2010 continues to prove successful for many of our clients. In the area of business law and private equity we continue to see many of our clients receive funding and meet their capital goals. That is exciting. We are up to 9 clients that have done so this calendar year.
We have several other clients who are still pursuing capital under a Red D exemption / private placement offering. We are very cautious about who we take on as clients, and I am hopeful that each will be funded in full soon.
I had a couple of interesting observations recently - one from a meeting with a potential investor and one this week while reviewing a new business plan. These are random comments, but worthwhile for folks seeking funding from private equity investors.
1. Where the business model is centered around a disruptive technology, you must prove that the technology will be sticky. This should be key to your market opportunity discussion. Also, the concept should be easy to describe. An investor who knows nothing about the market should understand the key need for your technology and stickiness of the market within 60 seconds of reading a summary. If you are not familiar with the disruptive innovation concept read Clay Christensen's book The Innovators Dilemma.
2. Watch your sources and uses carefully – especially uses. I read a plan for a $2.5MM raise with the plan allocating $1.3MM to executive salaries in the first 24 months. That is ridiculous. I don't care what doctorates or experience the C levels have - this is a pre-revenue business. At best, if you must be paid a lot, tie salaries to metrics with revenue generation. For any equity raise, best "uses" are sales, sales, sales and development which will lead to more sales.
We have several other clients who are still pursuing capital under a Red D exemption / private placement offering. We are very cautious about who we take on as clients, and I am hopeful that each will be funded in full soon.
I had a couple of interesting observations recently - one from a meeting with a potential investor and one this week while reviewing a new business plan. These are random comments, but worthwhile for folks seeking funding from private equity investors.
1. Where the business model is centered around a disruptive technology, you must prove that the technology will be sticky. This should be key to your market opportunity discussion. Also, the concept should be easy to describe. An investor who knows nothing about the market should understand the key need for your technology and stickiness of the market within 60 seconds of reading a summary. If you are not familiar with the disruptive innovation concept read Clay Christensen's book The Innovators Dilemma.
2. Watch your sources and uses carefully – especially uses. I read a plan for a $2.5MM raise with the plan allocating $1.3MM to executive salaries in the first 24 months. That is ridiculous. I don't care what doctorates or experience the C levels have - this is a pre-revenue business. At best, if you must be paid a lot, tie salaries to metrics with revenue generation. For any equity raise, best "uses" are sales, sales, sales and development which will lead to more sales.
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