If you’re struggling to find success in your quest for venture capital, maybe you’re looking in the wrong place.
Here are few alternative of VCs:
There are plenty of other options available when it comes to finding capital. From angels to credit cards, here are 25 alternatives to consider when it comes to funding your business.
1. Angels
Most venture capital funds will not consider investing in anything under $1 million to $2 million. Angels, however, are wealthy individuals who will provide capital for a startup business. These investors have usually earned their money as entrepreneurs and business managers and can serve as a prime resource for advice on top of capital. On the other hand, due to typically limited resources, angels usually have a shorter investment horizon than venture capitalists and tend to have less tolerance for losses.
2. Private Placement
An investment bank or agent may be able to raise equity for your company by placing your unregistered securities with accredited investors. However, you should be aware that the fees and expenses associated with this practice are generally higher than those that come with venture and angel investors. You will likely receive little or no business counsel from private investors who also tend to have little tolerance for losses and under-performance.
3. Initial Public Offering
If you are somehow able to gain access to public equity markets than an initial public offering (IPO) can be an effective way to raise capital. Keep in mind that, while the public market’s high valuations, abundant capital and liquidity characteristics make it attractive, the transaction costs are high and there are ongoing legal expenses associated with public disclosure requirements.
4. Bootstrap Financing
This method is intended to develop a foundation for your business from scratch. Financial management is essential to make this work. With bootstrap financing you’re building a business from nothing, which means there is little to no margin for error in the finance department. Keep a rigid account of all transactions and don’t stray from your budget.
A few different methods of bootstrapping include:
Factoring, which generates cash flow through the sale of your accounts receivable to a “factor” at a discounted price for cash.
Trade Credit is an option if you are able to find a vendor or supplier that will allow you to order goods on net 30, 60 or 90 day terms. If you can sell the goods before the bill comes due then you have generated cash flow without spending any money.
Customers can pay you up front for your services.
Leasing your equipment instead of purchasing it outright.
5. Fund From Operations
Look for ways to tweak your business in order to reduce the cash flowing out and increase the cash flowing in. Funding found in business operations come free of finance charges, can reduce future financing charges and can increase the value of your business. Month-by-month operating and cash projections will show how well you have planned, how you can optimize the elements of your business that generate cash and allow you to plan for new investments and contingencies.
6. Licensing
Sell licenses to technology that is non-essential to your company or grant limited licensing to essential technology that can be shared. Through outlicensing you can generate revenue from up-front fees, access fees, royalties or milestone payments.
7. Launch Customers
Find out if you have any customers willing to fund research and development in exchange for the product produced.
8. Vendor Financing
Similar to the trade credit related to bootstrap financing, vendors can play a big role in financing your new business. Establish vendor relationships through your trade association and strike deals to offer their product and pay for it at a date in the near future. Selling the product in time is up to you. In hopes of keeping you as a customer, vendors may also be willing to work out an arrangement if you need to finance equipment or supplies. Just make sure to look for stability when you research a vendor’s credentials and reputation before you sign any kind of agreement. And keep in mind that many major suppliers (GE Small Business Solutions, IBM Global Financing) own financial companies that can help you.
9. Sweat Equity
You may be able to find people willing to work for stock options in exchange for a lower salary or a delay in compensation until a later date.
10. Self Funding
Search between the couch cushions and in old jacket pockets for whatever extra money you might have lying around and invest it into your business. Obviously loose change will not be enough for extra business funding, but take a look at your savings, investment portfolio, retirement funds and employee buyout options from your previous employer. You won’t have to deal with any creditors or interest and the return on your investment could be much higher.
However, make sure that you consider the risks involved with using your own resources. How competitive is the market that you are about to enter into? How long will it take to pay yourself back? Will you be able to pay yourself back? Can you afford to lose everything that you are investing if your business were to fail? It’s important that your projected returns are more than enough to cover the risk that you will be taking.
Read full text at:http://www.businessfund.com/2007/top-25-alternatives-to-venture-capital/
Tuesday, June 19, 2007
They Felt That Town "Was Filled With Wide-Open Business Opportunities"
In 2004 the brothers, both software engineers, quit their jobs in Santa Barbara and decamped to Buckeye, Ariz. After visiting relatives there earlier that year, Kyle had become convinced that the town was "filled with wide-open opportunities," especially compared with the software biz. "The tech sector was getting hit hard," says Aaron. "I didn't have a good feeling."
Aaron and Kyle, neither of whom had run a business before, began brainstorming about starting one together. Both had frequented a smoothie joint in Santa Barbara, and they fell in love with the idea of starting their own. They found an industry consultant online who helped them write a business plan. Then they hired an experienced designer. The Main Squeeze would be a 1,200-square-foot store with hardwood floors and stainless-steel tables. And it would cost more than the $130,000 they had saved.
That's when they drew up a list of 40 friends and relatives they could solicit as investors. "We wanted it to seem like we were offering them an authentic business opportunity," notes Kyle. For that they turned to CircleLending, a site that helps informal borrowers create formal lending deals. The siblings spent $99 to set up a loan agreement, choosing an attractive interest rate (9%), a repayment schedule they figured they could afford (either five or seven years) and a $1,000 minimum. Four folks each lent them $1,000, and another four each threw in $5,000. Last year the Campos brothers whipped up a profitable $210,000 in sales, and they've been paying their investors on schedule for close to two years. Says Kyle: "Not one has complained."
Read more at:http://money.cnn.com/galleries/2007/moneymag/0706/gallery.success_stories.moneymag/index.html
Aaron and Kyle, neither of whom had run a business before, began brainstorming about starting one together. Both had frequented a smoothie joint in Santa Barbara, and they fell in love with the idea of starting their own. They found an industry consultant online who helped them write a business plan. Then they hired an experienced designer. The Main Squeeze would be a 1,200-square-foot store with hardwood floors and stainless-steel tables. And it would cost more than the $130,000 they had saved.
That's when they drew up a list of 40 friends and relatives they could solicit as investors. "We wanted it to seem like we were offering them an authentic business opportunity," notes Kyle. For that they turned to CircleLending, a site that helps informal borrowers create formal lending deals. The siblings spent $99 to set up a loan agreement, choosing an attractive interest rate (9%), a repayment schedule they figured they could afford (either five or seven years) and a $1,000 minimum. Four folks each lent them $1,000, and another four each threw in $5,000. Last year the Campos brothers whipped up a profitable $210,000 in sales, and they've been paying their investors on schedule for close to two years. Says Kyle: "Not one has complained."
Read more at:http://money.cnn.com/galleries/2007/moneymag/0706/gallery.success_stories.moneymag/index.html
Great Innovater
Clayton Christensen is a giant in the world of innovation thinkers. And that's not just because the Harvard Business School professor stands 6 feet, 8 inches tall. Christensen's first book, The Innovator's Dilemma, became a bible for technology executives and Internet entrepreneurs not long after it was published 10 years ago. To date, it's sold 500,000 copies worldwide, while in 1999, Christensen was described by Forbes as "Andy Grove's Big Thinker" and featured on the magazine's cover with the former Intel chairman and Silicon Valley sage.
The book's theme—that good management is no guard against the disruptive power of new entrants who go after new customer groups or low-end markets—remains important today. "More than ever it has become shorthand for a classic problem," says Patrick Whitney, director of the Institute of Design at the Illinois Institute of Technology. "People never have to explain it, they just mention Clayton's name or The Innovator's Dilemma and everyone gets what the problem is."
Ten years later, however, the innovation landscape is rather different. Globalization has exponentially expanded where threats lie. Design thinking and its focus on the customer has captured the minds of managers. And as chief executives increasingly look to reinvent their business models, innovation is no longer defined in terms of mere technological breakthroughs. So how relevant is a book that chronicles the upending of the disk drive, steel, and earth excavator industries?
Ideas Still Resonate
Very, says Robert Sutton, professor of management science and engineering at the Stanford Engineering School and co-founder of Stanford's d.school. "There are very few books, whether you do innovation in the academic world or in the business world, that you have to understand equally well," he says. "You have to know it." In essence, the dilemma Christensen describes—how to serve your core business while finding new markets and watching out for new entrants in your blind spot—is as critical today as it was 10 years ago.
While reading it today can plunge you into a bit of a time warp—"Internet appliances," those devices for the kitchen counter that would only browse the Web and respond to e-mail, did not upend the PC industry—Christensen's ideas still resonate. Criticisms of the book tend to surround its lack of solutions, which Christensen tried to correct in his follow-up, The Innovator's Solution, which was published in 2003 to less fanfare.
One reason the first book was so well-received, says Roger Martin, the dean of the Joseph L. Rotman School of Management at the University of Toronto, is that Christensen doesn't criticize managers, as many ivory tower professors do in their books. Rather, a major theme is that great managers miss disruptive innovations precisely because they're focused on their customers, working hard to create returns for shareholders, and trying to do everything right.
"He takes a 'there but for the grace of god go you,' positive, blame-free approach [that managers both respond to and appreciate]," Martin says.
BusinessWeek Associate Editor Jena McGregor caught up with Christensen on June 11, exactly 10 years after the release of his book. Here are edited excerpts of their conversation:
Back in 1997, did you ever think the book would achieve the sort of popularity that it did?
I thought I had a good idea. It emerged from my doctoral thesis on the disk drive industry, and at the beginning I thought it applied a bit in computers and disk drives, but I didn't know how far it would reach. Then one by one people read the research and said this is "exactly what is happening in my industry." I really didn't understand that it was as generalized a phenomenon as it has turned out to be.
Your book focuses heavily on disruptions that are caused by advances in technology. More than ever, however, managers are defining "innovation" in a broader context, from breakthrough business processes to business models to customer experiences.
I think when I wrote The Innovator's Dilemma, my brain really was a technological brain and I was looking for a technological explanation. So I called it "disruptive technology." Then as I helped people to try and use the ideas, it became very clear there really isn't anything [it doesn't apply to].
Read more at:http://www.businessweek.com/innovate/content/jun2007/id20070615_198176.htm?chan=innovation_innovation+%2B+design_top+stories
The book's theme—that good management is no guard against the disruptive power of new entrants who go after new customer groups or low-end markets—remains important today. "More than ever it has become shorthand for a classic problem," says Patrick Whitney, director of the Institute of Design at the Illinois Institute of Technology. "People never have to explain it, they just mention Clayton's name or The Innovator's Dilemma and everyone gets what the problem is."
Ten years later, however, the innovation landscape is rather different. Globalization has exponentially expanded where threats lie. Design thinking and its focus on the customer has captured the minds of managers. And as chief executives increasingly look to reinvent their business models, innovation is no longer defined in terms of mere technological breakthroughs. So how relevant is a book that chronicles the upending of the disk drive, steel, and earth excavator industries?
Ideas Still Resonate
Very, says Robert Sutton, professor of management science and engineering at the Stanford Engineering School and co-founder of Stanford's d.school. "There are very few books, whether you do innovation in the academic world or in the business world, that you have to understand equally well," he says. "You have to know it." In essence, the dilemma Christensen describes—how to serve your core business while finding new markets and watching out for new entrants in your blind spot—is as critical today as it was 10 years ago.
While reading it today can plunge you into a bit of a time warp—"Internet appliances," those devices for the kitchen counter that would only browse the Web and respond to e-mail, did not upend the PC industry—Christensen's ideas still resonate. Criticisms of the book tend to surround its lack of solutions, which Christensen tried to correct in his follow-up, The Innovator's Solution, which was published in 2003 to less fanfare.
One reason the first book was so well-received, says Roger Martin, the dean of the Joseph L. Rotman School of Management at the University of Toronto, is that Christensen doesn't criticize managers, as many ivory tower professors do in their books. Rather, a major theme is that great managers miss disruptive innovations precisely because they're focused on their customers, working hard to create returns for shareholders, and trying to do everything right.
"He takes a 'there but for the grace of god go you,' positive, blame-free approach [that managers both respond to and appreciate]," Martin says.
BusinessWeek Associate Editor Jena McGregor caught up with Christensen on June 11, exactly 10 years after the release of his book. Here are edited excerpts of their conversation:
Back in 1997, did you ever think the book would achieve the sort of popularity that it did?
I thought I had a good idea. It emerged from my doctoral thesis on the disk drive industry, and at the beginning I thought it applied a bit in computers and disk drives, but I didn't know how far it would reach. Then one by one people read the research and said this is "exactly what is happening in my industry." I really didn't understand that it was as generalized a phenomenon as it has turned out to be.
Your book focuses heavily on disruptions that are caused by advances in technology. More than ever, however, managers are defining "innovation" in a broader context, from breakthrough business processes to business models to customer experiences.
I think when I wrote The Innovator's Dilemma, my brain really was a technological brain and I was looking for a technological explanation. So I called it "disruptive technology." Then as I helped people to try and use the ideas, it became very clear there really isn't anything [it doesn't apply to].
Read more at:http://www.businessweek.com/innovate/content/jun2007/id20070615_198176.htm?chan=innovation_innovation+%2B+design_top+stories
Uncommon Business Idea
What: A training surfboard or skateboard
Who: Robert Ellis and Stewart Cohen of GarageCo Toys Inc.
Where: Woodland Hills, California
When: Started in 2005
Startup costs: $69,831
Robert Ellis is a surfer at heart. The sport runs through his veins--and in his family. After all, it was watching his son, Brooks, jumping on a trampoline with a skateboard deck taped to his shoes that inspired Ellis to create a plastic toy with a similar purpose.
Working from his garage, Ellis developed a wooden prototype for what he eventually named the Yo Baby. He later hired a sculptor to create a mold for the final plastic version. Like a bike with training wheels, the Yo Baby is a training board for sports such as surfing or skateboarding--minus the wax or wheels.
Two years after creating the product, Ellis co-founded GarageCo Toys with surfing buddy Stewart Cohen to launch the toy into the market. The business allowed the 46-year-olds freedom to focus on what they loved: "The idea was to take our savings and put it into this business, so we could surf," Ellis says.
Today, Yo Baby rides on the popularity of board sports to create marketing buzz, with pro athletes such as longboard surfer Garrett McNamara representing it. Ellis says he also regularly visits surf and skate shops to sell the toy, concentrating on three major selling points: "name, product and our [logo character], Newt." Although the company did not begin shipping orders until last June, 2006 sales were $94,000, with 2007 projections of nearly $400,000. Ellis and Cohen have plans to expand the product line to include clothing and accessories while keeping business costs low by hiring people on a temporary basis.
Via-Entreprenuer Magzine
Who: Robert Ellis and Stewart Cohen of GarageCo Toys Inc.
Where: Woodland Hills, California
When: Started in 2005
Startup costs: $69,831
Robert Ellis is a surfer at heart. The sport runs through his veins--and in his family. After all, it was watching his son, Brooks, jumping on a trampoline with a skateboard deck taped to his shoes that inspired Ellis to create a plastic toy with a similar purpose.
Working from his garage, Ellis developed a wooden prototype for what he eventually named the Yo Baby. He later hired a sculptor to create a mold for the final plastic version. Like a bike with training wheels, the Yo Baby is a training board for sports such as surfing or skateboarding--minus the wax or wheels.
Two years after creating the product, Ellis co-founded GarageCo Toys with surfing buddy Stewart Cohen to launch the toy into the market. The business allowed the 46-year-olds freedom to focus on what they loved: "The idea was to take our savings and put it into this business, so we could surf," Ellis says.
Today, Yo Baby rides on the popularity of board sports to create marketing buzz, with pro athletes such as longboard surfer Garrett McNamara representing it. Ellis says he also regularly visits surf and skate shops to sell the toy, concentrating on three major selling points: "name, product and our [logo character], Newt." Although the company did not begin shipping orders until last June, 2006 sales were $94,000, with 2007 projections of nearly $400,000. Ellis and Cohen have plans to expand the product line to include clothing and accessories while keeping business costs low by hiring people on a temporary basis.
Via-Entreprenuer Magzine
IT Link For IT Professionals To Network And Learn From Each Other
Ziff Davis Media now has an online community, IT Link, for IT professionals to network and learn from each other.
IT Link is very specific in its networking offerings for those involved with IT. You an indicate your profession, your reasons for joining the network, as well as what you’re looking for in terms of networking opportunities. Find others to learn from or collaborate with, among other things. Your profile lets others know what it is you’re looking for, so getting right to the heart of the matter is not an issue, and setting up a meeting with another user is very easy, too. There are also some pretty handy ways to search for others, including a People Map, which shows members that can be of most service to you and your needs.
The profile matching capabilities of IT Link are the most beneficial aspects of this community, and it keeps this network focused on what matters most. Others seem to feel the same way, as IT Link has reportedly gained some 2,200 members since its launch two months ago. You also have easy access to the other web properties within the Ziff Davis Media network, though they aren’t very directly integrated with the IT Link community.
Other networks for professionals include LinkedIn, Xing, and Zoodango.
More at:http://www.ziffdavis.com/index.php
[via]Mashable
IT Link is very specific in its networking offerings for those involved with IT. You an indicate your profession, your reasons for joining the network, as well as what you’re looking for in terms of networking opportunities. Find others to learn from or collaborate with, among other things. Your profile lets others know what it is you’re looking for, so getting right to the heart of the matter is not an issue, and setting up a meeting with another user is very easy, too. There are also some pretty handy ways to search for others, including a People Map, which shows members that can be of most service to you and your needs.
The profile matching capabilities of IT Link are the most beneficial aspects of this community, and it keeps this network focused on what matters most. Others seem to feel the same way, as IT Link has reportedly gained some 2,200 members since its launch two months ago. You also have easy access to the other web properties within the Ziff Davis Media network, though they aren’t very directly integrated with the IT Link community.
Other networks for professionals include LinkedIn, Xing, and Zoodango.
More at:http://www.ziffdavis.com/index.php
[via]Mashable
Blog Searching Tool
WizWag the blog searching tool, has created an auto-discovery widget for bloggers to provide an extended blogosphere search for their readers. This service is currently in private beta.
The auto-discovery tool is powered by WizWag and operates by giving your readers a blogosphere search for related posts based on the keywords you’ve assigned to your article. These search results are separated into those that are very related, and those that are less related. Readers will get about eight search results total, with the option of finding more results on WizWag’s main page. The added perk of the auto-discovery widget is that you can insert two of your site’s ads (125 x 125) or Google Adsense to display below a reader’s search results.
The actual search results vary little from those you’ll find on Technorati or Google. A similar service for bloggers is Sphere, while other blogosphere search tools include BlogRovr and Heeii.
More at:http://www.wizag.com/Home/tabid/36/Default.aspx
Via-Mashable
The auto-discovery tool is powered by WizWag and operates by giving your readers a blogosphere search for related posts based on the keywords you’ve assigned to your article. These search results are separated into those that are very related, and those that are less related. Readers will get about eight search results total, with the option of finding more results on WizWag’s main page. The added perk of the auto-discovery widget is that you can insert two of your site’s ads (125 x 125) or Google Adsense to display below a reader’s search results.
The actual search results vary little from those you’ll find on Technorati or Google. A similar service for bloggers is Sphere, while other blogosphere search tools include BlogRovr and Heeii.
More at:http://www.wizag.com/Home/tabid/36/Default.aspx
Via-Mashable
AroundMe is a free software solution for those who would like to create a collaborative web space as MySpace clone
AroundMe is a free software solution for those who would like to create a collaborative web space as MySpace clone.People who dreamed off eariler aboout making his own website and his social networking site components could be true with this tool.
With this tool you can make your own website and layer in social networking components such as wikis, blogs, and forums. OpenID integration is one of the options that can be extended to the end users as well. AroundMe is released under a GPL license, is free to download, and also features a plug-in API. The hope for the creators of AroundMe is that people will use this tool to create websites for others to network around, forming groups (as with Ning) and offering up user-generated content.
More at:http://www.barnraiser.org/index.php?ws=1&wpn=SwAmOverviewPage
With this tool you can make your own website and layer in social networking components such as wikis, blogs, and forums. OpenID integration is one of the options that can be extended to the end users as well. AroundMe is released under a GPL license, is free to download, and also features a plug-in API. The hope for the creators of AroundMe is that people will use this tool to create websites for others to network around, forming groups (as with Ning) and offering up user-generated content.
More at:http://www.barnraiser.org/index.php?ws=1&wpn=SwAmOverviewPage
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