The idea stage is quite early for most VC firms. Angels may be your best bet but talking to VC's early will build a relationship that may be handy sooner or later.
I recommend you go on the various VC's websites, find out who they are invested in and contact the founder or someone else in the company. See how they have found the experience, what their VC wanted and see if they can put in you direct contact with their backer. Just make sure the company is not a competitor to your idea!
Next best bet are to find who the lawyers and accountants and other advisors are for the VC backed company (or the VC firm if you can find this out. Make contact with them and ask similar questions and favours.
You should read Enterprise and Venture Capital by Chris Golis (4th Edition). It will help you with guidance on all aspects of building a growth company. The 4th Edition is Australia focused but the general principles apply world wide. I am currently co-authoring the 5th Edition, which will be a little more international.
Make sure you spend time with people who have done it before, even if you have to spend a little money, to learn how they did it.
Make sure you have plenty of your own capital in the business because without personal financial commitment, its unlikely any one else will trust you with their money. Cheers Tom
Links:
http://www.tomthemoneyman.wordpress.com
http://www.t3capital.com.au
Sunday, June 1, 2008
Sunday, May 25, 2008
Forecasting Sales & Revenues
I strongly recommend building your revenue projections from the bottom up.
By this I mean estimating unit volumes and unit price to arrive at total sales by product/service line.
Forecasting at this grass roots level will enable you to perform rapid sanity checks on your assumptions against the market as a whole and against competitors.
Forecasting in this way also enables you to compute more accurately the resources and people required to deliver those sales so that you can make cost assumptions (operating expenses, capital expenditures, working capital needs, etc.).
If you are analyzing an investment opportunity, you should take the same approach. Analyze the company's projected units, unit prices and total sales and the trends relative to the history of the company and the market.
Cheers
Tom
By this I mean estimating unit volumes and unit price to arrive at total sales by product/service line.
Forecasting at this grass roots level will enable you to perform rapid sanity checks on your assumptions against the market as a whole and against competitors.
Forecasting in this way also enables you to compute more accurately the resources and people required to deliver those sales so that you can make cost assumptions (operating expenses, capital expenditures, working capital needs, etc.).
If you are analyzing an investment opportunity, you should take the same approach. Analyze the company's projected units, unit prices and total sales and the trends relative to the history of the company and the market.
Cheers
Tom
Saturday, May 17, 2008
Sustaining Competitive Advantage
A few key tips to build and sustain competitive advantage:
- Move early
- Build unique, protected IP
- Differentiate and support it with continual innovation
- Capture market share quickly
- Keep your costs low - the low cost producer can survive in down markets
- Invest in R&D to stay ahead of the curve
- Stay very close to your customers and their needs!
Cheers
Tom
Thursday, May 8, 2008
Should you get an NDA from prospective investors?
You should certainly try but many investors (particularly VC’s) won’t give them. It partly limits their ability to do business and there is a major administration burden - some VC’s see thousands of business plans per year. That is a lot of NDA’s to keep track of and takes thousands of hours of time to read them, sign them, file them, track them, etc.
To access investors with millions of dollars, you will have to take some risks and that NDA or no-NDA decision will probably be an early judgement call for you.
With big name investors, your ideas are generally safe. Its in the VC’s best interests not to abuse the info they get - if a firm got a reputation for stealing ideas, they probably wouldn’t have many entrepreneurs knocking on their door.
With private individuals and lesser known investors, I’d try hard to get the NDA.
One interesting point is that while many investors won’t sign, once they are invested in the company, they will want you to have a policy of obtaining an NDA from other outside parties!!
So you could try to turn that around on them - “if you invested in our business, surely you’d want confidence that our info has not been provided to large numbers of others without any protection? So its a double standard not to sign ours now.”
Hopefully this is some useful guidance for you and gives you some material to have an intelligent discussion with investors about NDA’s when you are trying to persuade them to sign!
Cheers
Tom
To access investors with millions of dollars, you will have to take some risks and that NDA or no-NDA decision will probably be an early judgement call for you.
With big name investors, your ideas are generally safe. Its in the VC’s best interests not to abuse the info they get - if a firm got a reputation for stealing ideas, they probably wouldn’t have many entrepreneurs knocking on their door.
With private individuals and lesser known investors, I’d try hard to get the NDA.
One interesting point is that while many investors won’t sign, once they are invested in the company, they will want you to have a policy of obtaining an NDA from other outside parties!!
So you could try to turn that around on them - “if you invested in our business, surely you’d want confidence that our info has not been provided to large numbers of others without any protection? So its a double standard not to sign ours now.”
Hopefully this is some useful guidance for you and gives you some material to have an intelligent discussion with investors about NDA’s when you are trying to persuade them to sign!
Cheers
Tom
Friday, May 2, 2008
Cell Phone Wrist-Watches
Dick Tracy has come to life.
These devices have been around for a while and they are pretty cool.
They range from very expensive (Tag Heuer) designer versions costing thousands of dollars to cheaper versions out of China (AUD200 or so).
You put your cell phone chip in the watch and off you go. They come with blue tooth so you can have a wireless ear piece.
I am a ‘less is more’ person and if I can carry one less device, its definitely of interest.
Definitely worth considering, even if you just use when you are out for a walk, run, bike ride or something where you just don’t want to lug around even the smallest lightest mobile phone.
What’s your experience or view on these devices?
PS. The number of makers producing these devices now just further shows how easy things are to copy and how hard it is to sustain a competitve advantage!
These devices have been around for a while and they are pretty cool.
They range from very expensive (Tag Heuer) designer versions costing thousands of dollars to cheaper versions out of China (AUD200 or so).
You put your cell phone chip in the watch and off you go. They come with blue tooth so you can have a wireless ear piece.
I am a ‘less is more’ person and if I can carry one less device, its definitely of interest.
Definitely worth considering, even if you just use when you are out for a walk, run, bike ride or something where you just don’t want to lug around even the smallest lightest mobile phone.
What’s your experience or view on these devices?
PS. The number of makers producing these devices now just further shows how easy things are to copy and how hard it is to sustain a competitve advantage!
How to sustain competive advantage
Move early
Build unique, protected IP
Differentiate and support it with continual innovation '
Capture market share quickly
Keep your costs low - the low cost producer can survive in down markets
Invest in R&D to stay ahead of the curve
Stay very close to your customers and their needs
Build unique, protected IP
Differentiate and support it with continual innovation '
Capture market share quickly
Keep your costs low - the low cost producer can survive in down markets
Invest in R&D to stay ahead of the curve
Stay very close to your customers and their needs
Turning your website in a selling machine
Its very worth while to undertake Seach Engine Optimization and some search engine marketing.
The best way is to get some help - hopefully one of your own personal contacts can recommend on that has had great results.
Here is one in Australia but with the web, it does not really matter where you are!
I am going to use Chris soon because he has done amazing work with a client of mine. Chris Thomas , Search Engine Optimisation / Search Engine Marketing reseo - we'll get you there. www.reseo.com Studio 2a, 108 Moor St p: +61 3 9415 2383 Fitzroy VIC, 3065 f: +61 3 9415 2399 Australia Ethical growth through ethical work. e: christ@reseo.com Reseo Blog: The light and dark side of SEO - a must read for the absolute cutting edge in online traffic building techniques, in easy to understand language http://blogs.reseo.com
The best way is to get some help - hopefully one of your own personal contacts can recommend on that has had great results.
Here is one in Australia but with the web, it does not really matter where you are!
I am going to use Chris soon because he has done amazing work with a client of mine. Chris Thomas , Search Engine Optimisation / Search Engine Marketing reseo - we'll get you there. www.reseo.com Studio 2a, 108 Moor St p: +61 3 9415 2383 Fitzroy VIC, 3065 f: +61 3 9415 2399 Australia Ethical growth through ethical work. e: christ@reseo.com Reseo Blog: The light and dark side of SEO - a must read for the absolute cutting edge in online traffic building techniques, in easy to understand language http://blogs.reseo.com
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