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How Entrepreneurs Use Mentors to Raise Capital From Investors

September 26th, 2011

How Entrepreneurs Use Mentors to Raise Capital From Investors

For many entrepreneurs, the most difficult part of the entrepreneurial process is sourcing funds. A venture capital fund or an angel investor group might only grant 1 in 1000 entrepreneurs who cross their path the right to pitch, and only 1 in 10 of those deals might get the funding they need. So how do entrepreneurs set themselves on the path to becoming that 1 in 1000?

Mostly, it is about perception and networking. Many entrepreneurs still do not understand that if they go straight for the money their first time out, they have a 95% chance of burning the entire investment network they want to raise capital through. The perception they create with those first impressions can travel much faster than the entrepreneurs can. One investor will tell 10 others that they passed on your deal and then, even after you’ve cleaned up your presentation, you will still have a hard time getting future investors to take a serious look at your deal.

Don’t make the fatal mistake of going this process alone.

There are many, many people and organizations that want to see you succeed. But first, you have to be humble enough to realize that you don’t know it all. Although every entrepreneur believes their deal has what it takes to get funded, every deal can be improved to improve its investment success. Ask around to find a great Mentorship program.

A professional mentorship program will help fresh entrepreneurs cultivate positive perceptions with seasoned investors, thereby forging positive connections between them. Mentorship programs can allow an entrepreneur access to a wealth of guidance, advice, and connections within the venture community. Using those critical resources, entrepreneurs can drastically improve their chances of getting funded.

Innovative venture capital mentorship programs, built on award-winning research and
time-tested ideas, can help you become that 1 in 1000 entrepreneur. Such programs include the participation of venture professionals and investors as mentors who give a full review and critique of your executive summary and pitch. They also provide access to innovative programs and ideas, along with useful venture analytic tools.

Within the mentoring process, value is added to entrepreneurs through a series of critiques and question and answer sessions with seasoned venture professionals and investors. Through a third party observer, objective comments and critiques from mentors provide important feedback on how entrepreneurs appear to investors.

Positive impressions and perceptions are constructed and perfected through mentorship programs and that creates long-lasting value for entrepreneurs as they embark on their new business ideas and ventures. Such venture capital mentorship programs are the only places where venture professionals provide unbiased feedback to help entrepreneurs achieve their true potential and help them to successfully raise money.

Article from articlesbase.com

Posted in Venture Capital | Tags: capital, Entrepreneurs, From, Investors, Mentors, raise | No Comments »

Secrets of Successful Entrepreneurs and Venture Capital Investors

September 15th, 2011

Secrets of Successful Entrepreneurs and Venture Capital Investors

Venture capital is not an easy game. Not all venture capitalists have been successful investing in start ups in different fields such as infrastructure, innovation, biotechnology, information technology, or software. Investing in these types of businesses involves great risks and hard works, not to mention the huge amount of money that they have to venture in. Venture Capitalists assume enormous risks with high levels of uncertainty.

Successful VC investors accept uncertainty as an integral part of being in business. They must be ready to face many crises and allow temporary failures without having to panic. After all, failure is the mother of success. Even Thomas Edison, a genius inventor, failed a thousand times before he finally succeeded with his inventions or discoveries. Talk to an entrepreneur or to any group of up-the-corporate-ladder type businessmen who sees innovation and creativity as the path to profitability and long term sustainability, and they will share openly about failures, mistakes, and setbacks as steps along the path to success.

Venture Capitalist Adi McAbian, a 36 year old successful entrepreneur who is the managing director of TwistBox, and a board member of the Internet Task Force of Boston, has a proven track record for creating, growing and selling successful businesses. He shared that the secret lies in being able to harness that idea and quickly bring it to fruition in a cost-effective manner. “Many budding entrepreneurs get too caught up with the massive amount of detail involved in creating a burgeoning company’s infrastructure, rather than focusing on the business itself,” explains Adi McAbian, “I advocate outsourcing the basics to those that specialize in this. To be successful in this tough economic climate, you need to focus 100 percent of your attention on your business model and customers.”

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On the other hand, mastering the VC game combines the right mix of facts, advices, people and stories. Integrating the experiences of notable entrepreneurs is extremely helpful and beneficial. Dee Power and Brian E. Hill, authors of Secrets to Unlocking Venture Capital for Your Company, also shared the secrets to obtaining venture capital:

Preparation – It is imperative to prepare yourself and your company in searching for seed capital or growth capital by developing a clear, concise, and realistic business plan that would make the reader excited about the opportunity that your company would present. Failing to clearly identify the opportunity is the most critical mistake that entrepreneurs make, according to venture capitalists. Before you approach an investor, speak to advisors or other entrepreneurs who have worked with them to find out as much as you can. Provide a strong and experienced management team with diverse range of expertise. And do not make simple mistakes such as wrong spelling, grammar, or computation.
Positioning – To make sure that what you are offering is what they are looking for, research the investment criteria of the venture capitalists. A company that does not match with the venture capitalists’ investment criteria is the second most common reason why they are being declined. It is also important to get referrals by other VC firms, and get one if you do not have one yet.
Perseverance – Keep trying. Do not give up. Follow up your submitted plan through phone call, fax, or email weeks after your proposal. Or you can be persistent by calling the VC firm everyday. Continue to widen your network of contacts to give you more avenues of approach to the investors. And most of all, believe in your passion about your company.

An accomplished venture capital investors spend a lot of time digging into an entrepreneur’s past failures because they believe that such failures will make an entrepreneur more amenable and responsive. Success stories have many milestones – positive and productive, or even setbacks. But it is not what you lose from setbacks, rather what you learn from it and apply that would make a ventured business a success.

Rose Brazil writes articles for www.grow-connect.com, the great source of angel investors and venture capital.

Article from articlesbase.com

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Role Of Government In Developing Entrepreneurs

August 16th, 2011

Role Of Government In Developing Entrepreneurs

ENTREPRENEUR

An Entrepreneur is an individual who efficiently and effectively combines the four factors of production. Those factors are land (natural resources), labor (human input into production using available resources), capital (any type of equipment used in production i.e. machinery) and Enterprise (intelligence, knowledge, and creativity.)

Entrepreneurship is often difficult and tricky, as many new ventures fail. is often . Most commonly, the term entrepreneur applies to someone who creates value by offering a product or service. Entrepreneurs often have strong beliefs about a market opportunity and organize their resources effectively to accomplish an outcome that changes existing interactions.

Business entrepreneurs are viewed as fundamentally important in the capitalistic society. Some distinguish business entrepreneurs as either “political entrepreneurs” or “market entrepreneurs,” while social entrepreneurs’ principal objectives include the creation of a social and/or environmental benefit.

The Enterprise can be set up in a designated industrial areas, where infrastructure facilities are available and is near to the market identified. It can also be set up in any other area depending upon nature of activity and local municipal rules.

Entrepreneurship is the practice of starting new organizations or revitalizing mature organizations, particularly new businesses generally in response to identified opportunities. Entrepreneurship is often a difficult undertaking, as a vast majority of new businesses fail. Entrepreneurial activities are substantially different depending on the type of organization that is being started. Entrepreneurship ranges in scale from solo projects (even involving the entrepreneur only part-time) to major undertakings creating many job opportunities. Many “high-profile” entrepreneurial ventures seek venture capital or angel funding in order to raise capital to build the business. Angel investors generally seek returns of 20-30% and more extensive involvement in the business. Many kinds of organizations now exist to support would-be entrepreneurs, including specialized government agencies, business incubators, science parks, and some NGOs.

CHARACTERISTICS OF AN ENTREPRENEUR

Entrepreneurs have many of the same character traits as leaders, similar to the early great man theories of leadership; Entrepreneurs are often contrasted with managers and administrators who are said to be more methodical and less prone to risk-taking. Such person-centric models of entrepreneurship have shown to be of questionable validity, not least as many real-life entrepreneurs operate in teams rather than as single individuals

The Entrepreneur has an enthusiastic vision. The Entrepreneur’s vision is an interlocked collection of specific ideas. The overall blueprint to realize the vision is clear. The Entrepreneur promotes the vision with enthusiastic passion. The Entrepreneur develops strategies to change the vision into reality. The Entrepreneur takes the initial responsibility to cause a vision to become a success. Entrepreneurs take prudent risks. An Entrepreneur is usually a positive thinker and a decision maker. ADVANTAGES OF ENTREPRENEURSHIP

Every successful entrepreneur brings about benefits not only for himself/ herself but for the municipality, region or country as a whole. The benefits that can be derived from entrepreneurial activities are as follows:

Enormous personal financial gain. Self-employment, offering more job satisfaction and flexibility of the work force. Development of more industries, especially in rural areas or regions disadvantaged by economic changes, for example due to globalization effects. Encouragement of the processing of local materials into finished goods for domestic consumption as well as for export. Income generation and increased economic growth. Promotion of the use of modern technology in small-scale manufacturing to enhance higher productivity. Encouragement of more researches/ studies and development of modern machines and equipment for domestic consumption. Development of entrepreneurial qualities and attitudes among potential entrepreneurs to bring about significant changes in the rural areas. Freedom from the dependency on the jobs offered by others. The ability to have great accomplishments.

CONTRIBUTIONS OF ENTREPRENEURS

1) Develop new markets.

Under the modern concept of marketing, markets are people who are willing and able to satisfy their needs. In Economics, this is called effective demand. Entrepreneurs are resourceful and creative. They can create customers or buyers. This makes entrepreneurs different from ordinary businessmen who only perform traditional functions of management like planning, organization, and coordination.

2) Discover New Sources Of Materials.

Entrepreneurs are never satisfied with traditional or existing sources of materials. Due to their innovative nature, they persist on discovering new sources of materials to improve their enterprises. In business, those who can develop new sources of materials enjoy a comparative advantage in terms of supply, cost and quality.

3) Mobilize Capital Resources.

Entrepreneurs are the organizers and coordinators of the major factors of production, such as land labor and capital. They properly mix these factors of production to create goods and service. Capital resources, from a layman’s view, refer to money. However, in economics, capital resources represent machines, buildings, and other physical productive resources. Entrepreneurs have initiative and self-confidence in accumulating and mobilizing capital resources for new business or business expansion.

4) Introduce new technologies.

Aside from being innovators and reasonable risk-takers, entrepreneurs take advantage of business opportunities, and transform these into profits. So, they introduce something new or something different. Such entrepreneurial spirit has greatly contributed to the modernization of economies. Every year, there are new technologies and new products. All of these are intended to satisfy human needs in a more convenient and pleasant way.

5) Create Employment.

The biggest employer is the private business sector. Millions of jobs are provided by the factories, service industries, agricultural enterprises, and the numerous small-scale businesses.

PROMOTION OF ENTREPRENEURSHIP

Entrepreneurship was potential to support economic growth and social cohesion, it is the policy goal of many governments to develop a culture of entrepreneurial thinking. This can be done in a number of ways: by integrating entrepreneurship into education systems, legislating to encourage risk-taking, and national campaigns

Many of these initiatives have been brought together under the umbrella of Global Entrepreneurship Week, a worldwide celebration and promotion of youth entrepreneurship, which started in 2008.

FINANCIAL ASSISTANCE

Financial assistance is available from institutions such as Nationalised Banks, Small Industries Development Bank of India, Regional Rural Banks, National Small Industries Corporation, State Financial Corporations etc. depending upon the project requirement and promoters background. Financial assistance has two components. Loan for fixed capital is used to acquire Plant and Machinery, land and building. Working capital loan is used to meet day to day operational cost of the production. State Financial Corporation and National Small Industries Corporation generally provide working capital. However under a package assistance, State Financial Corporations also provide a composite loan covering plant and machinery and working capital.

The general conditions for getting financial assistance are:

Eligibility criteria Technical /Economic viability Promoters contribution Capacity to repay loan Collateral securities/guarantee

THE ROLE OF GOVERNMENT IN SUPPORTING ENTREPRENEURSHIP

Small and Medium-sized Enterprises (SMEs) in market economies are the engine of economic development. Owing to their private ownership, entrepreneurial spirit, their flexibility and adaptability as well as their potential to react to challenges and changing environments, SMEs contribute to sustainable growth and employment generation in a significant manner.

SMEs have strategic importance for each national economy due a wide range of reasons. Logically, the government shows such an interest in supporting entrepreneurship and SMEs. There is no simpler way to create new job positions, increasing GDP and rising standard of population than supporting entrepreneurship and encouraging and supporting people who dare to start their own business. Every surviving and successful business means new jobs and growth of GDP.

Therefore, designing a comprehensive, coherent and consistent approach of Council of Ministers and entity governments to entrepreneurship and SMEs in the form of government support strategy to entrepreneurship and SMEs is an absolute priority. A comprehensive government approach to entrepreneurship and SMEs would provide for a full coordination of activities of numerous governmental institutions (chambers of commerce, employment bureaus, etc.) and NGOs dealing with entrepreneurship and SMEs. With no pretension of defining the role of government in supporting entrepreneurship and SMEs, we believe that apart from designing a comprehensive entrepreneurship and SMEs strategy, the development of national SME support institutions and networks is one of key condition for success. There are no doubts that governments should create different types of support institutions:

i) To provide information on regulations, standards, taxation, customs duties, marketing issues;

ii) To advise on business planning, marketing and accountancy, quality control and assurance;

iii) To create incubator units providing the space and infrastructure for business beginners and innovative companies, and helping them to solve technological problems, and to search for know-how and promote innovation; and

iv) To help in looking for partners. In order to stimulate entrepreneurship and improve the business environment for small enterprises.

Training

Basic training differs from product to product but will necessary involve sharpening of entrepreneurial skills. Need based technical training is provided by the Govt. & State Govt. technical Institutions.

There are a number of Government organisations as well as NGOs who conduct EDPs and MDPs. These EDPs and MDPs and are conducted by MSME’s, NIESBUD, NSIC, IIE, NISIET, Entrepreneurship Development Institutes and other state government developmental agencies.

Marketing Assistance

There are Governmental and non-governmental specialised agencies which provide marketing assistance. Besides promotion of MSME products through exhibitions, NSIC directly market the MSME produce in the domestic and overseas market. NSIC also manages a single point registration scheme for manufacturers for Govt. purchase. Units registered under this scheme get the benefits of free tender documents and exemption from earnest money deposit and performance guarantee.

Promotional Schemes

Government accords the highest preference to development of MSME by framing and implementing suitable policies and promotional schemes. Besides providing developed land and sheds to the entrepreneurs on actual cost basis with appropriate infrastructure, special schemes have been designed for specific purposes like quality upgradation, common facilities, entrepreneurship development and consultancy services at nominal charges.

Government of India has been executing the incentive scheme for providing reimbursement of charges for acquiring ISO 9000 certification to the extent of 75% of the cost subject to a maximum of Rs. 75,000/- in each case. ISO 9000 is a mechanism to facilitate adoption of consistent management practices and production technique as decided by the entrepreneur himself. This facilitates achievement of desired level of quality while keeping check on production process and management of the enterprise.

Concession on Excise Duty

MSME units with a turnover of Rs. 1 crore or less per year have been exempted from payment of Excise Duty. Moreover there is a general scheme of excise exemption for MSME brought out by the Ministry of Finance which covers most of the items. Under this, units having turnover of less than Rs. 3 crores are eligible for concessional rate of Excise Duty. Moreover, there is an exemption from Excise Duty for MSME units producing branded goods in rural areas

Credit Facility To MSME

Credit to micro, small and medium scale sector has been covered under priority sector lending by banks. Small Industries Development Bank of India (SIDBI) has been established as the apex institution for financing the MSME. Specific schemes have been designed for implementation through SIDBI, SFCs, Scheduled Banks, SIDCs and NSIC etc. Loans upto Rs. 5 lakhs are made available by the banks without insisting on collaterals. Further Credit Guarantee Fund for micro, small and medium enterprises has been set up to provide guarantee for loans to MSME up to Rs. 25 lakhs extended by Commercial Banks and some Regional Rural Bank.

Policies And Schemes For Promotion Of MSME Implemented By State Governments

All the State Governments provide technical and other support services to small units through their Directorates of Industries, and District Industries Centres. Although the details of the scheme vary from state to state, the following are the common areas of support.

Development and management of industrial estates Suspension/deferment of Sales Tax Power subsidies Capital investment subsidies for new units set up in a particular district Seed Capital/Margin Money Assistance Scheme Priority in allotment of power connection, water connection. Consultancy and technical support

Government of India runs a scheme for giving National Awards to micro, small and medium scale entrepreneurs providing quality products in 11 selected industry groups of consumer interest. The winners are given trophy, certificate and a cash price of Rs. 25000/- each.

CONCLUSION

Government accords the highest preference to development of MSME by framing and implementing suitable policies and promotional schemes like policies and promotional schemes, providing incentives for quality upgradation, concession on excise duty and provides technical supportive services. Thus Government play supportive role in developing entrepreneurs.

R.Yuvarani

M.Phil Scholar

Department of Commerce,

Periyar University, Salem-11.

Article from articlesbase.com

Posted in Venture Capital | Tags: Developing, Entrepreneurs, Government, Role | No Comments »

Women Entrepreneurs: Rising Sun of the Era

February 16th, 2011

Women Entrepreneurs: Rising Sun of the Era

In this rat-racing world of today, women are getting empowered as fast as a change in a fad. The silos of the work field are being broken by the women heading everywhere in this so-called men-dominant world of yester-years. Now it is the era of new women, who are proving their mettle in all fields, diluting the water-tight compartments of the areas of professionalism being men- or women-oriented.

There was a time when women were perceived as only home-makers, but with the changing trends and our movement towards 21st century, it is becoming crystal-clear that they can be fortune-makers for an organization too. Recent findings have shown that the number of firms owned by women has grown twice the rate in the past ten years. Infact “Women business-owners are significant players in the nation’s economy and their momentum shows no signs of slowing down.”

More and more women are becoming entrepreneurs these days because they see the attractiveness that a home-based business has to offer them in terms of freedom and flexible working hours. No longer having to work hours dictated to them, women entrepreneurs have more time to spend with their families and to bring up their children. They enjoy more varied and meaningful tasks in their business, without the limitations and stresses associated with the glass-ceilinged corporate world.

Are Women Leaders in Demand?

Business is Business! That’s what they say! But is there any particular way a business has to be done? Partly yes and partly no. Partly yes because there isn’t any particular way we wouldn’t have learnt and tried to master it. And partly no because continuous change in technology and vast amount of information is making it much more challenging, and demands something new every time. Add to it the global competition, business is never the same. As somebody said, “You never cross the same river more than once.” Always there are new waters in the river, so there are new challenges and new people in business every time.

So evolving is the new concept of knowledge worker, and the problems of attrition have shifted the focus of organizations to the women as future workforce, especially as knowledge workers. Obviously, there are many examples where a woman has reached to the top, like Indira Nooyi, CEO of PepsiCo, and many more. So organizations have started seeing women with a new hope, they are taking-up women of ability, pairing them with men of ability, to make the best organization and a profitable one too.

The truth is that successful business is led by people of experience with specific business skills and the right mind-set. This is why we must develop women managers further through learning experiences, coaching and training that ensures the results a corporation needs to obtain highly skilled women leaders.

Here are some reasons why we need more women as leaders in business: -

Women, on average, are terrific communicators and tend to be better at it than men. It’s the information age and it’s highly competitive. Global business will require expanding business networks. Women are natural net-workers. Diverse view-points can result in better, more creative solutions to business issues. Both women and men are needed to address business issues effectively. Keeping a talented knowledge worker will require relationship strategies. Women instinctively care about building relationships which is why they tend to gravitate toward jobs where building relationships is a major component such as Marketing or HR.

The list may go on and on, and now the women will be the rising sun of the era. The women entrepreneurship is just one stance of women empowerment, more examples are yet to be set. So wishing all the women the very best of their life, we hope to have a world that is more respectful towards women.

As is rightly said, “Well Begun is Half Done.”

Women in industrial research A report from an independent high – level expert group underlines the need for the full participation of women in industrial research. The implications for innovation include the drawbacks of inadequate female input into research, design and marketing, and the reasons why women entrepreneurs are a very rare breed.

The high level group on women in industrial research, appointed by the European Commission’s Research DG, concluded in January 2003 that the under- representation of women in science is hindering the aims of the European Research Area. The group focused on industrial research since the EU target is for about two- thirds of R&D investment to be financed by industry by 2010. By that date, Member States’ investment in R&D should, according to the Barcelona European Council, approach 3% of gross domestic product.

The group, chaired by Professor Hula Rubsamen- Waigmann, was alarmed that the average proportion of women in EU industrial research (14.9%; range 9-28%)is less than half that in universities and research institutes, and that they are awarded a tiny minority of patents. Childcare and other services are essential to allow highly qualified women to remain active in research careers; but their provision varies widely. Social pressures on women to be full-time mothers (or lack of recognition of the value of career women) are important too. If a real difference is to be made by 2010, concerted actions are needed at EU, national and regional level.

Women Entrepreneurs

Over the past 20 years the number of women who are self – employed or running their own business has increased substantially. Women- owned businesses are still a minority, but many more are co owned by men and women.

Women owned firms are concentrated mainly in the service-sector. Rubsamen-Waigmann says that a major factor here is the availability of venture capital. “Women start business with capital from informal sources, ask for less and have a harder time raising venture capital in sectors where high initial investment is needed. In the service sector you can start with a small amount and grow slowly, but business are more sustainable.” This, she believes, is another reason why co-owned companies are often successful, because they mix an element of risk- taking with an element of caution. The reports highlight the need to raise awareness among venture capitalists of the value of women entrepreneurs. Less than 5% of the current bn venture capital pool in the US is awarded to women- owned firms.

How women entrepreneurs can drive growth fast-forward

Women have come a long way in business. Today, they own one-third of all Canadian companies, paying the salaries of nearly 2 million people. The top 100 women entrepreneurs in Canada generate over billion in revenue annually. What’s more, women now own increasing numbers of small and medium-sized companies outside of traditional service sectors, such as biotechnology, robotics and manufacturing.

That’s the good news. On the other side of the coin, according to a study by Industry Canada, over half of businesses run by women entrepreneurs are in a slow-growth stage of development. The majority of women-owned businesses tend to have fewer employees. Women export less and request less financing.

So as a woman entrepreneur, how do you overcome some of these barriers? If your business is a little sluggish, how do you make that vital shift into fast-forward growth? Chic Allison, Partner with BDC’s Consulting Group, who has worked closely with hundreds of women in business, offers some essential advice on how women can build on their strengths.

Assess your growth potential

Businesswomen are more inclined to take measured or calculated risks. But their reticence to risk too much may also create barriers to growth. What can help here? A formal growth potential assessment of your company can actually measure your risk potential. Basically, this involves hiring experienced consultants to do a cost-effective diagnosis of your business to help you see your strengths and minimize weaknesses that could hinder your success. By conducting in-depth interviews with key people in your business, the experts can provide you an outsider’s perspective on your company’s operations and pinpoint challenges associated with your growth.

Make strategic planning a part of your business

Avoid working in a silo. As you may know, women entrepreneurs are often skilled at networking because they’ve worked hard to get into the spotlight. Always focus on personal and professional visibility in the business community at large. Keep in mind that you should be building a strong presence in mainstream organizations. Consider your possible contribution to the local chamber of commerce, lobbying groups and industry-based organizations. Ultimately, being a part of the mainstream business community enables you to strengthen and polish your competitive business skills.

Show your sizzle. Get growth financing.

Although women in business are often well-prepared on paper when seeking financing, they tend to be less assertive when it comes to selling their business strengths.
When you’re looking for financing, remember that you’re there to help the loan officer help you get what you want. Be sure you present a full picture of where you’re going, which means showing that you’re proud of your achievements. Showing confidence in your growth potential is as important as demonstrating the figures.

Break the rules and always innovate!

Innovative companies outperform non-innovative businesses by far in a competitive business world. And women entrepreneurs tend to be naturally creative, want to learn and are open to new ideas. If you’re looking to achieve growth, be sure you’re challenging the status quo in your key operational activities such as human resources and financial planning. For example, you many need to encourage your employees to get involved in the decision-making process, to brainstorm strategic plans and share ideas on working smarter and faster. On the financial front, you should be looking at innovative financing alternatives from your banking partners, for example, that enable you to pursue growth, expand into few markets, develop your people and export. If you feel that you’re not a risk taker, look for financing that provides you flexibility and a comfortable level of cash flow.

Develop your resources from within

Women are born communicators, so to drive your business growth potential, be sure you build a strong learning organization. Encourage your people to take the initiative to develop and support risk-taking. Training your people means appointing mentors and coaches to cement the partnership between managers and employees. Most importantly, be sure you assess the full range of training vehicles readily available today, from Web-based learning to leader-led workshops.

Get the people you need and delegate

As multi-taskers in business and their personal lives, women often have difficulty delegating responsibility. But if you’ve reached a plateau in your business, it may be because you have reached your own personal limits. Remember that you can’t do everything yourself, so be sure to bring in the right talent to help you pursue your company’s growth. Hire people who match your company’s profile and who will help you achieve the growth you need.

Conclusion

“Entering the new Century, I strongly believe that more efforts should be undertaken in order to ensure greater opportunities for women, who nowadays take the main burden of doing most of domestic work, supporting their families financially and morally, and often having not enough time and energy left for doing what they want to do most. I hope that in the 21st century, there will be a just and democratic society, where women and men can participate equally in all aspects of social, political and economic life. I hope, that the civil and political interests of women will be protected, women’s economical independence (support to small business, loans to women entrepreneurs, etc.) will be increased, women’s political participation will be strengthened, discrimination against women (violence against women, trafficking in women and children, etc.) will be eliminated, women’s access to education will be expanded. I think that it is very important for women of diverse countries to consolidate efforts and get more international visibility for the purpose of uplifting the status of women in our communities and, indeed, in the whole world.”

“Harmony of Mankind and Earth.”

C. PAVITHIRA

M.Phil Scholar,

Depatment of Commerce

Periyar University, Salem-11,

C. PAVITHIRA

M.Phil Scholar,

Depatment of Commerce

Periyar University, Salem-11,

Article from articlesbase.com

Posted in Venture Capital | Tags: Entrepreneurs, Rising, Women | No Comments »

Venture Capital Alternative For Technology Entrepreneurs

December 8th, 2010

Venture Capital Alternative For Technology Entrepreneurs

Venture Capital Alternative For Technology Entrepreneurs

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Venture Capital Alternative For Technology Entrepreneurs

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Venture Capital Alternative For Technology Entrepreneurs

By: Dave Kauppi

About the Author

<a href=”mailto:davekauppi@midmarkcap.com”>Dave Kauppi</a> is the editor of The Exit Strategist Newsletter, a Merger and Acquisition Advisor and Managing Partner of <a target=”_new” href=”http://www.midmarkcap.com/”>MidMarket Capital</a>, providing business broker services to owners of middle market companies. The firm counsels clients in the areas of M&A, valuations, “Smart Equity Capital Raises”, sales and acquisitions. Visit our Web site to review our lists of buyers and sellers.

(ArticlesBase SC #71698)

Article Source: http://www.articlesbase.com/ – Venture Capital Alternative For Technology Entrepreneurs

If you are an entrepreneur with a small technology based company looking to take it to the next level, this article should be of particular interest to you. Your natural inclination may be to seek venture capital or private equity to fund your growth. According to Jim Casparie, founder and CEO of the Venture Alliance, the odds of getting Venture funding remain below 3%. Given those odds, the six to nine month process, the heavy, often punishing valuations, the expense of the process, this might not be the best path for you to take. We have created a hybrid M&A model designed to bring the appropriate capital resources to you entrepreneurs. It allows the entrepreneur to bring in smart money and to maintain control. We have taken the experiences of several technology entrepreneurs and combined that with our traditional investment banker Merger and Acquisition approach and crafted a model that both large industry players and the high tech business owners are embracing.

Our experiences in the technology space led us to the conclusion that new product introductions were most efficiently and cost effectively the purview of the smaller, nimble, low overhead companies and not the technology giants. Most of the recent blockbuster products have been the result of an entrepreneurial effort from an early stage company bootstrapping its growth in a very cost conscious lean environment. The big companies, with all their seeming advantages experienced a high failure rate in new product introductions and the losses resulting from this art of capturing the next hot technology were substantial. Don’t get us wrong. There were hundreds of failures from the start-ups as well. However, the failure for the edgy little start-up resulted in losses in the – million range. The same result from an industry giant was often in the 0 million to 0 million range.

For every Google, Ebay, or Salesforce.com, there are literally hundreds of companies that either flame out or never reach a critical mass beyond a loyal early adapter market. It seems like the mentality of these smaller business owners is, using the example of the popular TV show, Deal or No Deal, to hold out for the million briefcase. What about that logical contestant that objectively weighs the facts and the odds and cashes out for 0,000?

As we discussed the dynamics of this market, we were drawn to a merger and acquisition model commonly used by technology bell weather, Cisco Systems, that we felt could also be applied to a broad cross section of companies in the high tech niche. Cisco Systems is a serial acquirer of companies. They do a tremendous amount of R&D and organic product development. They recognize, however, that they cannot possibly capture all the new developments in this rapidly changing field through internal development alone.

Cisco seeks out investments in promising, small, technology companies and this approach has been a key element in their market dominance. They bring what we refer to as smart money to the high tech entrepreneur. They purchase a minority stake in the early stage company with a call option on acquiring the remainder at a later date with an agreed-upon valuation multiple. This structure is a brilliantly elegant method to dramatically enhance the risk reward profile of new product introduction. Here is why:

For the Entrepreneur: (Just substitute in your technology industry giant’s name that is in your category for Cisco below)

1. The involvement of Cisco – resources, market presence, brand, distribution capability is a self fulfilling prophecy to your product’s success.
2. For the same level of dilution that an entrepreneur would get from a VC, angel investor or private equity group, the entrepreneur gets the performance leverage of “smart money.” See #1.
3. The entrepreneur gets to grow his business with Cisco’s support at a far more rapid pace than he could alone. He is more likely to establish the critical mass needed for market leadership within his industry’s brief window of opportunity.
4. He gets an exit strategy with an established valuation metric while the buyer helps him make his exit much more lucrative.
5. As an old Wharton professor used to ask, “What would you rather have, all of a grape or part of a watermelon?” That sums it up pretty well. The involvement of Cisco gives the product a much better probability of growing significantly. The entrepreneur will own a meaningful portion of a far bigger asset.

For the Large Company Investor:

1. Create access to a large funnel of developing technology and products.
2. Creates a very nimble, market sensitive, product development or R&D arm.
3. Minor resource allocation to the autonomous operator during his “skunk works” market proving development stage.
4. Diversify their product development portfolio – because this approach provides for a relatively small investment in a greater number of opportunities fueled by the entrepreneurial spirit, they greatly improve the probability of creating a winner.
5. By investing early and getting an equity position in a small company and favorable valuation metrics on the call option, they pay a fraction of the market price to what they would have to pay if they acquired the company once the product had proven successful.

Let’s use two hypothetical companies to demonstrate this model, Big Green Technologies, and Mobile CRM Systems. Big Green Technologies utilized this model successfully with their investment in Mobile CRM Systems. Big Green Technologies acquired a 25% equity stake in Mobile CRM Systems in 1999 for million. While allowing this entrepreneurial firm to operate autonomously, they backed them with leverage and a modest level of capital resources. Sales exploded and Big Green Technologies exercised their call option on the remaining 75% equity in Mobile CRM Systems in 2004 for 4 million. Sales for Mobile CRM Systems were projected to hit 0 million in 2005.

Given today’s valuation metrics for a company with Mobile CRM Systems’ growth rate and profitability, their market cap is about .26 Billion, or 3 times trailing 12 months revenue. Big Green Technologies invested million initially, gave them access to their leverage, and exercised their call option for 4 million. Their effective acquisition price totaling 9 million represents an 82% discount to Mobile CRM Systems’ 2005 market cap.

Big Green Technologies is reaping additional benefits. This acquisition was the catalyst for several additional investments in the mobile computing and content end of the tech industry. These acquisitions have transformed Big Green Technologies from a low growth legacy provider into a Wall Street standout with a growing stable of high margin, high growth brands.

Big Green Technologies’ profits have tripled in four years and the stock price has doubled since 2000, far outpacing the tech industry average. This success has triggered the aggressive introduction of new products and new markets. Not bad for a million bet on a new product in 1999. Wait, let’s not forget about our entrepreneur. His total proceeds of 9 million are a fantastic 5- year result for a little company with 1999 sales of under million.

MidMarket Capital has borrowed this model combining the Cisco hybrid acquisition experience with our investment banking experience to offer this unique Investment Banking service. MMC can either represent the small entrepreneurial firm looking for the “smart money” investment with the appropriate growth partner or the large industry player looking to enhance their new product strategy with this creative approach. This model has successfully served the technology industry through periods of outstanding growth and market value creation. Many of the same dynamics are present today in the high tech industry and these same transaction strutctures can be similarly employed to create value.

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Dave Kauppi -
About the Author:

<a rel=”nofollow” onclick=”javascript:_gaq.push(['_trackPageview', '/outgoing/article_exit_link']);” href=”mailto:davekauppi@midmarkcap.com”>Dave Kauppi</a> is the editor of The Exit Strategist Newsletter, a Merger and Acquisition Advisor and Managing Partner of <a target=”_new” rel=”nofollow” onclick=”javascript:_gaq.push(['_trackPageview', '/outgoing/article_exit_link']);” href=”http://www.midmarkcap.com/”>MidMarket Capital</a>, providing business broker services to owners of middle market companies. The firm counsels clients in the areas of M&A, valuations, “Smart Equity Capital Raises”, sales and acquisitions. Visit our Web site to review our lists of buyers and sellers.

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Are Bloggers Entrepreneurs?

September 3rd, 2010

Are Bloggers Entrepreneurs?

Across many other indian blogs, I am observing that entrepreneurism is being associated with (or related) to the personal risk and/or risk of invested money. There is a fundamental flaw in the chain of thinking. And this fundamental flaw comes from our misunderstanding of the true meaning. We take the literal meaning of the definition and fail to put entrepreneurship in proper context.

The central premise of entrepreneurism is about “risk of the idea”. The risk is associated with whether the idea solves any problem, how that idea can be executed, whether a business model can be derived out of it, or whether it can be sustained profitably. The basis of entrepreneurship does not stand on pillar of personal risk and risk of capital. These two aspects are just the enablers or facilitators. They do not, cannot, and will not drive entrepreneurship. If that were the case, then all angel investors and venture capitals would be called entrepreneurs. Buffett takes personal risk and capital risk by putting money into companies (many times distress and depressed companies), he should be called entrepreneurs! Do we call them entrepreneurs?

Just because one takes personal risk or invests money does not make him/her entrepreneur. Otherwise we should call stock market traders, owners of street corner shop, and vegetable vendors as entrepreneurs. Even a college student can be called an entrepreneur. He spends money, time, and takes personal risk by spending 3 to 4 years in college not knowing what kind of job he will get after graduating.

History shows us that entrepreneurs are successful when they focus on core problem, when they focus on a unique solution, and solve that problem in better way. Here unique solution does not necessarily mean innovation, and better could be cheaper, faster, simpler, ease, etc.

Anybody who starts a blog is not an entrepreneur. However, a blogger can be considered as an entrepreneur provided an individual is using blog as a medium to promote a unique idea. That idea could be addressing a problem. It could be providing solutions to that problem. If there is a need for it, than the blog will become popular, and end up being a profitable venture. The individual is addressing the core premise, i.e. risk of the idea, focused on problem, and solution to it. I would call them blogopreneur.

Let us take an example. There is a lack Indian blogs that provide opinions and viewpoints, based on individual thoughts, facts, data-driven analysis, and well researched posts. If an individual decides to focus on that topic and makes a profitable business venture out of it, then that blogger can be called as an entrepreneur. However, starting a blog to rewrite the news, or republishing the information is not entrepreneurial. They are just bloggers and not blogopreneurs.

Therefore, I believe entrepreneurship is not limited to taking personal risk or capital. It is about providing a unique solution to a problem. If that solution is unique, and there is need for it, and benefits its end users, it will automatically turn out to be a profitable venture.

We fail to identify the difference between business venture and entrepreneurial venture. It has been ingrained in our lexicon that any business venture is entrepreneurial. Among all of the tech startups that have mushroomed in last two years, ninety percent of them are attempting a business venture. The gist is there is no entrepreneurism associated with these ninety percent of tech startups. This is a topic in itself which I will discuss sometime in future.

TIP Guy writes on his blog, TIPBlog.in, where he encourages individuals to invest on their own. He discusses an any and all aspect that influences dividend and value investing. The unique aspect about his blog is that all of the discussion is in the context of do-it-yourself individual investors and bloggers.

Posted in Venture Capital | Tags: Bloggers, Entrepreneurs | No Comments »