The text book answer that would be given by most B-School professors is that venture capital is a subset of a larger private equity asset class which includes venture capital, LBOs, MBOs, MBIs, bridge and mezzanine investments. Historically venture capital investors have provided high risk equity capital to start-up and early stage companies whereas private equity firms have provided secondary traunches of equity and mezzanine investments to companies that are more mature in their corporate lifecycle. Again, traditionally speaking, venture capital firms have higher hurdle rate expectations, will be more mercenary with their valuations and will be more onerous in their constraints on management than will private equity firms.

While the above descriptions are technically correct and have largely held true to form from a historical perspective, the lines between venture capital and private equity investments have been blurred by increased competition in the capital markets over the last 18 24 months. With the robust, if not frothy state of the capital markets today there is far too much capital chasing too few quality deals. The increased pressure on the part of money managers, investment advisors, fund managers and capital providers to place funds is at an all time high. This excess money supply has created more competition between investors, driving valuations up for entrepreneurs and yields down for investors.

This increased competition among investors has forced both venture capital and private equity firms to expand their respective horizons in order to continue to capture new opportunities. Over the last 12 months I have seen an increase in private equity firms willing to consider earlier stage companies and venture capital firms lowering yield requirements to be more competitive in securing later stage opportunities.

The moral of this story is that if you are an entrepreneur seeking investment capital your timing is good. While the traditional rules of thumb first explained above can be used as a basic guideline for determining investor suitability, dont let traditional guidelines keep you from exploring all types of capital providers. While some of the ground rules may be changing your capital formation goals should remain the same: entertain proposals from venture capital investors, private equity firms, hedge funds, and angel investors while attempting to work throughout the entire capital structure to seek the highest possible valuation at the lowest blended cost of capital while maintaining the most control possible.

Author: Mike Myatt
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Therefore, you should have dueling spreadsheets; that is to say the spreadsheets, which take your best guess and double the time, double the expenses to compete with your optimistic approach. You should be able to present both of these to your Angel Investor; who chances are is a retired business person with a little bit of financial savvy.

This will show your Angel Investor that you indeed are a rational thinker and concerned about the money as well as the truth. If the Angel Investor cannot trust you your chances of being funded are nil. An angel investor is betting on the jockey not only the horse. As an entrepreneur you must be honest with yourself as well as your financial partner.

They want to make sure you believe in what you are doing and that you also have risked your own capital, time and energies into the new business. Angel investors want you to succeed and often they also like to give their input and if you end up taking their money for your startup, the need to realize that their input needs to be taken seriously.

Angel Investors are typically much better investors for a long-term business plan that Venture Capitalists, although they do not come usually with the incredible network to help you succeed. Venture Capitalists are more interested in themselves and making money on their investment then what you get out of it or the future of the business with you in it. An angel investor is interested in you, the future of the business and the possibility of making a whole lot of money on their investment. Please consider all this when presenting your business plan to an Angel Investor.

Author: Lance Winslow
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Examples are:

1. Angels in the Outfield – a kids baseball movie where real Angels help the Anaheim Angels baseball team find their confidence again.

2. Angel investors that help small businesses or start-ups with initial capital.

Both of the examples above played or play a major role in the life of the subject. In fact, without the Angel and the confidence/support it brought, the team or new business may have fallen short or not moved forward at all.

Well, the truth is that there are Angels in the job search community as well. If you find one, when you find them and how proactive they are can make all the difference in successful job search.

In my 2007 search, I was blessed with the luxury of a fantastic Angel. This person came from a local recruiter who networked me to one of her contacts – a person in my field (marketing) who had just recently finished their own job search. So, what made their help Angelic?

During an hour long phone call at a key early point in my search, this person (who did not know me) delivered a toolbox of new ideas, contacts and networking groups that was invaluable. More importantly, my job search shifted from doing the traditional things to my acting with very specific intent. In fact, this call not only was a game changer but it helped to build the pieces of what became my successful job strategy.

Here’s a sampling of what I received:

A copy of their job search strategy (recruiters, networking groups, websites, focus areas)

An introduction and referral to two critical and exclusive networking groups in the area

The pros and cons of many other local and online networking groups

A copy of their one-sheet outline (a short, crisp version of a resume that also includes your target industry, title, geography, and companies)

The heads up on a key online resource called RiteSite – a great job search and networking site.

The names of two other people in my field with whom I could network – one was also looking, the other was employed.

What’s not so tangible is the new level of confidence and sense of purpose I felt having been helped in this way. This person could have been nice and done their duty by spending 5-10 minutes throwing me a few recruiter names. Maybe they suggest a few websites they like. After that, we’re done and I’m really not much better off, right?

So, why is this important?

First, every introduction you get has the potential to be an Angel. They are rare, as they should be, but it can happen. They more likely come from a trusted friend but who knows? Here’s one thing to do – every time you are speaking to someone while networking ask them: do you know anyone else that I should be speaking to? It may be hard to ask this question (the ego can get in the way) but it is important to always be looking for new contacts.

Second, Angels are not just people who provide advice. If you are a seasoned job seeker and do not need (or don’t think you need) a fresh toolbox, your Angel might be someone who opens up a whole new network for you or someone who is incredibly tied in and keeps you on their lookout list as jobs roll past them.

Third, whether employed or looking, you can be an Angel for someone else. It is incredibly gratifying to help someone who really needs it. No skin off your back, just some of your time. Also, thinking longer term, imagine the support that person will offer you next time you are looking for work.

Final tip – If you get an Angel on the line, ask smart questions, be prepared, be respectful, be courteous of their time (even an Angel can be burned out if over-used) and say . . . THANK YOU.

Author: Tim Tyrell-Smith
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In fact, many people give up their dream of purchasing a franchise because they are unable to find the money required to do so. Fortunately, there are many available funding options if you just know where to look. I’m going to discuss some potential funding sources so you can purchase a successful franchise of your own.

Obtain a Special Franchise Loan

Depending on the country in which you live, you may be able to obtain a special franchise loan to start a franchise. For example, the United States offers a lending program that has resulted in a huge number of successful franchises. They offer what is called SBA-backed loans to successful applicants. You should discuss the situation with your financial institution to see if you quality for an SBA-backed loan for your franchise. Many banks also provide a list of the specific franchises they are willing to fund.

Many British banks also operate a franchise unit that is specifically designed to provide financing to franchisees. Banks such as NatWest and Ulster Bank provide funding to many franchisers and franchisees. This can simplify the process of obtaining funding, since specific lending criteria have already been established. You may qualify for a “soft” loan; they require very minimal or no personal collateral as security, and they are generally offered at a much lower interest rate than traditional business loans.

Look For a Venture Capitalist

Another option to fund your franchise is to seek the assistance of a venture capitalist. You will generally be required to provide an extremely detailed business plan and an outline of every aspect of your proposed business. In order to obtain venture capital, you may also have to sacrifice as much as 50 percent of your business to obtain the required funding.

Consider Family Equity

Even if you manage to find funding for your franchise, you will need to invest some of your own money or “equity” into running the business. Hence, you need to make sure you are able to pay your bills every month and can handle all the necessary personal and business expenses. You should consider discussing your business with trusted friends and family members. They may be willing to invest in your new business venture if they see how determined you are to succeed.

Seek an Angel Investor

When I refer to angel investors, I don’t mean the kind with shiny halos and white wings. This term refers to an individual who is wealthy and is not a professional venture capitalist. This person has investment money ready for a lucrative investment opportunity or one that will net higher returns than traditional investment methods such as the stock market.

Most angel investors will only consider providing funding for investment opportunities that will earn them annual returns of 25 percent or higher. Many of these individuals are long-term investors who have helped many entrepreneurial ventures get off the ground.

Talk to the Franchiser

Last but not least, be sure to discuss the situation with the franchiser. According to recent statistics, approximately 30 percent of all franchisers are willing to provide financing to the franchisee directly or via a third-party lender. Your franchising agreement will normally indicate if direct financing is available. Even if this is the case, you will most likely need to consider alternate sources of funding as well. Most franchisers will not cover 100 percent of the required funding to run the business.

Author: Michelle L Kirkbride
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As business angels are people who have generally already made their fortune through other ventures they could prove vital to the success of your business. They could bring you everything you need to get your business off the ground; the main thing being the money needed to start your venture up. As business angels are wealthy individuals they will invest in new business ventures that are considered high growth. Their reason for doing this is to gain a high return of the profits that the business makes. This means the investment that a business angel provides is a risk, as there is no guarantee that your business is going to be successful. Due to this fact a business angel will not only be investing money into your business; they will also do everything in their power to make sure that your business becomes a success.

In order to help make your venture a success money isn’t the only thing being brought to your company. These angels will also invest their skills, time, experience and the contacts that they have built up. So you will not only have access to all of the money that you need to successfully run your venture but you will also have all of the help that you could ever need right at your fingertips. Sound good?

Angels are a fundamental tool. They are needed to fill the gap that exists between venture capital and debt finance. They are imperative to the success of start-up ventures and early stage companies. There are however certain points that you need to keep in mind. To use the help of an angel your investment needs should be between £10,000 and £750,000; your business also needs to have a good early stage development or expansion plan and certain angels will only invest in particular areas of business. Basically in order to attract the attention of a business angel your business plan needs to be clear and you need to be able to demonstrate how your business will make money. All of your facts and figures need to be accurate. The reason why aspects such as these are so important is down to the fact these investors won’t put their money and time into something unless they feel it will be worthwhile; your venture needs to appeal to them.

If you do attract the attention of a business angel my advice to you is to spend time with your investor so you can see if you have a solid relationship with each other. It will also ensure that your business idea matches the skills that they have.

If you do take on board the help available from such an investor then the way it works is they will own a percentage of your business so when your venture starts to bring in money, a percentage of this money will be making its way across to your investor. This is however a small price to pay for the advantages that said investor will be bringing into your business.

Author: Helen Cox
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Here’s what they told us:

Reach Significant Milestones Before Seeking Funding- especially Having Paying Customers — The more the early-stage company is able to accomplish on its own, the more attractive it is to venture capitalists, who now put a premium on the existence of real, live customers rather than vague notions
about the customers being ‘out there.’

“Get as far as possible without money. Find a way to show the dogs will eat the dog food.”

“Right now, you need to have it all: working, proprietary, protectable technology; successful, experienced and relevant management team; and proof of market demand in the form of paying customers.”

Be Prepared to Bootstrap the Company – During times when capital is less plentiful, entrepreneurs have to be prepared to go it alone until more investors jump back into funding
early-stage deals.

“Very, very, very few seed stage companies will obtain capital from venture funds, so it is best to bootstrap as much as possible. Save the time seeking investors and get to work to make something happen.”

“Be more creative. Think of ways to make progress without institutional investors.”

Work Harder and Do Your Homework — Finding capital for a start-up company has always been a difficult task, and many entrepreneurs have found it especially hard in 2007. But perseverance and taking the time to really understand what investors look for in a company are two ways of improving
the chances of obtaining funding.

“Network like crazy and know EVERTHING about your industry.”

“Don’t give up!. Keep looking. Research the VCs more thoroughly to find true early stage firms in your particular space. Work with local angel groups, the most likely source of seed money. “

Have the Strongest Management Team Possible Before Seeking Capital – Investors in each of our annual surveys have stressed the importance of the management team.

“Make sure at least one team member has done it (built a successful company) before.”

“Get the best team you can and plan on only one shot at a VC. And plan on a low valuation.”

Build the Company More Slowly with Less Capital – Capital is being ‘rationed” out in smaller increments, and quick exit strategies are no longer the norm.

“Do not base any aspect of the plan on an exit of less than 36-48 months.”

“Get farther along before you seek institutional capital, and ask for smaller amounts with a realistic time line. Don’t compress 7 years of development into 24 months. Build your company one block at a time, and ask for the capital in stages as you prove your case.”

Use All Available Capital More Carefully – Capital is now a more scarce commodity than it was in 1999 and early 2000.

“Make sure your business has a tangible economic benefit to customers in the near term, a strong ROI/Payback. Efficient use of capital is paramount now.”

“Build a cheap operation. And keep it cheap.”

So while it’s never been easy to get venture capital, not even during the good old gold rush days of the dot.com’s, the challenge is even greater now. But if you have a strong management team, a solid business model and you’re persistent, you just might win the battle.

Author: Dee Power
Article Source: EzineArticles.com
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On account of the large number of visitors, the hotel industry in Los Angeles is truly a booming one, throughout the year. Los Angeles lays claims to being home to some of the leading hotels of the world. In a highly competitive market, hotels in LA often offer discounted rates as an incentive to attract potential guests.

Hotels in Los Angeles provide discounted price packages depending upon factors such as period of the day, seasonal fluctuations in traffic, number of rooms required and length of stay. Most hotels offer discounts to large groups of people traveling together and on off-season bookings. Travelers can also save money on accommodation by booking in advance.

Los Angeles is an expensive city and for most tourists to the city, the cost of accommodation and food is the largest expense head in addition to the cost of shopping, sightseeing and travel in the city. It therefore, becomes imperative to plan the trip out and save money on hotel bills by negotiating discounts with the hotel management. Tourists can spend the money saved on many other essential things during their holiday.

It is recommended that a good amount of research be done to get a clear idea about the best discounts on offer before booking a hotel in Los Angeles. The Internet is a good place to start shopping for hotel discounts while planning a trip to Los Angeles.

Author: Richard Romando
Article Source: EzineArticles.com
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Before the meeting

One of the first things that entrepreneurs should bear in mind is that even before an angel investor agrees to meet with him or her, the angel investor probably already has an idea of who he or she is. This is because of the fact that angel investors make it a point to “screen” who they meet with, and, as much as possible, they want to be introduced to entrepreneurs by a trusted friend or relative so that they would have a “reference.” This is because they want to meet with entrepreneurs whom they can have confidence in and trust.

If an angel investor is a family friend or was introduced by a friend or a relative, it would be good to hold a “pre-negotiation meeting” before the big meeting by inviting the investor to gatherings or parties. This is because doing so can allow the entrepreneur and the investor to get to know each other better before the meeting, which can also serve as a good opportunity to make a good first impression.

During the meeting

During the big meeting, an entrepreneur can build on the first impression that he has made by coming to the meeting prepared to effectively present his business concept and to answer any questions that the investor may have. To be able to do so, he or she must prepare a good business plan and bring some very important tools like a calculator, which can help him assess his business needs given the different options he would be presented with during the meeting. In case the investor agrees to invest, it would be a good idea to draw up a letter of intent. However, if the investor is a friend or a close family friend, a simple verbal agreement and a handshake would suffice before the papers are prepared.

To help relieve some of the anxiety that an entrepreneur goes through in looking for an angel investor, there are a number of ways by which he or she can make the meeting with an investor more pleasant. Some of these include holding a “pre-negotiation” meeting and preparing well for the meeting in order to leave a good impression with an investor and increase the chances of signing an investment deal.

Author: Eric Morris
Article Source: EzineArticles.com
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Early Stage Financing:

Seed Financing–A small amount of money is involved (usually $50,000 or less). Funds are used to develop a concept. This is the earliest stage of venture capital financing. The investor (often referred to as an angel) is expecting to reap a large percentage ownership should the concept prove to be feasible and marketable.

R&D Financing–This is a tax-advantaged partnership set up to finance product development. Investors secure tax write-offs for their investments. If the product becomes successful, they share in the profits.

Startup–Money is used for product development and initial marketing. While startup companies are organized, they typically have not yet sold their products commercially.

First Stage–The entrepreneur usually has developed a prototype. Funds are used to initiate full-scale manufacturing and sales.

Expansion Stage Financing:

Second Stage–In this stage, working capital is for the initial expansion of a company that is shipping products but may not yet be showing a profit.

Third Stage–This is also called “Mezzanine” financing. Capital at this stage is used for major expansion including physical plant expansion, marketing, and working capital.

Fourth Stage–This is also referred to as “bridge” financing. This is financing for a company expecting to go public within six months to a year. Often bridge financing is structured so that it can be repaid from the proceeds of a public underwriting.

Acquisition/Buyout Financing:

Acquisition Financing–Funds are provided to a firm to finance its acquisition of another company.

Management LBO–Funds are provided to enable an operating management group to acquire a product line from either a public or private company concern, often the very company they work for. (LBO means leveraged buy-out.)

Public Market–This is the purchase of over-the-counter stock. The venture capital investor is typically directly involved with improving the company.

(c) Copyright 2006, Leonard M. Stillman Jr., All Rights Reserved.

Author: Len Stillman
Article Source: EzineArticles.com
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A Proprietary Product, System, Method or Approach

Investors look for surefire indications that the firms they are investing in have a leg up on competitors. While patents, trademarks, copyrights and other trade secrets do not guarantee success, many successful ventures enjoy one or more of these advantages.

A Large Potential Market

What good is a great product or service if the potential market is too limited? In a relatively small market, a venture might have to capture the entire market to be profitable. Most investors look for ventures that operate in markets large enough to result in significant revenues and profits. Large sustainable profits usually lead to greater enterprise value.

Customer Acceptance

Nothing is more convincing than a rapidly growing base of satisfied customers. Well-written business plans, multiple patents and spectacular Power Point presentations are great, but early rapid product acceptance is where the metal meets the road.

A Highly Talented and Experienced Management Team

Investors look for management teams that are talented and that can deliver on their plans. Many ventures fail, not because the business plan is not compelling or well designed. They fail because the management team is unable to execute their plan. Investors are partial to management teams that have successfully executed plans in the past.

A Well Thought Out Plan

Speaking of business plans, a highly focused plan usually precedes a smashing success. Since most investors have limited time to meet with entrepreneurs seeking financing, it is imperative that savvy entrepreneurs put together compelling business plans. In a short well-written plan, they must communicate their vision and business concept in a convincing manner, anticipating and answering the most critical investor questions.

Exit Strategy

Venture investors usually have limited investment horizons. In many cases, they have raised their money using an investment fund vehicle. The vehicle usually requires them to return their investors capital within a certain time frame. Most venture investors have a three to seven year investment horizon. High net worth angel investors may have more flexibility if they are convinced that greater rewards will come from a longer investment horizon.

The Potential for Excellent Returns

Investors look for ventures capable of generating the kinds of profits that create significant company value. Financial projections must be realistic yet convincing. Large profits produce high company valuations. Upon an investors exit from the investment, a large enterprise value usually results in large investment returns.

If you are making plans to tap the venture capital market, keep these points in mind. Focus on presenting a compelling, well-written business plan. Once you get your meeting with investors, be prepared to concisely communicate how your business will become successful.

Author: George Parker
Article Source: EzineArticles.com
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