To prevent thieves from entering your house you take the necessary precautions. You lock doors and windows. When you go on vacation you leave a few lights on. You may even have a neighbor pick up your newspaper and mail so it appears that someone is home. All of these things are done to deter thieves so your house and possessions remain secure. Similarly, as an investor, there are precautions that should be followed when trying making a deal.

FundingUniverse.com is committed to providing a safe environment for investors and entrepreneurs. FundingUniverse.com will soon be available for use by only angels and angel groups that complete a detailed application process that includes interviews and signed documents confirming the legitimacy and intentions of each individual or group. In addition, we will continue to accept referrals from our already-approved members.

There are some things you need to look for before making a deal with an entrepreneur. The following tips should be helpful to new investors and will provide a review for more experienced investors. (Keep in mind that these tips are merely guides to help reveal red flags. There is a possibility that legitimate entrepreneurs may or may not follow some of these practices.)

Meet Face-to-Face

Meeting a potential entrepreneur face-to-face is critical. If you are about to invest several hundreds of thousands of dollars into a business idea, the entrepreneur should be eager to meet with you.

Complete Background Checks

Investors should obtain as much information about the entrepreneur as possible. Talking with the management team, acquaintances and the entrepreneur’s former employers can provide much needed information. Do whatever you need to do to feel completely confident about the entrepreneur’s credentials.

Beware of “guaranteed returns”

No business idea can guarantee returns. If an entrepreneur claims they can guarantee large profits without risk, then the deal should be critically analyzed. If the possibility for great returns exists, there is an equal possibility for significant loss.

Ensure Every Investment Deal in Writing

If an entrepreneur is legitimate they will not hesitate to put the terms of a deal in writing. Do not let lack of time or money serve as excuse to avoid written deals.

Don’t be Pressured to Move Quickly

Rarely are “once-in-a-lifetime” deals truly what they claim to be. You need to feel completely satisfied with your investments. This type of satisfaction rarely comes from making quick judgments about a business venture.

The brief list provided here is by no means complete. For further information on guarding against fraud please visit http://www.sec.gov/investor/pubs/affinity.htm

To prevent thieves from entering your house you take the necessary precautions. You lock doors and windows. When you go on vacation you may leave a few lights on. You may even have a neighbor pick up your newspaper and mail so it appears that someone is home. All of these things are done to deter thieves so your house and possessions remain secure. Similarly, as an entrepreneur you need to take necessary precautions while trying to obtain funding.

Scam artists, posing as legitimate investors, prey on an entrepreneur’s intense desire to find funding. FundingUniverse.com is committed to providing a safe environment for entrepreneurs and investors. FundingUniverse.com will soon be available for use by only angels and angel groups that complete a detailed application process that includes interviews and signed documents confirming the legitimacy and intentions of each individual or group. In addition, we will continue to accept referrals from our already-approved members.

While we are doing what we can to prevent fraudulent investors from entering the site, as an entrepreneur there are some things you need to watch for. (Keep in mind that these tips are merely guides to help reveal potential danger. There is a possibility that legitimate investors may or may not follow some of these practices.)

Meet Face-to-Face

Meeting a potential investor face-to-face is critical. If an investor is about to invest several hundreds of thousands of dollars into a business idea, the investor should be eager to meet with you. If not, beware.

No Money Up Front

Generally, investors will not ask for money up front, and they will not ask you to wire it to them. If you ever have questions or concerns ask the investor. If the investor is unwilling to answer to your satisfaction, then move cautiously before entering into an agreement.

Beware of Foreign Funding

The Sophisticated Nigerian 419 Scam is one such scam. Beware of any international “firm” which requires a “fee” to be sent through a wire transfer to a foreign bank. The FBI warns against this and other similar scams. Take a moment to familiarize yourself with other scams where you could be targeted. (http://www.fbi.gov/cyberinvest/escams.htm).

Guard Against Unaccredited Investors.

An accredited investor, according the U.S. Securities and Exchange Commission is one who:

· A bank, insurance company, registered investment company, business development company, or small business investment company;

· has an individual net worth of or joint net worth with spouse, that exceeds $1 million at the time of purchase

· a natural person with income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year

· a trust with assets in excess of $5 million, not formed to acquire the securities offered, whose purchases a sophisticated person makes.

(For additional information about accredited investors visit http://www.sec.gov/answers/accred.htm)

In a previous blog entry, Guy Kawasaki provides valuable tips and suggestions regarding raising money from angel investors. If you are an entrepreneur seeking to raise money, Guy’s tips will help you to understand the motivations behind an angel’s investment.

I really like the way that Guy presents his content. Most of his suggestions are focused on thinking first about the investor’s needs — not the entrepreneurs. If an entrepreneur can think about the motivations and desires of the angel investor, she can then cater her executive summary, business plan or VideoPitch in such a way that it is appealing to the investor.

Don’t underestimate the importance of the presentation. Present your idea or concept in way that makes it easy for the angel to want to contact you:

• Prove that you can execute
• Be realistic — Don’t exaggerate your financial projections or underestimate the difficulty of acquiring new customers
• Be weary of saying: “All we need is 1% of this quadrillion dollar market…”
• Be thorough — show that you have spent the time necessary to present a well-though out proposition

Weekly Tip: 04.17-21.06

At FundingUniverse.com we like to think of ourselves as a matchmaker, of sorts. We love to “engage” entrepreneurs and investors in a “courtship” that ends in a blissful partnership. As with dating, first impressions in the business world are paramount. At FundingUniverse.com, you’ll find the tools and resources you’ll need to make a smashing impression.

Here are a few tips:

TIP #1:

In order for an investor to become interested in your business idea, it is critical for you to provide as much information as possible to the investor. Put yourself in their shoes. If someone asked you to take $200,000 from your account and deposit it into theirs, how much information would you need before you felt comfortable doing it?

Every entrepreneur should fill out the entrepreneur profile AND upload an executive summary, a business plan, a PowerPoint, or a VideoPitch. If you haven’t done these things, click here to do it now.

TIP #2:

Sell yourself and your management team. Show your passion, integrity, and ability to execute. What have you already accomplished? Do you have an extensive professional network? Have you previously built a successful entrepreneurial venture? If you have accomplished any or all, make sure to communicate this in your business profile. An investor needs to see that you can accomplish what you say you will.

TIP #3:

VideoPitch provides an excellent way to show who you are. The VideoPitch provides investors with a glimpse of your personality and provides you the ability to sell yourself and show your product. Don’t forget tip #1 and include other important information too!

(The VideoPitch is currently in beta version and will be released nationwide shortly).

TIP #4:

All the efforts of an entrepreneur will be fruitless if the ideas are not presented well. FundingUniverse.com provides FREE examples of well-written business plans. You can use these examples as guides while constructing your business plan. In addition, the FundingUniversity provides more information on what angel investors want, pitching tips, business plan helps and frequently asked questions, branding tips, FundingUniversity textbooks, company histories, and other online resources.

If you want to receive contact and follow-up from angel investors, FundingUniverse.com recommends you do all you can to show your passion and integrity while providing investors with all the well-presented information they desire. Good luck!

Weekly Tip 04.17-21.06

Our goal at FundingUniverse.com is to match entrepreneurs and investors. Because we have new entrepreneur’s signing up on the website daily, it is important for you, as an investor, to be familiar with the resources FundingUniverse.com provides to help you locate business plans of interest. Some of the tools available to you include: Search Tool

This tool allows you to quickly search for your investment preferences. By expanding the list preferences box, you can search by business categories, investment amount, or by a date range. For your convenience, these preferences can easily be saved for all future visits to FundingUniverse.com. You can also delete individual plans from your view by clicking on delete at the far right of each plan.

Messaging Center

Our message center is an easy and convenient way to contact an entrepreneur. Through this resource you have the ability to anonymously ask entrepreneurs any question you may have about their business idea. The security of our angel investors and our entrepreneurs is our number one priority; the only information an entrepreneur will have access to is the information you give them personally.

VideoPitch

FundingUniverse.com now offers a way to hear and see an entrepreneur’s pitch. This innovative pitching tool allows you to gain a sense of the entrepreneur’s personality and presence even before a face-to-face meeting occurs. Business plans that include a VideoPitch will always be at the top of your business plan list.

Investor Discussion Board

An important part of the services offered to investors includes the investor discussion board. This tool allows you to make private comments to other investors on the site. Questions for other angel groups, queries about a business plan or general investment questions can all be discussed from this board.

Watch List

When you come across a plan you are interested in but don’t want to contact the entrepreneur immediately, just add it to your personal watch list. That plan will be held there so that you can keep an eye on it.

Want to form a group?

The DealFlow Suite enables angel groups to draw from plans posted on the FundingUniverse.com family of sites, discuss them online, and rate them as a group. In addition, angel groups may use the software to evaluate plans that have been submitted to them privately through FundingUniverse.com.

Josh Kauffman has put together a killer list of books that cumulatively teach entrepreneurs what they need to know to be on par with their MBA’d counterparts.

You’ll need two things when you finish reading this post:

1) Your credit card

2) Amazon.com

I read a child’s book the other day to my nephew about a Native Incan who needed help getting water and food up to his village in the mountain.  The way was long and required more strength than this little man could give.  He decided to use his donkey, which was small, but had the strength of ten men.  He found that this task also did not appeal to the donkey, but knew that this would be his only way to get the supplies up the mountain.

He sat down to think about it, and an idea popped into his head.  He grabbed a carrot from his bag and dangled it from a stick with some rope that he also had.  Urging the donkey forward by holding the dangling carrot in front of his mouth, he was able to get the food and water up the mountain to his family before dinner. Thus began the “stick and carrot” approach.

There are a couple things that make this work:

·        The carrot must be sweet enough to be enticing

·        The weight of the load must equal the worth of the carrot

·        The donkey must be hungry

Yesterday we entered FundingUniverse.com’s second lockdown.  This time it was to introduce entrepreneurs to the newly launched VideoPitch.  Jeff and Brock, both of whom I think have good Incan friends, decided to replace the donkey in the story with FundingUniverse’s employees (yes Garret, you do look like a donkey), and the carrot with an iPod Nano.

The carrot was sweet, the load was light, and we were all, definitely hungry.  After a funny hacking prank by our web techies, we were dialing up like “whoa.”  I’ve never seen the employees around here work so hard and love it so much.

There were two things that were amazing about this event.  First is the hard work that was so willingly put in.  Secondly, the jumpstart it gave our new product roll-out.  Everybody, including the C-level employees, worked the phone lines, and the payoff was not just the selling of a bunch of VideoPitches, but a ton of good feedback from and interaction with our entrepreneurs.  So, I guess, the moral of the story is to read to your kids… or something like that.