Name: Joel Nielsen

Title: Venture Consultant

Joel consults with FundingUniverse’s entrepreneur clients and helps them plan and execute a fundraising strategy. He has assisted clients all over the country in diverse markets and industries.

Strong business acumen + personable disposition + mad ping pong skills = Joel.

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What’s the biggest mistake you’ve ever made in business?
I have a type A personality which means that I have a tendency to micro manage projects and people.  That all came to an end when I started graduate school.  In that environment it was physically and mentally impossible to control everything that needed to be completed in the time allotted.  Suddenly I had to depend on others to do their fair share and that required a lot of trust from me.  However, the experience was fantastic and through the process I learned that most people have amazing abilities if we give them the power and confidence to complete them.  As I get older, I have found that I have become more of a cheerleader and less a dictator and it has made all the difference

What’s the best business advice you’ve ever received?
1. Trust but verify.  -Ronald Regan
2. Get it in writing.  -Every Lawyer I have ever met.

Where did you work before FundingUniverse?
I am the CEO of Patriot Corporate Enterprises LLC.  Before that I owned a finance firm in Salt Lake City for 15 years.

What drew you to FundingUniverse?
I was immediately impressed with CEO Brock Blake and my boss Frank Poulsen.  Both men are extremely smart, very innovative and trust me to do my thing.  Beyond them are fantastic sales agents, awesome IT talents and an environment where it is fun to come to work every morning.

How will you help FundingUniverse grow?
I believe that a good leader is a better follower so right now my job is to take my cues from Brock and Frank and be prepared to do anything that they ask of me.  In addition to that I am designing some programs that could drive some incredible revenue streams.

What’s your favorite things about FundingUniverse?
The incredible people who work here.  I also have a passion for small business and seriously enjoy watching them grow.  Everyday I wake up and get to help build other peoples dreams.

What has been the funniest moment at FundingUniverse?
There is a ping pong table at the office that gets a lot of use during the day.  Several ping pong balls have been destroyed since I’ve been here.  Someone finally went out and bought a whole bucket of them.  Who knew it could be such a stress reliever to pound a ping pong ball into your opponents face?

What has been the weirdest moment at FundingUniverse?
When I found my brand new $5.53 ping pong paddle destroyed.  I was crushed because it was the last one that Walmart had I was doing really well with it.  I have been on a losing streak ever since and I can’t help but wonder if it was a company conspiracy to destroy it.

Do you have a website or blog?
OK my PERSONAL blog is witandbanter.blogspot.com However, you should know that it is quite flippant as I try to extract the humor out of everyday things that happen to me.  In addition you will see that there are some tongue-in-cheek posts.

Would you loan money to this guy?  Neither would I.  Unfortunately this is how a lot of small business owners look when they go hunting for business capital.  The business may have an excellent product, wonderful sales projections and perfect pro forma’s and still not find a suitor.  CEO’s often scratch their head trying to figure out where they are going wrong.  The truth is they may be lacking credibility.

Investors are a skittish bunch by nature.  You would be too if you had been torched out of huge sums of money over the years.  For every home run an investor funds, they will likely tell you of 7-8 failures that have cost them a mint.

The commonality among winners and losers is how each started the process.  *cue Chariots of Fire music*  Both brought big hopes and ideas to the investors table.   With a burning desire deep within the soul, they knew without a doubt that they were going to be the next Microsoft.  All of them stood tall with hands on hips, overlooking their little fiefdom and dreamed BIG, sometimes pondering how they could run this juggernaut of an industry and still find time to fit the Oprah interview into the schedule.  Visions, yes actual REAL VISIONS of sugar plumbs danced in their heads!

The statistical reality is that only half of these companies will still be in business after five years.  So to counter this statistic, one of the elements that investors look for is your credibility.  If you are trying to start a business with your college roommate, forget it.  An investor isn’t interested in paying your “University of Hard Knocks” tuition… it’s VERY expensive  The simple fact is that there are too many established businesses available to investors, ones with historical performance, proven revenues and lots of traction.  So what can you and your roommate “Kegger” do to get some respect?  Form an advisory board.

A Board of Advisers offers a number of strategic advantages that include

*  Industry Experts who are serious about your success

*  Years of experience from Wiley veterans who have traversed your path before

*  An instant networking hub that can leverage and introduce strategic partners

*  A group of people to whom you must be accountable to

*  Instant credibility

Funding Universe suggests inviting the following qualified people into your inner circle.  An industry guru, accountant, lawyer, established businessman and a distribution/sales agent.  A diverse group of individuals such as these provide rich resources of knowledge, networking and growth opportunities. So if your business is struggling and you can’t seem to get the respect that you deserve, consider trading in your pocket protector and taped-horned-rim glasses for a board of advisers.  It just might get you funded!

Joel Nielsen is a Venture Consultant for Funding Universe and can be contacted at jnielsen@fundinguniverse.com

You should plan on doing well before doing good.

I know all of my recent posts have a “don’t to this” theme to them, but there are some common mistakes that I have seen that really make it difficult to get funded, besides, there are a lot of smarter people than me giving out all kinds of advice to entrepreneurs telling them what they should do. For now, I will continue to be the scold.

Would-be entrepreneurs tend to be shockingly optimistic. This is generally a good thing but it can lead to big mistakes if not tempered with a appreciation of reality. Case in point: Don’t put charitable giving into your business plan. A business plan needs to lead to the maximum possible return for the investor. This is already about the riskiest investment around and there really is no room for reducing returns even more. Elements that put any strain on returns that are not absolutely critical only increase risk. This necessitates that charity be separated from your start up plan. Do not tell your investors that you are going to spend their money to pay your janitors $20/hour or that your exit strategy is to give half of the company to a ministry serving unwed mothers or part of your plan is to do pro bono urban renewal with the start up capital. These are actual examples I have seen in my clients business plans just this summer.

The standard expectation will be that this type of work is done through the entrepreneurs as individuals and the investors as individuals. The company exists to maximize return for the shareholders who can do with it what they wish.

Any company’s customers should be better off because of its’ products. Many enterprises naturally benefit their communities in ways not directly related to their products. Business should by their very nature contribute to society (if you’re in a business and it doesn’t, get out now.) But early stage companies need to be focused on maximizing the return of their shareholders. The risks are too high to do anything else.

Also, here is the best “how to pitch” video I have yet seen and it’s from one of the members of the FundingUniverse investor network.

. . . so suggests Richard Branson, billionaire entrepreneur behind the Virgin brand of companies including the newest FundingUniverse partner, Virgin Money. No hypocrite, Richard practiced what he preaches in the early days of Virgin Records when he took a loan from his Aunt Joyce to keep the then struggling business alive. Virgin Money helps other entrepreneurs do what Richard did by managing and formalizing loans between individuals—typically people who are already closely affiliated like family members or friends.

This isn’t an uncommon practice. Friends, family and fools (FFF) financing, as it’s typically referred to, constitutes the majority of early-stage investments in the United States according to the most recent Global Entrepreneurship Monitor (GEM) report.

FFF is arguably the most flexible and easiest to qualify for type of financing because the terms are very negotiable and the qualification process is personal. And now, with Virgin Money, someone else can handle the awkwardness of collecting payments and the loan can even be recorded on the borrower’s business credit.

Here’s an itemized list of benefits:

• A legally-binding promissory note
• Repayment by electronic funds transfer
• Email statements for both borrower and lender
• Online accounts for both
• Year-end reports for both
• Private loan specialist to help keep your loan convenient and hassle-free
• Optional security agreement and UCC filing*
• Optional credit reporting to Dunn & Bradstreet at no additional charge

Our partnership with Virgin Money means you just need to find someone willing to loan you the money and we can help with the rest. Talk to the “Aunt Joyce”’s in your social circle then give us a call.

For more information, call 877.638.3616 option 1 or click here.

As I stated in my last post, focusing on fundamentals is what will get you funded.  So what are the fundamentals of equity fundraising?

1.  Bring together a proven management team that is deeply commited.

2.  Create a list of milestones for your company to reach in the next 5 years.

3.  Reach as many milestones as you can with your own money, time and resources.

4.  Draw up short, direct, well researched business documents.

5.  Network, Network, Network.

Well, that’s it.  I know this seems oversimplified and in a way it is, but that’s intentional. I know things never seem to go exactly as planned and you run in to road blocks all along the way; however, if you can keep perspective and follow these fundamentals then you can raise money.  The key is to keep your focus on the fundamantals, instead of allowing the day to day distractions of running your business to interfere with reaching your milestones, building your team, focusing on clear concise documents and building a network.  

You’ll hear the term traction a lot in the start up world.  It is increasingly becoming a standard peice of industry vocabulary but most VC’s and angels I talk to or whos’ blogs I read use it in a slightly different way than the business world as a whole does.  Typically in other fields you would hear people talking about “traction in the market.”  That is customers, sales, marketshare.

From my experience, when discussing a startup company, traction usually means something like progress.  How far along is the business?  What has been accomplished?  Sales, customers and marketshare are probably about the best progress most of us can hope for but it is not the only traction that has value.  Is the business something that came to you in a dream last night or do you have a completed, patented, tested product that is already generating buzz in the marketplace?

As a consultant for FundingUniverse most of the entrepreneurs I work with have some understanding of traction but often only on a superficial level.  If I were geekier I would say “they don’t grok it” but I think you need to be fluent in at least 3 programming languages to use that word and not sound like a complete dork.  I’ve seen this misunderstanding of traction exhibits itself in two ways:

• “I have a great soup recipe and for only $10m you can get 10% of my company.”  This is a real example of an entrepreneur that, not having any sales, decided his valuaiton should be based on the next best thing, his pro forma financials.  Of course this example can be used to demonstrate a large number of things but for our purposes, he didn’t have sales so he just ignored the idea of traction.
• “The Unit Manager I worked with at Haliburton said he wants to buy 4 for $2m each as soon as they are ready and will probably buy more latter.  He’s really excited about the idea.”  This piece of information didn’t make it to the first 4 investors my client had talked to.  It wasn’t a real sale so it wasn’t traction, right?

I could go on and on with valuable progress that entrepreneurs don’t think to mention but I hope you get the point.

Entrepreneurs should know that pre revenue traction can be valuable and while you will always do better with investors having actual sales, if it is significant it should be touted.  FundingUniverse rates business plans for our investors on a scale of 0 to 4 stars.  One star is for traction.  It is one of the largest determinates of the value of your company.  When soliciting funds from equity investors the more traction you have the better.  It will help determine how likely you are to get funded, how long it will take and your valuation.  so it is critical for entrepreneurs to have a clear understanding of what actual progress, traction, their idea has.

It’s a very interesting time in technology, as we watch not only the development of new, and revolutionary technologies, but also the convergence of various pieces being brought together into Mashups. For those not familiar, a Mashup is essentially the taking of various pieces of other applications, and hooking them together in new and exciting ways. Think of it sort of taking all of the best pieces from your favorite toys and snapping them together to create a cyborg Hulk with spidey-sense.

Another type of “trend mashup” involves taking the momentum that a specific type of movement, medium, or social trend and combining their energies together like multiple tidal waves merging into a single massive Tsunami.

A local company, Seek Mobile Interactive, is looking to capitalize on just such a convergence: Mobile Experiences, Social and Persistent Gaming, and Location based interactions.

Whatever your feelings might be with regards to the apple iPhone, it’s hard to deny that it has forever changed the way the world views the mobile device, and at a more fundamental level, the whole mobile experience. No longer is it just about making a call. Your mobile device is now your portable computer, and more: it is your portal to the world. It is the web, your phone, twitter, maps, weather, pictures, the world and where you are in it. With this new horse power, display, and tactile experience so far beyond “hit 1 now,” it has also become an extremely powerful gaming platform.

Speaking of gaming… gaming as an industry and an experience has undergone a massive revolution as well. With the internet and Xbox-live the world became introduced to, and hooked on, gaming as a social experience. It’s not just a place to play, it’s a place to meet new people, and meet-up wit those you already know. It is not just a thing to do, it’s a place to be. This was taken even further with the concept of “persistence” through games like Everquest, and Worlds of Warcraft, and environments like Second Life. Now the things you gained, the groups you’ve joined, and potentially even the buildings you’ve built are all still there in the virtual world when you return.

But what if there were a way to tie this virtual world in wit the real one? A way to meet some of those people, and see some of those places? Something like an “overlay” of virtual on top of the world that surrounds us? This is another social area that technology has continued to advance and facilitate. “Blue Dating” as gained huge momentum, as young people use Bluetooth devices to learn more about those around them. Similarly, with the GPS capabilities of the iPhone this leaps beyond the ability to know who is near to you, but where you both are in the world, and who and what else might be nearby.

Welcome to the social gaming mobile tsunami.

Seek Mobile Interactive has spent much of the last year in development on a revolutionary game that allows players in a virtual fantasy world to go on quests, fight monsters, collect gold, and best of all, find each other. With their flagship product, Living Arcana, Seek Mobile allows the players to meet and even battle one another on their iPhones. Additionally, it allows players to create things and even people in this virtual world. Imagine that you could create a person that would show up if someone went to the base of your favorite rock climbing spot. He would interact wit the player, and give them a quest to climb the rock face, then talk to his partner at the top. Upon reaching the top the player would be presented with their reward.

This is but one example of how the persistence of an online game, the ubiquitous access of the handheld, and the targeting of location based services can enable a whole new experience. Imagine a ninja game where you can drive outside of someone’s office building to execute that killer combo and take them out. Imagine a zombie game where those around you become infected, but if you can get to the GPS location of the local Home Depot, and enter the SKU of a chainsaw into the phone you can mow them down for the next several minutes.

But Seek Mobile is more than just cool ideas for games. These guys have some real hands on experience. Seek has been hands-on with Torque, a slick gaming interface design platform for about as long as the concept of the App Store has been out. With the roll of Torque as iTorque directly to the phone, Seek Mobile is now leveraging their jump on the game to quickly put out all of the work they have put into Living Arcana.

Look for these guys to be making some serious waves soon.

iPhone Activation: $199

Game download: $0

Hitting your boss with a fireball from the parking lot: Priceless.

Written by: Steve Spencer , Utah Technology Spotlight.

FundingUniverse maintains an exclusive, invitation-only social network for our investors. We keep our network closed to ensure we’re working with legitimate investors who legally qualify for the opportunity to view the thousands of deals available through our website. We’ve heretofore accepted just over 700 investors into our network and turned down at least that many because they weren’t accredited.

Every investor who applies to join the network is taken through an interview process to ensure their legitimacy before we allow them access. We don’t let investors in who just solicit services to our entrepreneur members or, worse, are scammers posing as investors.

It’s a delicate balance between making joining as a legitimate investor easy while protecting our entrepreneurs from shady characters, so we continue to work on making the sign-up process smoother and more efficient.

Recently added for investors who apply to join the network is a limited view of the many dealflow and group collaboration tools available. They are still required to complete an interview before seeing deals but they can now see a sample of what’s available and complete their profiles right upfront to expedite the process.

What this means is we can now more efficiently process investor applications and orient them to the service much more effectively. The benefit to you? More genuine investors who might invest in your business.

Rest assured, FundingUniverse will maintain it’s strict “no posers” policy and do what we can to keep our network legit and elite.

Earlier this week I received the following email:

Hi Joel,
We’d like to give you a repayment update on the loans you’ve made through Kiva.
A total of $3.14 has been newly repaid!

I chuckled to myself as I read the email because I was sarcastically thinking to myself  ‘Whoa, where am I going to spend the $3.14?’  But for Doris Nuhey in Ghana the $25 that we loaned to her several months ago was critical to her small business.  Doris owns a hair salon in Ghana and applied for a $750 loan through Kiva.  She has paid back almost 40% of her loan.  $3.14 won’t even buy a gallon of gas here in the US, but in her neighborhood, the money goes a long way.

I found out about Kiva about a year ago while watching a documentary on microenterprise loans in third world countries.  Three things stuck in my head that night.  First, Kiva allowed entrepreneurs access to funding that they would never get otherwise.  Two, the entreprenurial spirit is alive around the world, even in the most dire of countries and economies.  Third, the default rate on loans from Kiva was less than 1.5%  Since their conception several years ago, Kiva has loaned out close to $14 million dollars.

I was curious enough the next day that I decided to visit Kiva’s website www.kiva.com and scroll through the small businesses that were looking for loans.  Our family discussed each business carefully and finally decided on Doris.  We joined a dozen other people from the US, England, Canada and Australia to fund her business.  Shortly after she received her funds we received the following report from a Kiva field representative.

Ask any professional baseball player what got him to the big leagues and I would wager that with few exceptions he would highlight some very typical behavior, such as hard work, consistent practice etc.  If you were to dig deeper and probe him about what specific things made him a quality hitter, pitcher or infielder I would wager a greater sum that he would talk about fundamentals; throwing your hips through and letting your shoulders follow as you swing the bat, letting your body do the pitching not your arm by keeping the ball back and high and letting the body rotate, or keeping your butt down as you feild a fast grounder.  All these things are fundamentals that you learn in little league.  Mastering these fundamentals is what makes a pro.

The same goes for funding a business.  I can tell you till I am blue in the face how to build a plan, pitch to investors and network, but at the end of the day, only those who work at the fundamentals over and over again will get funded, grow their business and have a successful exit.  So what are the fundamentals?  

Let’s see if you can tell me.  Use the comments for this post to outline what you view as fundamental to raising capital.  Next weeks post will cover the results.