concept. Among those are Arctaris Capital Partners, LP in Waltham, Mass. (www.arctaris.com); Cypress Growth Capital LLC in Dallas (www.cypressgrowthcapital.com); Revenue Loan LLC in Seattle (www.revenueloan.com); and Noventi Ventures in Menlo Park, Calif. (www.noventivc.com).
Before you get overly-excited understand that these firms only lend to companies with reliable existing revenues not startups. However, it is possible if you have a strong team to find individuals to back you using Revenue Royalty Certificates. In the case of startups, there is normally a moratorium of 6 to 12 months on payments to allow the company time to achieve traction. To find out how you can pitch an RRC to angel investors and set one up, click here: How Deal-makers Close Angel Investors.
If you're starting to tire of Angry Birds, check out the newest hit game: Boccee Balls
Looks like another hit from the team at playscreen.
<-- Click to embiggen.
How to be a Lean Startup: Iterating & Pivoting
I don't know how Paul Graham stands it. He must hear these words a hundred times a day.
Warning: This will be an NSFW video in some offices due to salty language.
What are your odds of attracting startup capital from angel investors?
Better sit down first.
Ok, are you ready?
According to AngelSoft:
... only 51 companies out of 20,395 that were processed through their system over the last 12 months received funding. The odds of writing a New York Times Best Seller are greater than the odds of getting funded by an angel!
Even though I have been writing about this problem since 1995, I had no idea that the odds could be so poor. The typical numbers are one out of every 500 companies applying for venture capital gets any and perhaps one in every 200. The Angelsoft numbers translate to one in 400.
That's why it's called the Financing Valley of Death. Investors want entrepreneurs to prove their mettle by surviving it before any checks are written.
Don't kid yourself about business plans, Powerpoints, and elevator pitches eliminating this test.
They won't.
Why pay for directories and lists of angel investors when you can access them for free?
If you're looking for lists of angel investor groups and networks to connect with, check out the biggest and totally free lists on the Internets:
Word to the wise, don't destroy your chances of raising money by making the common mistakes of first-time capital seekers.
A revenue-based financing instrument called a Revenue Royalty Certificate.
I'll gladly pay you Tuesday for a hamburger today. - Wimpy
The above quote sums up in one line what most first time capital seekers sound like to angel investors. I say this because the number one concern of investors is the preservation of their capital which includes the ability to extricate it from the company within a reasonable amount of time.
When the investor asks what sort of liquidity event the entrepreneur plans to create for this purpose and when, the answer is invariably vague. "Oh well, if everything goes perfectly we will IPO in a few years or be acquired by a big company." That folks is as confidence inspiring as Wimpy's famous offer. Investors require a minimal level of certainty. Vague answers only scare them off. That is the first big deal-killer.
The second deal killer is an inability to agree on a valution. The entrepreneur needs $500K and is offering 20% of the company for it. That's only fair, right? The angel wants 51% because of the high level of perceived risk. The chasm between the two valuations is in most cases too wide to bridge.
The third big deal-killer is over how any potential profits may be split if they do occur. Since the startup will be a private company initially the founders will want to minimize taxable income via the standard ways. This usually means that nothing is left over to share with the passive investors. Considering that his money could be tied up for five or more years without any return, can you blame the investor for not being excited enough to write a check?
Is there a solution? Is there a way to eliminate these three deal-killers? The answer is yes. It's done by using a revenue-based financing instrument called a Revenue Royalty Certificate.
Find out more about this amazing yet still little know tool which was recently written up in the WSJ: An Alternative Financing Option for Start-ups: Entrepreneurs Going the Revenue Royalty Route Use a Share of Revenue to Pay Back Loans
Get the details here on how to successfully use Revenue-Based Financing.
Just yesterday I announced the realease of version 3.0 of How Deal-makers Close Investors which explains how to use revenue royalty finnacing and today the Wall Street Journal publishes a piece on a company that used them to raise capital.
An Alternative Financing Option for Start-ups
Entrepreneurs Going the Royalty Route Use a Share of Revenue to Pay Back Loans
Thanks to Scott Austin for this illuminating look at revenue based financing.
How Deal-makers Close Investors
Revenue-based financing is becoming the hot new way to provide capital to companies. I'm proud to be the first person to ever provide entrepreneurs with a tool for raising money with this type of deal structure.
I have now just released version 3.0 of How Deal-makers Close Investors. It shows you how to approach capital raising like a deal-maker as well as how to utilize revenue-based finance with a Revenue Royalty Certificate. There is nothing sadder than someone with nothing but a business plan and Powerpoint who can't understand why people aren't throwing money at their venture. Don't be one of these time wasters.
Here's more information on how to be successful at raising capital from private investors and business with revenue-based financing.
Deal-Killers: How to Turn Off Angels Investors
Get your copy of How Deal-makers Close Investors right now. It will help you stand head and shoulders above other capital chasers in investors' eyes.
Sometimes these instruments are called Revenue Participation Certficates.
My friend Barry Moltz is offering you a free business book with free shipping.You have 50 fabulous titles to choose from.
http://barrymoltz.com/consulting/bookgiveaway
You snooze, you lose.
Raising Startup Capital for the Next Facebook
This short little video is packed with lessons for startup entrepreneurs.
(source: www.antiventurecapital.com)
For international viewers: http://www.xtranormal.com/watch/7739783/
One of the amusing (and sometimes exasperating) things that you notice as you get older is that people keep "discovering" the same obvious points year after year, and when they do they act like Christopher Columbus spotting land in the West Indies in 1492.
Last year, a research team at the University of Maryland B-School discovered that venture capitalists don't really read business plans. If they do look at them at all, it's to read the executive summary and management team section to see if any credible people are part of it. If they are still interested, they will then initiate a series of meetings that take place over months in most cases before making a decision. So the lesson here is don't put too much faith or money into your business plan. Smart investors know that they are as objective and accurate as a personal ad on a dating site. I first learned that hardly anyone actually reads business plans back in the late 1980s.
Now another academic has made yet another discovery which will send shock waves through the startup world. Are you sitting down? Here is it: investors don't like putting their money into companies that are more than an easy car commute away. In many cases, this means that any opportunity outside of a 25 mile radius gets rejected. In cases where an investment is made outside this radius, it's usually of a smaller size according to the study.
“We saw that visiting a company day to day made a real difference, and investors were willing to write bigger checks if they could do that,” he says. From Tian’s research, venture firms don’t necessarily abide by the so-called 20 minute rule, where venture capital firms typically want to invest in startups located within a 20 minute drive of their office, but a greater distance does make a VC hold on tighter to its purse strings. (source)
If the reasons why aren't obvious, allow me to spell them out for you. Investors, both VCs and angels, like to meet face-to-face on a regular basis with the people running their startups because their money is at risk. If an angel investor cuts a check for a new telehone system, he likes to be able to drop by and see that the money was spent on exactly that and not on a vacation for the CEO. Moreover, startups stumble and falter all the time. It's an accepted part of the game. When it happens investors want to be able to meet with the mangement team face-to-face to work out a solution. Sometimes people have to fired or hired and the investor wants a say in the matter. That's all hard to do if the company requires a plane ride to visit.
The lesson here is that if you are seeking capital you need to be near the people with money in the vast majority of cases. If you're not near them, consider moving. If you're not willing to move for the sake of your business then you may not be as committed to its success as investors would like see.Investors will simply assume that real agenda is to create a nice comfy life-style business for yourself with their money.
The worst thing anyone can do is hope that investors from another country will wire them money.
So yes, geography is a major factor in your ability to raise money from investors.
Angel Investors: NorthWest Energy Angels
This is a new clean energy angel investor group. At least it is for me.
We look only at companies in "cleantech" or "greentech" and invest in seed, A and sometimes B rounds. Our geographic focus is the Pacific Northwest (Washington, Oregon, Idaho, Montana, British Columbia and Alberta) but we look at deals from other regions, particularly the Western U.S. Although we welcome companies with "chiseled-in-stone" term sheets, we are experienced in leading both seed and A rounds. (Read investment criteria.)