When considering entering into a partnership or making a private
investment in an early stage company, beware of the “idea
guy”. This is a title sometimes used by entrepreneurial
minded individuals who don’t contribute to the growth of the
company through development, sales or management but develop
concepts (ideas) for products or services for some market
opportunity.
From my experience, idea guys often have little ability to manage
cash flow or people. Without the proper partners in...
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As stated in
Part 2 of
this series, a business’ capital strategy is both
directed by the market strategy and leadership
team required to carry out the strategy as well as
directing to the market strategy and team. A
solid capital strategy is based on understanding where you are and
where you need to go.
The first step in developing a capital strategy is to
know
your revenue projections. If you had the money and
team you need, what can you sell and when? In developing a
market strategy the...
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Over the last three weeks I have visited the west coast twice and
Toronto once to help clients work through funding rounds and
strategic acquisitions. I also visited with two angel
investment groups which I work with. The primary purpose of
each trip was to help clients develop and realize their capital
strategy for growth. While most of these entrepreneur clients
are in technology fields, others include a tax planning firm and a
Bollywood project out of Toronto.
It does not matter what world...
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Last night I lectured on this topic to my entrepreneurial capstone
class at Purdue. It is possibly the most basic question for
any startup looking to raise capital, but it is often not
approached correctly. In my experience most entrepreneurs
take a wild guess at their number.
The correct approach is to look at your cash flow projections and
determine it from there. For a new startup the goal is to get
to breakeven and beyond. For later stage companies the
projections may address strategic...
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I read many business plans for early stage companies - most of whom
are seeking some sort of seed or early round capital funding from
private equity investors. One of the largest discrepancies
I see in plans is in the expense models regarding allocation
of salaries.
Post-revenue, most businesses will find salaries (including
benefits) falling somewhere between 30% and 55% of their net
revenue. But what about pre-revenue companies that are
looking to use early capital to launch? I read a...
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I read a Guy Kawasaki blog post this week where he walked through
six reasons why an abundance of capital can hurt an early stage
business. In my entreprenurial law / funding law practice I
work with a lot of business owners through capital strategies and
the private equity processes. Honestly, the drafting of a
private placement memorandum is the easy part of my practice.
The hard part is creating the proper capital structure for
the long term growth and success and reaching investors who...
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This is the second post in a series on developing a good business
model for an early stage company.
Proof of Scale and Proof of Commercialization (at
Profit)
Following POC, you want to prove that your concept can scale under
a viable business model. Proof of Scale and Proof of
Commercialization (at profit) work hand in hand as each is often
dependant on the other. POS refers to the ability for a
concept to scale in terms of sellable units in the marketplace and
business growth requirements....
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I saw
a great article awhile back in Entrepreneur and thought
I should post the article for those in the formation stages of
their next business venture.
I can't stress enough how much time and energy it takes to launch a
start-up, and just how
much the success or failure of a budding new company rests on the
people involved. I see it everyday as an Indiana
technology lawyer involved in Indiana entrepreneurial law.
You can count on spending hours upon hours of the day with your
business...
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There is a great four part series on
the
SpendMatters blog which walks
through one industry expert's story of the rise of
Iasta as a global leader in eSourcing
markets. This was fun for me to read. I am going on my
ninth year of representing Iasta as it's Business law / SaaS law
counsel and have loved seeing them grow from a modest Midwest
auction software provider to a global SaaS eScouring leader.
It is definitely worth a re-post on The Business & Culture
Blog.
The article is by Jason Busch,...
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Next
week is the
TechPoint Innovation
Summit. This will be an exciting event for Indiana-based
technology leaders.
This year I am pleased to moderate the
plenary panel discussion on "Funding Innovation".
As an Indiana tech lawyer / SaaS law attorney who helps
clients set capital structures and meet capital goals, this is a
topic I live and breath and am always striving to see fulfilled.
Thus, I am thrilled to take part in this
discussion.
The panel consists of venture capital and private...
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I recently discovered
OnStartups.com, a blog
and resource website for business start ups. The author,
Dharmesh Shah, is a software developer and entrepreneur and writes
about his experiences in living through the startup phases of a
SaaS company.
In a post this past week he writes about five simple insights he
has learned through the process of starting his own SaaS
company. Here is an excerpt:
Insights On SaaS
Startups
1. You are financing your customers.
Most SaaS businesses are...
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Raising private equity is a hurdle for many new
businesses. This has become a major area of
my
business law practice, especially in light of today's market
where debt financing is harder for new businesses to come by.
When it comes to raising private equity, I very much ascribe to
Chris
Baggot's philosophy. Chris wrote a nice article a few
months ago describing his approach (
See
his article here).
The idea is for the company to raise only what it needs for the
next step of its business plan....
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