Archive for the ‘Money’ Category

When Bee Met Evan and “Loyalty Capital”

Posted: June 14, 2015 by Jerry Malsh in Money, Startup

jerry-malsh-2015Meet Bee Roll, entrepreneur, founder and owner of Beezy’s Café, a small, growing and community-oriented business in Ypsilanti, Michigan.

Now meet Evan Malter, entrepreneur, founder and CEO of ZipCap, an innovative San Diego-based lender of low-interest loans to small, growing and community-oriented business owners that are financed by the customers who choose to patronize those businesses.

This emphasis on local businesses is reflected in the fact that ZipCap is actually the abbreviated version of the company’s more formal name, Zip Code Capital, Inc.

Bee and Evan met when she wanted to expand Beezy’s by offering more products and services to her customers and her community yet couldn’t secure a loan from traditional banks because she didn’t have sufficient collateral. Evan’s business model, based on the concept of what he calls “loyalty capital,” seemed to be an ideal fit for both of them.

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Finding Money in Your Company

Posted: March 15, 2015 by Bill Cunningham in Manufacturing, Money, Operations, Planning

bill-cunningham-scOne of my business school professors quipped, “That business doesn’t have any problems that money won’t solve!” However, when you are that business and you need cash to stay in operation – it really isn’t that funny. Here are some tips to keep you going,

Start by looking for quarters in the sofa. When cleaning your house, and you lift up the cushions and find a few quarters – or when you reach in a pair of pants and find a five-spot, it gives you a great but short-lived feeling of wealth. The same can be true in your business if you look hard enough.

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What Makes a Great VC

Posted: November 29, 2014 by Micah Baldwin in Culture, Ecosystem, Money, Startup

Micah BaldwinEvery year as the Newly Minted VCs begin to settle in and blog/tweet, there is a bevy of posts about how venture capital as it stands today is broken, and they, with their new insights and operational histories are going to fix it.

Of course, most of them become what they rail against over the course of the next few years.

As I have started to think more and more about jumping the fence full force into the investing side of the entrepreneurial equation I keep asking myself two questions:

What makes up the perfect VC, and can I be that.

For many, it seems that for founder/CEOs the answer has been distilled into three key components:

  1. Keep money in the bank.
  2. Recruit amazing talent.
  3. Articulate the vision.

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Fundraising and Risk

Posted: October 12, 2014 by Dov Rosenberg in Money, Planning, Startup

dov-rosenbergOne of the most frequent questions I get from entrepreneurs getting started is, “How much money should I raise?”  In the imaginary world where startup pro formas originate, it is clear how much total capital will be needed to build the business to breakeven, but not when each portion of that capital should come in.  And how you answer that can have a significant impact on the amount of dilution you take over time as a founder.

One extreme would be to just raise all the money up front.  While this approach greatly reduces the total cost of fundraising, it will almost certainly be a worst-case scenario for founder dilution, assuming your valuation goes up over time (which it always does, right?).  So, raising all of that cash at the beginning is obviously not the solution.

Perhaps you could try to raise cash just-in-time, as you need it.  By never raising more than you need, you would minimize the dilution that you’d take overall, again assuming your valuation continues to increase.  But there is a cost to fundraising, including things like your time and effort, out-of-pocket travel and legal expenses, and so on.  And the more times you do it, the more times you disrupt your business and put needed growth expenses on hold.  Definitely not an effective way to grow a company.

So where’s the happy medium?

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Cavete vendit

Posted: July 27, 2014 by Bill Cunningham in Legal, Money, Operations, Startup, Technology

bill-cunninghamCaveat emptor, which means “beware the buyer,” resonates with anyone who buys goods or services on the web. The credit card industry has created a safety net where we feel that providing our credit card information for web purchases is probably safer than giving a credit card to an unscrupulous waitress or bartender.

However, as a merchant that sells over the web, the words “Cavete vendit” should ring clear in your mind meaning “Seller beware.” Merchants carry a tremendous of risk in taking credit cards and you need to plan accordingly.

I experienced a frustrating run with a credit card scammer and learned how vulnerable merchants are in the process. The experience also showed us where the gaps were in our security and gave us pause as to why we hadn’t taken these measures in the first place.

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VALUING NEW STARTUPS AND EARLY STAGE BUSINESSES

Posted: April 28, 2014 by Avi Ram in Money, Startup

aviramThe valuation of a new startup determines the amount of equity in their company the entrepreneurs will have to sell to their investors. Determining the valuation is a black art rather than a science. In order to understand the “investment valuation” at funding the entrepreneurs must understand the funding process. This valuation should not be confused with some estimate of “current worth” of the company. Ask the question “If I tried to sell the company today, how much would I get?” and then compare that to the “Investment Valuation”. The “current worth” tells you what the company is worth today, the “investment valuation” some indication of the investor’s view of future value.

Entrepreneurial startups have little, if any, trading history so a valuation based on past performance is not possible. Similarly a valuation based on sector P/E ratios is not sensible because there are no results to apply a PE ratio to and in any case, these companies are often so innovative that there are no similar companies by which to judge a likely PE ratio.

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bill-cunninghamBoston stole the startup crown from Cambridge this past year by closing 97 venture capital deals in 2013 compared with 66 in 2012. Kyle Alspach, tech guru writer for the Boston Globe, penned a front page article describing the huge tectonic shift from Cambridge to Boston. Although Silicon Valley still reigns as the startup king, Cambridge has always enjoyed a vibrant startup ecosystem thanks to the talents and treasures attracted by MIT and Harvard. Former Boston mayor Thomas Menino wanted to

Kyle Alspach, Tech Guru Writer at the Boston Globe

Kyle Alspach, Tech Guru Writer at the Boston Globe

“create an irresistible environment” for entrepreneurs – changing the name of Boston’s Seaport district to the Innovation district. He rallied the politicians to build infrastructure, and real estate barons to convert warehouses into cool, high tech space. It turns out that the basics attract entrepreneurs, and Cincinnati would do well to take copious notes on Boston’s journey. (more…)

What It Takes to Pitch A Winner

Posted: October 20, 2013 by Tom Heuer in Money, Startup

Tom Heuer, Miami University Center for EntrepreneurshipEvery day, I become more impressed by my students who are engaged physically, mentally, emotionally and spiritually in starting-up a business.  The New Ventures class grows every semester because of the very real roller-coaster the student teams will experience on their way to developing and delivering an inspiring presentation to venture capitalists, business executives, commercial bankers and entrepreneurs.  The Pitch – it is often their most memorable academic event in college.

So, how does every student team and most entrepreneurs arrive at the “memorable pitch.”  After being involved with the start-up process for years, I am not convinced that there is any one process that works better than others.  In his excellent book, Outliers, Malcom Gladwell pronounces that it takes 10,000 hours to become an expert at something.  Well, I may not have reached that level of expertise, but I have seen a pattern emerge as to why start-up student teams and certain entrepreneurs are successful.  They seem to focus their energy on three elements – the problem, the idea and the team.

The Problem

It is all about the problem.  Every successful start-up and on-going business owes its viability to solving a problem the target customer cares about.  This initial step in the start-up process usually has some emotional association with the entrepreneur.  The problem has happened to them numerous times and the frustration level becomes elevated.  The journey to search for a solution to the problem ends up being the motivation to start the business.

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How to Use a Crystal Ball

Posted: September 2, 2013 by Bill Cunningham in Legal, Money, Startup

Bill Cunningham Bio“I’m 100% positive that I can meet my sales forecast, I just can’t tell you when.”

–       VP of Sales at a Startup

Last year I wrote a column on “Leveraging the Power of the Press” in response to an entrepreneur getting more than their fair share of ink and airtime for something that he said. This could become an annual opportunity for teachable moments with the recent coverage of another startup that received a LOT of coverage for her public statements.

Without going into the specifics of this situation, the future revenue forecasts presented to the audiences and published in the media sounded out of this world. That’s what startups do – they create huge opportunities to make the world a better place.  I’d like you to consider the art and science of forecasting as it relates to your startup.

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CarolynPioneMicheliPeople have asked me recent what is behind all the new entrepreneurial energy in Southwest Ohio.

Maybe you have noticed how startup companies are regularly featured in the media and how seminars and workshops are proliferating on topics such as how to launch a technology company, how to fund a technology company, how to work with a technology company.

Local universities are expanding entrepreneurship and startup accelerator programs, and new organizations such as Cintrifuse, the Brandery and Innov8 for Health have risen up to complement existing groups.

In just two years, the numbers have jumped dramatically: In 2009, 14 Cincinnati-based startups received $27 million in venture capital. In 2011, 36 companies received $70.2 million, according to Ohio State’s Fisher College, which is still gathering 2012 data.

A reporter from Louisville asked me last fall whether this activity was driven by the revitalization of downtown and Over-the-Rhine, drawing new people into the region. Others have credited a down economy with seeding ‘disillusionment’ toward corporate America.

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