$700 billion rounding error?

You’d have to be a desert island not to hear about the current financial bailouts. No matter whether you’re for or against em, the numbers are astounding. Word on the street is that the original $700 billion number was not derived from what was needed, but instead by a calculation on what wouldn’t upset the apple cart. In other words, what could be absorbed, sort of like a rounding error? Ummm…$700 billion, that’s it! Sure, who could blame us for spending 5-7% of our GNP? Well we’re not alone, most other big nations have recently followed suit. China $586 billion (16% of their GNP), Japan $68 billion (1%), S. Korea $80 billion (9%), Russia $209 billion (12%), Britain $450 billion (21%), Germany $151 billion (7%), Spain $111 billion (8%) and Switzerland $66 billion (15%). And this just in… the U.S. is up to $850 billion, plus another $300 billion more for mortgage guarantees (about 6% of our GDP). I just hope it’s going to be enough. [Numbers from Businessweek, December 1, 2008]

When should we start paying President Obama?

Watching CNN or Fox News, you can’t help but see that President-elect Barack Obama is already working ‘round the clock, and he’s not even been sworn in yet. Makes you hope he’s getting some kind of salary for being President-elect. Wouldn’t it be weird if he’s doing all this without pay for the next two months? What kind of welcome would that be? I am sure we are paying for secret service and T&E for all those big meetings, so why not pay the Prez salary upon election, and not simply stand on ceremony?

My Obsessions

Gas-price WATCH

Since gas prices represent the clearest icon of our ‘emotional economy’ we need a reminder how large the swings have been. Since 2007, the price of crude oil per barrel rose from the $50’s and $60’s up to $145 on this July 4, 2008. This month, on November 21, it was $49.93 and on November 29 it was $54.43. Wheeee!

While the lowest I’ve seen recently is $1.83, I decided to check out http://www.gasbuddy.com/ I found there I could buy gas in Tucson for $1.73! Remember, it was $4.00 in July 2008 (regular gas in today’s dollars)? Don’t forget it was up to $3.32 in March 1981, during the Iraq-Iran war. [Prices per zFacts.com]

Advice to Entrepreneurs

Accordion to me…This week’s advice to entrepreneurs

What do angel investors look for? Ideally: A really big market with a big problem, your big solution, your big capabilities, and all it needs is money. Problem is it’s really hard to prove, and contrary to what you may think, even wealthy people don’t want to lose money. Here are two tips on finding your first investors. First, look to people who will give you the benefit-of-the-doubt. These are people who already like you, your friends and family, and already know how great you are, and very much want to help you succeed. Second, while I’m active with several angel groups, including Desert Angels and Northern Arizona Angels, I urge you to spend just as much time looking for specific investors who are likely to find instant ‘relevancy’ with what you’re doing. Like, if you’re working on cure for Alzheimer’s, try talking to local neurologists. No doubt, they’ll be a tough audience, but if you’re on the right track, they’ll know it. Better to find out now. Got an idea or something you need help on? Email me at rick@hotventures.com

Title: Venture Consultant

Matt Pernichele brings a wealth of personal entrepreneurial experience to the FundingUniverse consulting department. He helps clients prepare for and approach investors for capital and works to refine many different aspects of their businesses in the very important foundational stages (pre-funding)

Matt is our longest-employed consultant and is usually talked about in glowing terms by the entrepreneurs he consults with.

What’s the best business advice you’ve ever received? After the above example, I was told by a friend about the idea of “fast fail” that is, when you enter an endeavor make sure you will be able to tell pretty quickly if it will be a failure or a success so you don’t waste too much time on it.

Where did you work before FundingUniverse? Most recently I was doing some accounting work for Consonus.

What drew you to FundingUniverse? I found the idea of working with startup entrepreneurs exciting. It’s a great job where I learn useful new things every day and meet a lot of committed, creative people.

How will you help FundingUniverse grow? Hopefully by getting people in a position where their plans can get funded and by directing investors to real, quality deals I will help FundingUniverse become the place where good deals can get good exposure.

What’s your favorite things about FundingUniverse? Learning about my clients businesses.

What do you do when you’re not working?
Hike and take care of my high maintenance children.

How has FundingUniverse helped you grow professionally? Working at FundingUniverse has exposed me to a lot of different business models and personalities that I would not have otherwise encountered. I have also learned a great deal about my clients industries; from aircraft manufacture to SaaS to men’s hair care products.

First it was housing, banking, and insurance. Now, retail and automotive. Not a good time to have big stores, big shelves and lots of goods from manufacturers who want to get paid. With the credit crunch, big ticket item sales are near impossible, everyone clobbered but the category leaders… i.e. Circuit City and Linens ‘n Things have been slammed. If smart, Walmart, Target and Costco will find ways to get by. Next, it’s clogging auto dealers who sit with big inventories. No one’s buying a car that doesn’t need one right away. I hear 2009 autos are sitting in the ports waiting for 2008 autos on the lots to clear out. Not going to happen this year. And it’s no solution to throw money at them, the big-3 need to change big-time. They need some kind of structured re-organization. If we as citizens must invest in them to keep the entire Midwest economy from crashing, the big-3 must find a way to make better cars, have fewer dealers, and dump their legacy obligations. Sorry, I think big unions (more mouths to feed), big stores and big inventories should be jettisoned. And I say, down with expensive marketing plans, good products should sell themselves!

My travels

This week, I hit Flagstaff (think Grand Canyon) and Tempe (mainstreet for ASU). First, we dedicated the new Northern Arizona Center for Emerging Technologies and AZ Governor Janet Napolitano cut the ribbon of this new 10,000 square foot incubator, which by the way, is already filled with ten awesome technology companies (more about these companies next time). Later that day, the new Northern Arizona Angels group met at the ultra beautiful Pine Canyon Golf Club. Investor presentations were made by Protein Genomics (they make skin), Norchem Drug Testing (like they say, drug testing), Density Investments (new age green building), Ambature (super conductor material) and Visible Energy (making sense of energy).

Spressions

“Be careful what you wish for”… remember when we longed to get rid of our biggest problems: high gas prices and the Iraq war? Don’t you wish we were back there now?

Accordion to me…This week’s advice to entrepreneurs

Looking to fund your company? Wherever you are, there are probably angel investor groups in your region. While November and December may be shot, if you have a killer company, you should apply to the angel group(s) in your area and then, others nearby too. [ look at their directory at http://www.angelcapitalassociation.org/ ] Get some professional advice, know your domain, make sure your company can exploit its unfair competitive advantage, and know your true valuation boundaries. Concentrate on proving the details on how your sales will be brought in. Very few companies know enough how they will get their sales. And…don’t talk about fast exits or IPO’s. Of course you are open to the right liquidity event, but right now, no one knows when, how and where. Ah, but you must be ready and wise. Got an idea or something you need help on? rick@hotventures.com

The tables could barely hold the number of investors that attended our Speed Pitch event on November 4th in Salt Lake City. Traditionally we have 10 tables with about 2-3 investors per table, but at this event we had at least four per table and some had more than that.  We truely had investors spilling into the aisles!

The flood of investors attending was telling for two reasons.  1.  We are in a downturn economy which typically means that investors are more tight fisted with their resources.  To have so many of them at our event was intriguing and 2.  The strength of investor turnout is a tribute to FundingUniverse and their ability to bring quality and certified companies to the table.  It takes a Hurclean effort to put these events together but the results for both the Investor and the Entreprenuer are immeasurable.

I am excited to report that EVERY company that pitched was offered invitations for follow up meetings, were given referrals to other investors or in most cases were given both.  Shortly after the event, we asked all entreprenuers to share some of their thoughts on the event.  Here are just a few of the we received.

Fantastic!  Great experience, great opportunity.
- Jason Izatt, CEO, Izatt International

Do what you can to get into this event.
- Shane Willard, CampusBook

Pony up the [dough] and attend.
- Alan Martin, CEO, CampusBook

It really helps to hone the pitch.
- C. Lunceford, Miralinx

Must do. If not for the money then for the experience
- Cary Snowden, CEO, ListPipe

Our next speed pitching event will be on December 12th and we are excited to end this incredible year on a high note.  If you are interested in learning more about how your company can present at one of our events or if you are an investor looking for qualified, certified deals contact one of our representatives at 877-638-3616 option 1 to learn how you can attend our next event.

Joel Nielsen is a Venture Consultant at FundingUniverse.  He can be reached at jnielsen@fundinguniverse.com

Hey everyone, here’s the maiden launch of my blog for FundingUniverse. This is my chance to rant and rave on the subject of Angel Investing: Trends, Deals, Happenings, Phenomena and Kooky Stories.

Where am I coming from?
You can check out my Web site at but please allow me to get this background stuff out of the way. I’ve put in 34 years of hard labor in start-ups, turnarounds and fast-growth technology companies. I work mostly with IT and BioSciences companies, investing in them, helping them find money and sometimes as a board member or advisor. I’m on the board of several angel groups, technology incubators and have advised almost 100 companies, and have co-founded several successful tech companies, and I am most proud of Knowledge Adventure, which we sold for $100 million in 1996. Soon after I was an early shareholder in Bill Gross’ Idealab, which quickly became the most famous tech incubator in the world, and recently has morphed into one of the most notable tech operating companies in the U.S. Idealab created Overture.com and sold it to Yahoo for $1.6 billion, and now runs a few dozen companies, among them the hottest solar company, eSolar, new automotive company, Aptera Motors, and robotics company, Evolution Robotics.

What me worry?
Okay, I won’t dodge the question. Worried? Well, just a little. How’s this economic disruption affecting angel investing and entrepreneurial companies? Well things are going to be more difficult… plenty. Right away, any borderline investor deals are probably going to get killed, and the deals that do get done will be at terms a lot more investor favorable. However, for those companies that have an oh-my-gosh, true competitive advantage in a large market that’s screaming for a solution, don’t worry, you’re still good. While many angels have pulled back or are waiting, there still are investors who need to keep their capital employed. I mean, even if billions of dollars of capital has been withdrawn, there still are tens of billions remaining that must be employed, right? In any event, I suggest you make plans to keep yourself busy now though mid-January, cause once we hit Thanksgiving, deal closings will be few and far between.

I like “Recession-Resistant”
There is no recession-proof. But no matter whether you’re entrepreneuring or investing, make sure your company does something truly important. No…wait, you better make sure it provides something that’s absolutely essential to the buying public. If it isn’t, go find a way. The next year or two may not be your best years, but they can be years that you survive and build. I call that recession-resistant, but you may want to look for satisfaction in simply getting by.

Question: What’s a word for high gas prices and the war in Iraq? Answer: Nostalgia
What I’m saying is if you look back six months, it looked like high gas prices and the war in Iraq were making our lives unbearable. Now… I betcha you wish those were still our big problems!

Title: Venture Consulting Manager, Investor Liason, Distance employee and king of diatribe.

Frank’s the grand poobah over the venture consulting arm of FundingUniverse. He makes sure our consulting is producing results for clients. He’s also the guy responsible for maintaining good relations with our investor network by catering to their every whim.

Frank currently lives in Idaho and works remotely. When we’re lucky, he occasionally graces the FundingUniverse headquarters in Utah with his presence.

What’s the best business advice you’ve ever received? “He who knows not and knows not that he knows not is a fool, shun him. He who knows not and knows that he knows not is a wise man, follow him”

Where did you work before FundingUniverse? I worked as a business analyst with an auto group in Southeast Idaho, previous to that I worked with a joint venture between a Venture Capital firm and a regional entrepreneurial center as an analyst and consultant.

What drew you to FundingUniverse? The excitement of working in the Private Equity industry, i have always been fascinated by it.

How will you help FundingUniverse grow? By ensuring quality consulting and new approaches to our work, this will help to increase our sell-ability as the word get’s out that we are truly the best in the industry.

What’s your favorite things about FundingUniverse? Of course the people. We have a great team of young accomplished professionals that work hard and play hard.

What has been the funniest moment at FundingUniverse? Well I would have to say that Michael Jones is a terminally funny moment, get to know him, you will see.

What has been the weirdest moment at FundingUniverse? I don’t think we should talk about that publicly.

This morning started with a great visit to a local Angel Group’s monthly meeting.  I always enjoy seeing companies pitch to investors and am especially intent on observing nuance, which tells so much about what the investors are looking for.  I would like to share some of those observations today that may help entrepreneurs gain a more intricate insight into preparation for a fundraising pitch.

Observations:

1.  Without fail the first question after every pitch was calculated to determine the details of the offering. i.e. pre-money valuation, percentage of ownership offered, preferred or common stock, liquidation preferences etc.  I will let you draw your own conclusions but I think this means it is important to the investors.

2.  The company that received the most interest did so in large measure because of the dynamic character of the CEO.  Though the business model, market, financials, deal, traction etc. was all in order, it was the leader that created the buzz.  I heard private discussions such as “I like this guy” and “This kid knows his stuff.”  Oddly enough, the CEO of this company was the youngest of the five presenting.  

3.  One particular turn-off to the investors was either the total absence of the CEO, which happened in one case, or when the CEO deferred to a present or not-present CFO for answers on valuations, deal terms, or financial projections.  In short, the CEO must be present and he should be able to answer all the important questions.

I will leave you to draw the conclusions hear. I think it sufficient to say that it is difficult to understand everything an investor is looking for unless you can get the input of someone who sees it all the time. (shameless plug)

Title: Funding Consultant

Brian points our clients in the right direction for funding. Out of the numerous options available, he consults and recommends the best financing/consulting/credit building/equity capital source based on the individual needs of the client.

If you ever see his face on a celebrity’s body, don’t be alarmed, you’ve just become privy to his amazing Photoshop talents.

Where did you work before FundingUniverse? I worked with a company called XanGo as the sole representative of their Korean language department. XanGo was featured right along-side FundingUniverse in Utah Valley BusinessQ Magazine’s ‘Top 40 Under 40′ and was also named a ‘Best Company to Work For’ by Business Q. (Spoiler-alert: I like working for FundingUniverse more)

What drew you to FundingUniverse? I have always had a passion to learn everything there is to know about entrepreneurship. One day, as I was searching through my BYU’s business school’s alumni job postings, I came across the FundingUniverse sales consultant position. I had to do a little background research but soon came to find that this was precisely what I was looking for.

How will you help FundingUniverse grow? I like to think that my personality is such that those clients who speak with me will want to tell their friends and business acquaintances how professional and helpful Funding Universe is. I want them to have such a good experience that they will want to see us grow too, and therefore help in the process.

What’s your favorite things about FundingUniverse? The team, of course. Everyone that works here is very energetic and fun. Another thing I’ve come to love is our recently organized business learning library. We have several people in the office who have temporarily donated their books to start a library from which we can borrow books to continually add to our knowledge of entrepreneurship and investing. It’s being put to good use.

What has been the funniest moment at FundingUniverse? One day, Trent came out to ask everyone to step into his office; he even threatened to fire about three people if they didn’t come in. After entering the office, he then proceeded to show us a video clip of the comedian Jim Gaffigan talking about bacon. My condolences to anyone that got fired for not watching that video. After showing the clip, he described how our consulting packages should include, not only one-on-one professional consulting, but also a five pound bag of Costco bacon. Here’s a link to the video he showed: http://www.youtube.com/watch?v=xxwCy69_YcQ. [Brian later noted that this video prepared for a company meeting should be included as "funniest moment": http://sendables.jibjab.com/view/XQ7LYJO17cmSVLEu featured are CEO Brock Blake, CTO Trent Miskin and Utah Regional Director Rob Sanders]

What has been the weirdest moment at FundingUniverse? A couple weeks ago, I emailed a particular client to confirm an appointment time; I received a response a few hours later. Well… I think this gentleman mistakenly sent his “funny” business spam-mail to the wrong person because what I received was, well…I won’t go into detail. Note that this is my “wierdest” moment and not my “funniest” moment at FundingUniverse.

What do you do when you’re not in the office? I have several hobbies. Right now, I am taking a web development class so I can make web pages–just for fun. I also took several aviation classes in the past and would like to get back into that to finally get my private pilot’s license. Also, I am taking bagpipe lessons every Wednesday night (pretty unique, eh?). Other hobbies of mine include snowboarding in the winters and longboarding in the summers.

FundingUniverse wants to help you improve your business proposition to an investor. The best way for us to do this is to actually play the role of the fund analyst.  The only real difference is we will actually provide you with constructive feedback, advice and consulting on how to make your proposition effective and attractive, rather than throwing it in the trash and never even replying to your email or phone call.

So here are a few things to understand about an investor and therefore what to expect as a client.

1.  Investors won’t read your 25+ page business plan and neither will we.  Rather we will help you carve it down to a direct and compelling document that is simple to understand and easy to digest quickly.

2.  Investors want to see your executive summary first, if you cannot convince them you are worthwhile from the Exec. Summ. then your business plan will probably just bore them. We will help you condense your plan down to the most critical material then it will be a simple process to add to it and make a good business plan.  This is much easier than reading your doctoral thesis and trying to find a few nuggets.

3.  It is best to get refered to an investor instead of spaming the transum with your B-plan.  We will help you understand the strategic and proper way to contact an investor.  Believe it or not you are probably only 2 and maybe even 1 relationship away from a funding source if you just took the time and worked strategically to tap your network.

4.  Investors are not evil but, they are in business to make money.  if you do not understand the details of deal structure, the terms of the deal and equity finance generally, you stand the risk of getting the raw end of the deal or loosing the opportunity to negotiate a better deal for you.

So, before you go looking for Venture or Angel funding, let us play the part of the fund analyst so you don’t have to face a barrage of rejection with little (or more likely) no feedback or response.

Title: Senior Funding Consultant

Zach is one of two senior consultants in charge of fitting clients with fundraising solutions that meet their needs. He leads a team of consultants who contact and qualify entrepreneurs who apply for funding.

Zach’s usually the first guy in the office even if he’s been up all night taking care of his infant first-born.

What’s the best business advice you’ve ever received? “do or do not, there is no try” - Yoda; “do more than is required”

Where did you work before FundingUniverse? Sage Communities - Finance Intern

What drew you to FundingUniverse? (1) I wanted experience with a startup, (2) I wanted to learn about entrepreneurship and how to effectively start a successful business, (3) I wanted experience in the world of angel investing/VC/entrepreneurship, (4) FundingUniverse had everything I was looking for as well as a great name both locally and nationally.

How will you help FundingUniverse grow? By constantly evaluating and improving our screening process to help us bring on as many entrepreneurs as possible and assist them in getting prepared to raise investment capital.

What’s your favorite things about FundingUniverse? (1) my co-workers, (2) the industry, (3) seeing businesses get funded, (4) Michael Jones

What has been the funniest moment at FundingUniverse? Watching Michael and Kendall play ping pong.

What has been the weirdest moment at FundingUniverse? Seeing broken ping pong paddles every week.