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Archive for the ‘Venture Capital’ Category

What Lenders Consider in Making an Investment

Posted on February 10th, 2011 by The BizFilings Team
Category: Angel Investors, Cash Flow, Finding Money to Start a Business, Lines of Credit, Start A Business, Venture Capital, Women-Owned Businesses, Work For Myself

While conditions are already difficult for small business owners in regards to achieving their credit needs, it is likely even more difficult for women-owned businesses.

“Traditional lenders are requiring you to jump through more hoops, and they are applying less attractive terms after all the jumping is over,” writes Entrepreneur magazine contributor Kim Kiyosaki. “Private lenders and investors are more cautious and have upped their standards, as well. What’s a businesswoman to do?”

When seeking credit opportunities, Kiyosaki advises women business owners to consider four basic factors that lenders – banks, microlenders, angel investors or venture capitalists – consider when deciding whether or not to approve a loan.

  1. The project. This refers to the startup, organization or business venture that is seeking funding. What is it? What will it do? Why is it unique, and why does it deserve funding over others like it?
  2. The partners. These are the main principals – initial investors, founders, managers, participatory advisers – involved in the creation of the venture.
  3. The financing. Investors, perhaps more than anything else, want to see the numbers. Such figures include growth and revenue projections, prior investments, current sales and past deals.
  4. The management. “Money follows management,” Kiyosaki points out. Make sure that lenders are confident in the competence and devotion of those who will determine how their money is spent.

Loan options for woman-owned businesses

There are loan options available for woman-owned businesses. The Prequalification Pilot Loan Program uses intermediaries to assist prospective borrowers in developing loan applications and securing loans. A Women’s Business Development Center or a Small Business Development Company are examples of intermediaries. Here’s how the loan process works:

  • The loan package is submitted to the SBA and a decision is generally rendered in three days.
  • If approved, the SBA issues a letter of prequalification stating the SBA’s intent to guarantee the loan.
  • The maximum loan under this program is $250,000 with a guarantee of 85 percent up to $150,000 and 75 percent for loans over $150,000.
  • The intermediary can usually help the applicant find a competitive lender.

Additional resources

Business Resources for Women Entrepreneurs
A Guide to Starting and Running a Woman-Owned Business

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A Few Tips to Attracting Venture Capital Investment

Posted on January 27th, 2011 by The BizFilings Team
Category: Finding Money to Start a Business, Small Business Trends, Venture Capital

Last year, venture capital investment grew by 19 percent nationwide, reaching a volume of $21.8 billion. This year, as investors acquire greater access to capital, small businesses and finance-hungry startups can expect this figure to jump even higher.

That being said, business owners and entrepreneurs forming a company need to begin preparing themselves for a wave of new venture capital opportunities, especially among companies with high growth aspirations.

Begin by organizing all financial, audit and investment data from the last few years or since the company was launched. Chances are by the time venture capitalists are able to request such information from your company, they will already be somewhat interested. But by having this data prepared in advance, time will be saved and investors will be duly impressed.

Additionally, business owners may need to cut back on excess spending, as VC’s will want to see frugality and responsibility on the part of the owner.

“It may seem counter-intuitive that you have to reduce costs in order to bring on outside financing, but showing careful financial control – and maximum cash flow – can make your company more attractive to investors,” writes Dan Lubeck in Inc. magazine.

“Ideally,” he adds, “you should give yourself at least a year to prepare your company before you seek outside funding.”

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Venture Capital Expected to Surge in 2011 as Startup Scene Expands

Posted on December 29th, 2010 by The BizFilings Team
Category: Angel Investors, Cash Flow, Financial Services, Finding Money to Start a Business, Form My Business, Grow a Business, Lines of Credit, Start A Business, Venture Capital, Work For Myself

Venture capital is often considered a funding option only at a significantly developed stage – above angel investment and beyond initial bank loans or personal financing. Since the recession began, VC funding has declined substantially, despite a boom in a number of highly regarded tech and web startups.

In fact, the total amount of money raised by U.S. VC firms dropped year-over-year for 2008 and 2009, according to a statement by Mark Heesen, president of the National Venture Capital Association, to Reuters. And that number is expected to drop for 2010 as well.

However, improving market conditions, as well as a surge in the startup scenes of California and New York City, may contribute to an upswing in VC funding over the next few years. There is also the much-anticipated initial public offerings of companies such as Facebook and Groupon that is expected to occur sometime in the next two years.

Other major venture capitalists such as Merus Capital of Palo Alto, California, are upping their investment funds to meet the anticipated demand. Merus, founded by a former Google mergers and acquisitions executive, is now preparing to raise a new $100 million fund for tech startups and later-stage development companies starting next year.

For entrepreneurs forming a company in one of these startups hubs, it may be a good time to begin floating around ideas for your next round of investing.

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Funding Options for Startups

Posted on December 28th, 2010 by The BizFilings Team
Category: Angel Investors, Cash Flow, Equity Loans, Financial Services, Finding Money to Start a Business, Grow a Business, Lines of Credit, Small Business, Start A Business, Venture Capital, Work For Myself

Starting a company from home is a very common option for startups with limited funding. Apple, Google, eBay, Amazon and Facebook were all launched in dorm rooms, garages or homes using little more than a few computers.

Still, this does not mean that a fledgling enterprise will not need some sort of financing to help it reach the next stage of development.

Until the company can catch the attention of venture capitalists or angel investors, entrepreneurs can look to a number of other options for their financing needs.

Commercial bank loans can provide essentially all the funding a startup needs without the threat of managerial involvement. However, paying off the debt is easier said than done, especially as it takes a good amount of time for a startup to become profitable. The process of loan approval is also a more stringent process.

“Banks want to see two sources of repayment: cash flow from your business and a secondary source – typically collateral,” writes AllBusiness.com. “Lenders will look at your past financial statements, including those of any business partners.”

Home equity loans offer low interest rates and are easier to acquire. However, the risk of losing a home is often too great for the entrepreneur to take.

Startups can also consider credit cards, U.S. Small Business Administration-backed loans and equipment leasing. Although there is always almost a downside to a lending option, they should be considered on a case-by-case basis.

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Chase Surpasses Small Business Lending Goals for 2010

Posted on December 28th, 2010 by The BizFilings Team
Category: Cash Flow, Financial Services, Finding Money to Start a Business, Grow a Business, Lines of Credit, Small Business, Venture Capital

Chase Bank announced Tuesday that the Chicago-based bank has exceeded its lending goals for 2010, providing more than $10 billion in credit to U.S. small businesses.

The volume makes Chase the No. 1 small business lender in the country, according to the Small Business Administration. It also represents a 40 percent jump over the bank’s lending volume from last year.

The loans were spread among more than 250,000 small businesses with annual revenues of less than $20 million.

“Small businesses are putting these loans to use every day in cities and towns all across the country, creating jobs and helping our economy get back on its feet,” said Michael Cleary, CEO of business banking in retail financial services for Chase.

However, as the economy only gradually improves, credit remains a crucial problem, preventing owners from hiring in significant numbers. An October report by the New York Federal Reserve declared that more than three-quarters of small businesses met little or none of their credit needs for the first half of 2010.

Still, entrepreneurs forming a company may at least take comfort in Chase’s jump in credit availability, as well as other recent reports finding heightened confidence among small business owners.

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Small Business Lending Fund Passes Through Congress

Posted on December 23rd, 2010 by The BizFilings Team
Category: Cash Flow, Financial Services, Grow a Business, Lines of Credit, Small Business, Venture Capital

Entrepreneurs forming a company may take comfort in a recently passed piece of Congressional legislation that will provide greater small business lending incentives to community banks.

The newly formed Small Business Lending Fund will provide $30 billion in small business lending funds to community banks with less than $10 billion in assets.

“Increasing access to capital is the key ingredient our small businesses need to start investing, growing and hiring again,” Washington Senator and Democrat Maria Cantwell said. “I commend the Treasury Department for moving quickly to set up the Lending Fund to get job-producing lending capital flowing to the local banks and businesses who know how to put America back to work.”

The SBLF, which is part of the Small Business Jobs and Credit Act passed in September, is largely in response to the lack of available credit that has stricken many small businesses since the recession began.

As small businesses employ nearly 50 percent of the U.S. private workforce, the sector is seen as vital in job creation and, ultimately, a full-scale economic recovery.

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Google Ventures Serves as Both Incubator and VC Firm

Posted on December 20th, 2010 by The BizFilings Team
Category: Cash Flow, Financial Services, Finding Money to Start a Business, Grow a Business, Small Business, Start A Business, Venture Capital, Work For Myself

Google knows how difficult forming a company can be. At least, that’s what’s suggested by the company’s startup investment arm Google Ventures – let alone their motto “Don’t be evil.”

Since launching in March of 2009, the $100 million-per-year fund has taken on more than a dozen tech startups, ranging in fields from healthcare to payment services to biotech.

What’s more, Ventures has recently opened up Startup Lab – a complex located right by Google’s Mountain View, California, headquarters – in which the company’s ventures can work, utilizing many of the same resources available to Googleplex itself.

But, perhaps fitting the culture of the branch’s multi-billion dollar parent company, Ventures seeks to set itself apart from other venture capital firms, even equating investment from Google Ventures to winning a “Golden Ticket.”

“We plan to be very active in 2011 in the seed space,” Bill Maris, managing partner of Google Ventures, told Reuters. “Startup Lab is an expression of that interest.”

The startup culture of Silicon Valley is world-renown, with Google often referenced as a symbol of the region’s entrepreneurial and technology-minded spirit. As Venture’s startups begin to take off, the company hopes to further establish itself as the leader in tech innovation.

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SBA Launches Micro Loan Program Aimed at Quickly Getting Credit to Small Businesses

Posted on December 20th, 2010 by The BizFilings Team
Category: Cash Flow, Financial Services, Finding Money to Start a Business, Grow a Business, Lines of Credit, Small Business, Start A Business, Venture Capital, Work For Myself

The U.S. Small Business Administration has announced plans for a new lending initiative aimed at quickly providing small businesses with micro loans in response to recent reports that small firms are not receiving adequate credit.

According to the SBA, the loans range up to $250,000 and can be approved in a matter of minutes or up to 10 days through an application that is only two pages long. Analysts hope the program will aid cash-strapped entrepreneurs in forming a company.

“Many entrepreneurs and small business owners across the country have enormous potential to drive economic growth and create good-paying jobs in their local communities, but too often they face barriers in fulfilling that potential,” said Catherine Hughes, chairperson of the SBA’s Advisory Council on Underserved Communities.

The lending initiative is largely in response to an October report by the New York Federal Reserve, which found that three-quarters of small businesses that applied for loans in the first half of 2010 received little or none of the credit they requested.

However, a report released this week by the National Federation of Independent Business declared that 91 percent of surveyed small businesses’ credit needs were currently met, suggesting to many that the actual state of small business credit is difficult to determine.

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European Tech Startups Looking to California for Investment Needs

Posted on December 10th, 2010 by The BizFilings Team
Category: Business Inspiration, Financial Services, Finding Money to Start a Business, Form My Business, Grow a Business, Small Business, Start A Business, Venture Capital, Work For Myself

European entrepreneurs forming a company are increasingly finding it difficult to accrue mid-level funding from venture capitalists and investors and are instead looking to the U.S. for their financing, particularly toward the world’s renowned supporter of tech and web entrepreneurship: California.

According to the European Private Equity and Venture Capital Association and Dow Jones VentureSource, a significant gap has emerged between the amount of later stage deals signed in Europe compared to the amount signed in the U.S.

“I think that a lot of entrepreneurs in Europe sell out too early,” Davor Hebel, principal of Fidelity Growth Partners, told the Wall Street Journal. “And we, as venture capitalists, are partly guilty of that as well because maybe we don’t encourage them to really go for that billion dollar exit, which is really what this business is about, building billion dollar companies.”

Earlier this year, FGP began a $160 million investment initiative dedicated to emerging European tech startups, according to the Journal.

However, Hebel asserted that the difference in tech investment trends is not so much cultural as it is an inherent age gap between the two markets. Over the past several decades, U.S. venture capitalists have learned –  through the success of the tech boom’s most prominent enterprises – to be more patient with returns on investment.

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Peer-to-Peer Lending is Not Just for Friends and Family Anymore

Posted on July 13th, 2010 by Joey
Category: Angel Investors, Finding Money to Start a Business, Launch My Business, Small Business, Start A Business, Venture Capital

donationsThe New York Times reported July 11, that Small Business Administration (SBA)-backed lending plummetted in June. The Robb Mandelbaum blog revealed that “total approved loans in the SBA’s guaranteed loan programs fell to just $647 million for the month … the worst month for SBA lending in years, perhaps decades.”

Depressing stats, indeed. But despite this report, there are still credible ways to secure funding even in this current economic climate for budding entrepreneurs and small business owners, including:

The first one mentioned, peer-to-peer lending, also known as social lending networks, has received quite a bit of attention lately. CBS News just yesterday said that this alternative is becoming more and more popular. According to this report, Celent, a notable research firm, estimates that the peer-to-peer market “will climb to $5.8 billion in loans this year, up to 800 percent from 2009.”

But what exactly is peer-to-peer lending? “P2P” lending offers another option for people to borrow money without the traditional intermediation of a financial institution. Borrowing from family and friends falls into this category, but there are also formalized lending sites dedicated to peer-to-peer lending. Peer-to-peer lending can be easier, but be warned that lending sites do take your credit history, credit score, income and employment situation into account.

Some popular P2P websites include, Prosper and Lending Club. Prosper enables you to apply for a three-year loan up to $25,000, the Lending Club has a $25,000 limit for loans as well.

For your small business startup needs, P2P may be for you. But like with anything else, there are disadvantages, namely fees, ranging from 0.5 percent to 4.5 percent. After all, that is how they make their money.

Have any of you used Prosper or Lending Club to launch your small business? Or can you describe your experience with peer-to-peer lending?

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