How Many Graphs Should Be In My Business Plan

"According to Dave Lavinsky, President of Growthink, a common question in business plan development is “how many graphs or charts should I have in my business plan?” As with most other business planning questions, the answer is “it depends.” "

"To begin, the key point to consider in developing your business plan is the time restraints of your audience. If your audience is a retired angel investor, he may have few obligations and can spend an hour reviewing your business plan. However, the more likely scenario is that a venture capitalist, corporate investor or loan officer will review your plan while sitting at a desk topped with fifty other business plans. As such, it is critical that your plan conveys its key points quickly and easily – this is where graphs or charts come in."

"In determining whether to use a graph or chart, consider the old adage, “a picture is worth a thousand words.” The point here is that the picture should save a thousand words. That is, the graph or chart should supplement the text; it should not be explained ad nauseam in the text, or that defeats its purpose. Likewise, the graph or chart must be relevant and support the text, rather than detract from it."

"In addition to respecting the time constraints of the audience, the business plan must respect the audience’s energy level. That is, after reading seven business plans, an investor is likely to skip a page with 400 words of straight text. Even if no charts are applicable to support the page, Growthink suggests using appropriate spacing and/or callout boxes (e.g., key text phrases highlighted in boxes) to make the page more readable."

"Finally, if the business plan is being presented to one or few investors, the amount of graphs and charts should reflect the wants, needs and sophistication of those few readers. For instance, if the plan is being presented only to strategic investors who understand the market, graphs may be appropriate to convey information for which these investors already have background knowledge. Conversely, always keep in mind that the plan is not a slide presentation, and too many graphs and charts may position the company as one that is too lazy to complete the process of developing a formal business plan."

Read more here.

For more information, visit www.EvanCarmichael.com.

Presenting At A VC Forum

"It's a high-stakes and heady atmosphere, said Robin Kovaleski, executive director of the Florida Venture Forum. And in terms of spectacle, it's hard to beat the presentation sessions."

''It's daunting and scary to be up there in front of 600 people, with a big microphone in front of you and flanked by two huge (projection) screens,'' she said. ''After exactly 12 minutes the lights go on, the music comes up and we cut off their microphone.'' More than one CEO has been shut down mid-sentence.
''The strategy will be to keep it as simple as possible and to clearly explain what we do, which is not an easy task,'' he said. ``After the dot-com era and all the bad things we've learned from that, people are a little skeptical (of new technology). We need to be articulate.''

"''Venture capitalists want to look management in the eye and see what they are dealing with,'' said Kovaleski. ``(The presenter's) body language, their voice, their intonation -- all these things make a difference. Those who present better, look confident, are well-spoken and authoritative -- that says a lot about someone.''"

"Carl D. Roston is one venture capitalist who will be looking for golden opportunities. A shareholder of the Akerman Senterfitt law firm, he is also the forum's outgoing chairman."

"''What we're looking for is a strong management team, protect-able technology, which is potentially disruptive, large markets and a clear path to profitability,'' he said. ``If a company has all those features and a competitive advantage, that's what we're looking for. But then some really shine during the presentation stage.''"

Read more here.

For more information, visit www.EvanCarmichael.com.

Pragmatech Software Raises $8 Million From 3 Funds

"Pragmatech Software, Inc., the leading provider of sales productivity and proposal automation applications, today announced that it has received an additional venture capital infusion of $8 million in Series A funding. Three first round investors, Commonwealth Capital Ventures, Kodiak Venture Partners, and North Bridge Venture Partners, have participated in the second investment and serve on the company's Board of Directors. The expanded investment will drive Pragmatech's sales, marketing, and continued growth initiatives. "

""Over the past 18 months, Pragmatech has experienced tremendous growth, with deployments of our award-winning technology increasing around the globe," said Brian Zanghi, President and CEO, Pragmatech Software, Inc. "Our investors recognize the effect of Pragmatech's solutions on the corporate bottom line. This additional investment will solidify our position as the leader in the proposal automation sector as well as enable us to further enhance our technology to meet the evolving demands of our enterprise customers." "

Commonwealth Capital
"Founded in 1995 by a team of experienced venture capital investors, Commonwealth Capital is a leading early-stage venture capital firm focused on opportunities in the Communications Infrastructure and Software and Services sectors. With over $350 million of committed capital under management, the firm's partners have invested in more than 130 high-growth companies that are leaders in their industry categories. Commonwealth Capital's offices are located in Waltham, MA. For more information, visit www.commonwealthvc.com. "

Kodiak Venture Partners
"Kodiak Venture Partners is a Waltham, Massachusetts, based venture capital firm focused on seed and early stage investments in emerging communications/IT, semiconductor, and software companies. With a focus in the eastern regions of the U.S. and Canada, Kodiak Venture Partners builds relationships with entrepreneurs seeking accelerated market success. Kodiak's investment partners are successful high-technology business entrepreneurs who take a high-impact, hands-on approach to forming, operating, building, and funding market leaders. For more information, visit www.kodiakvp.com. "

North Bridge Venture Partners
"North Bridge Venture Partners is an active, early-stage venture capital fund based in the Boston, Massachusetts, area. Working closely with entrepreneurs, North Bridge adds value by providing strategic guidance, specific industry knowledge, team-building skills, and an in-depth understanding of both private and public financings. In addition, the firm's broad network of industry experts, current portfolio companies, public companies, and most importantly, the people that built them, are valuable resources for entrepreneurs. For more information, visit www.nbvp.com."

Read more here.

For more information, visit www.EvanCarmichael.com.

VC Investment Rising

"After years of declining investments, venture capital (VC) firms have begun pumping money into start-up high-technology companies, according to different surveys. "

"The MoneyTree Survey, released Monday, reported that nearly $21 billion was invested in start-up and emerging companies in 2004. The survey was prepared by the PricewaterhouseCoopers accounting firm, Thomson Venture Economics, and the National Venture Capital Association. '

"VC investments had declined to the $18.9 billion invested in 2003, according to the MoneyTree survey, which noted that 2004 was the first increase in VC investing since 2000--the year the telecommunications and high-technology bubble began deflating. "

"The MoneyTree report broke out investments on a regional basis, noting that Silicon Valley remained in first place in 2004 as far as investment dollars received; the Boston area finished in second place. "

"MoneyTree reported that VoIP provider Vonage Holdings raised some $145 million in two venture rounds in 2004. "

Read more here.

For more information, visit www.EvanCarmichael.com.

Getting Startup Funding

"A worldwide survey of entrepreneurship concluded that self-funding and informal investment fuels development of 99.9% of new businesses."

"Entrepreneurs provide 65.8% of startup capital, while others--mostly informal investors, including family and friends--provide the balance. Eighty-eight percent of America's 500 fastest-growing private companies didn't receive venture capital backing."

""Entrepreneurs seeking capital to start a business must first use their own savings," says William D. Bygrave, the Frederic C. Hamilton professor for free enterprise at Babson College in Wellesley, Mass. "Then turn to family members, next, friends, work colleagues and neighbors, and finally strangers for informal investment. They should forget about formal venture capital.""

"In the U.S., 91% of venture capital is devoted to high-technology companies, compared with 29% in Canada, France, Germany, Italy, Japan and the U.K., the G7 nations."

"Worldwide, informal investors in new businesses are overwhelmingly family members, providing just under half the needed capital. Friends and neighbors provide 26.4% of informal investment, while relatives kick in 9.4%, work colleagues 7.9% and strangers 6.9%, the survey found."

"In the nations surveyed, an average of $53,673 is needed to launch a new business. However, businesses launched by men require $65,010, compared with $33,201 for women. In many cases, women launch consumer-oriented businesses that require less seed money."

Read more here.

For more information, visit www.EvanCarmichael.com.

All About Angel Investing - Part 2

"Groups may be willing to commit additional funds in subsequent financings. According to market research:

• 20 percent of angels invested $25,000 or less per deal (in one to four deals per year).
• 40 percent of angels invested between $25,000 and $100,000 per deal.
• 25 percent of angels invested $100,000 to $250,000 per deal.
• 15 percent of angels invested more than $250,000 per deal."

"In “The Angel Investor’s Handbook” by Gerald Benjamin and Joel Margulis, the authors point out that private investors are investing $40 billion a year into as many as 140,000 early stage companies, which is approximately 4 percent of the 3.5 million start-ups in the U.S."

"This further suggests that there are about 400,000 angels investing each year who are filling this capital gap. This pool of investment is growing 14 percent to 20 percent per year versus pension fund growth of only 8 percent per year. The key issue with angel investors is that they must be in a position to lose the entire investment or lose access to it for an extended period of time."

"New companies created 20 million new jobs between 1979 and 1993 (or 67 percent of total job creation) with an additional 12 million jobs created between 1993 and 1997. Start-ups create 27 percent of these new jobs. Small companies represent 47 percent of all sales, 52 percent of business net worth and 99 percent of all companies in the U.S., according to the angel handbook."

"Additionally, 55 percent of all innovation comes through these small companies."

"According to research on angel investors, 65 percent of them like to invest in deals reasonably close to where they live (within 300 to 500 miles). The remaining 35 percent are comfortable with an investment in a company further away so long as the lead investor lives geographically close to the new company."

Read more here.

For more information, visit www.EvanCarmichael.com.

All About Angel Investing

"So what is an angel investor? In plain language, this is someone who invests his or her own funds in private companies at the earliest stage."

"These people typically have a net worth of $1 million to $10 million. These investors also bring with them expertise and some affinity or interest in a company’s products, markets and management team. These people are typically willing to take financial risks. According to MIT’s Entrepreneurship Center, there are four categories of angel investors:

1) Guardian Angels: This group brings entrepreneurial and industry expertise. These people have been successful entrepreneurs in the same sector as the new company.

2) Entrepreneurial Angels: This group has experience in starting companies but in different industry sectors.

3) Operational Angels: This group brings industry experience and expertise to the table but from large and established companies. These people may lack firsthand experience in the problems of a start-up.

4) Financial Angels: This final group invests purely for the financial return."

"According to an October 2002 report by the Ewing Marion Kauffman Foundation titled “Business Angel Investing Groups Growing in North America,” most members of angel groups invest between $25,000 and $100,000 in each deal (but can go as high as $250,000)."

Read more here.

For more information, visit www.EvanCarmichael.com.

Trouble Finding Venture Capital?

"Most venture capital groups don’t step in for the initial funding of a company (the first $1 million to $2 million). This gap is being filled by emerging angel groups."

"Even the mighty Amazon.com, which today is worth a mind-boggling $18.2 billion, was turned down initially by VCs."

"Founder and entrepreneur Jeff Bezos turned to angels for financing and was able to raise the first $1.2 million to get the company going. Later, Bezos and Amazon.com were able to get $8 million from VC groups, but this was only after he had achieved his first financing from angels."

"According to a 2003 article in the Journal of Private Equity titled “The U.S. Angel and Venture Capital Market: Recent Trends and Developments” by Jeffrey Sohl (director of the Center for Venture Research at the University of New Hampshire), there are 1,000 venture capital funds managing about $175 billion."

"These funds invest between $30 and $35 billion annually in entrepreneurial activity and bankroll less than 3,000 companies per year. Many of the financings are for companies already in their portfolios."

"A typical VC round of funding is for a later-stage deal where they are investing between $10 and $15 million, according to Sohl. This creates a real funding gap (particularly for early stage companies)."

"Sohl states: “The first market inefficiency is a capital gap between the needs of early stage ventures and the suppliers of early stage capital. High-growth ventures need patient, value-added equity capital to fuel growth.”"

"Sohl’s analysis is that angel investors provide close to 80 percent of the seed and start-up capital for high-tech ventures. In 2000, seed and start-up investments in the U.S. amounted to only $2.2 billion (all business sectors) in 382 deals. This represented 2.4 percent of total capital invested and 6.8 percent of total deals that year."

Read more here.

For more information, visit www.EvanCarmichael.com.

Early State East Accepting Registrations

"Registration to attend the 2005 Early Stage East Venture Capital Conference is now open. Attendees will have the opportunity to network with the most distinguished venture capitalists, private investors and investment firms on the East Coast as well as the most innovative entrepreneurs in various fields of technology. "

"The Early Stage East conference is a two-day event. On Wednesday, May 11, all are invited to attend Early Stage East's entrepreneurial education session where venture capitalists and experts in entrepreneurial development will present "Building a Great Business," and gather that evening for Early Stage East's distinguished Opening VIP Reception. On Thursday, May 12, up to 25 companies will present their break-away businesses to an audience of investors. The conference will be held in Philadelphia at the Hyatt Regency at Penn's Landing. "

"The conference traditionally features start-up companies focused on information technology, enterprise software and internet technology. However, this year Early Stage East has expanded its list of featured industries. Companies specializing in chemicals and advanced materials, manufacturing technology, nanotechnology, medical instruments and devices, industrial biotechnology and electronic materials will also be presenting at the conference. "

"To attend the Early Stage East Venture Capital Conference, register at www.earlystageeast.org. The deadline to register is May 6. Also, applications are now being accepted. To present a business plan at Early Stage East, apply at www.earlystageeast.org. The deadline to apply is March 17. "

"Early Stage East (ESE) is the initial venture capital showcase for promising young companies. The organization serves as a gathering place for entrepreneurs and those institutions funding and servicing them. ESE was founded in 1998 as a non-profit organization and has grown from a single-day venture capital fair to a year-round series of events. Our events showcase entrepreneurs in an effort to help them effectively obtain venture capital and successfully start break-away businesses. "

"ESE is geographically the largest venture conference developed specifically for early stage companies. Our events annually attract investors representing over $10 billion of institutional venture capital. Companies that have participated in Early Stage East events have gone on to raise over $600 million in institutional funding. "

Read more here.

For more information, visit www.EvanCarmichael.com.

VoiceAge Lands $10M Series A Financing

"MONTREAL, Jan. 13 /CNW Telbec/ - VoiceAge Networks Corporation, a leaderin multimedia content adaptation, today announced the closing of Series Afinancing, raising USD$10 million in new capital. BCE Capital (an affiliate ofBell Canada Enterprises) led the round, joined by partners Entrepia Ventures,BDC Venture Capital, and VoiceAge Corporation."

""Mobile multimedia content and rich media applications are becoming asignificant global revenue opportunity for wireless operators and serviceproviders, but a common hurdle that needs to be overcome is the mediaadaptation at the network layer required to ensure device and networkinteroperability", said Joe Catalfamo, BCE Capital Managing Director."VoiceAge Networks has demonstrated leadership in dealing with such contentadaptation issues since 2001, and is extremely well positioned to continue totake market share as it solves this problem for the key stakeholders.""

""VoiceAge Networks is bringing technology innovation that will beinvaluable as carriers introduce IP-based services and multimediaapplications," said Amit Srivastava, President, Entrepia. "The company has animpressive mix of management talent, products, and vision which, combined withtheir Tier 1 clients and global alliances, makes for a very excitingopportunity," added Steven Abrams, Director, BDC Venture Capital."

""Our SPOT xde(R) platform has provided our customers with great increasesin the uptake of multimedia services, which has driven our significantmomentum since spinning off the company from VoiceAge Corp. earlier thisyear", said Jean Mayrand, Chief Executive Officer, VoiceAge Networks. "Withthe help of our strategic partners and a number of commercial deployments, wehave quickly reached a level of maturity that has driven us to entertainexpansion possibilities. This endorsement from our investors is greatvalidation of our recent accomplishments and will allow us to aggressivelypursue and realize our strategic objectives," added Allan Benchetrit, ChiefOperating Officer."

"VoiceAge Networks is a leading solution provider in the emergingmultimedia content adaptation market, a technology that addresses theimpediments to the seamless delivery of mobile rich-media data services."

Read more here.

For more information, visit www.EvanCarmichael.com.

Angel Investor Groups Abound

Angel investor groups are springing up across Canada and the US. The newest addition is a Columbia group - Columbia Angel Partners.

"Columbia Angel Partners, hopes to invest about $2 million a year in four to six companies, said Neil McLean, who is serving as executive administrator."

"The 45 or so founding members have been organizing over the past year. The goal is 80 members. Each must have a net worth of $1 million, or an annual income of $200,000, or $300,000 with his or her spouse."

"It is a network of people who have a predefined motive not only to invest in small businesses, but also to help them grow."

"For Columbia Angel Partners to participate as a group, at least eight members must agree to put at least $100,000 collectively into the deal. Members must commit in $2,500 increments."

"“I had been through the process of raising money and knew through experience that there is a need for it. There is a lot that an angel group can provide,” McLean said."

For more information, visit www.EvanCarmichael.com.

VCs Raise More Funds, Valuations Rise

"Deloitte-Brightman-Almagor today published its VC Indicator survey for the fourth quarter of 2004 and expectations survey for the first half of 2005. The survey found that all the 47 venture capital funds covered predict that start-ups will raise more money than in 2004. 56% of the funds predict that up to 25% more companies will raise money in the first half of 2005, compared with 2004. 28% of the funds predict that over 25% more companies will raise money in the first half of 2005, compared with 2004. 16% of the funds believe that the number of companies raising capital will not change. "

"The survey also found that 32% of venture capital fund managers predict that it will be easier raise capital in the next six months, compared with 21% in the previous quarterly survey. 62% of venture capital fund managers believe that there will be no change, compared with the current situation. "

Read more here.

For more information, visit www.EvanCarmichael.com.

Venture capital groups put spark into technology sector

"Venture capitalists are more willing to invest in technology than they have been for more than three years."

"Michael Elias, managing director of Kennet and chairman of the European Venture Capital Association's high-tech committee, said: "I feel pretty bullish about innovation. People are fundraising again and we are definitely seeing more capital being deployed into tech companies.""

"Many of the technologies exciting venture capitalists are related to the internet. The successful market debuts of internet-based companies such as Google and Salesforce.com in the US this year have reawakened belief in dotcom businesses."

"The key technology on every investor's list is voice-over internet protocol, through which telephone calls can be made over the internet network."

"Online services, such as advertising placement offered by Overture, and web-based software providers such as Salesforce.com are among those most often mentioned. E-mail filtering and data security-related businesses are also expected to be in focus."

"However, venture capitalists are reluctant to generalise about prospects, stressing that the internet is above all a "sector of 1,000 niches", and the key is to find individual companies that are winners."

Read more here.

For more information, visit www.EvanCarmichael.com.

Overcoming The Money Hurdles

Raising the money to start a business can be a very challenging and overwhelming task.

Over 10 million Americans think of starting a business each year yet only 30% of them actually do. If you have the idea and the business plan, here are some of the places where you can get the money:

Personal Savings
This is the primary source of investment for the majority of new businesses. Think about how much you can afford to invest without taking out so much that you don't have a backup plan in case your business fails.

Friends and Family
These investors are also known as "love money" or "blood money" - It's important to treat them as investors and to have a written agreement to confirm your mutual understanding. Even if it's an interest free loan, have it written down.

Banks and Credit Unions
Most entrepreneurs will turn to their banker to arrange startup financing. Make sure you are prepared! Have the detailed business plan and resume on hand, practice your pitch before going in, and look professional. Many loans are turned down because the entrepreneur didn't do enough homework.

Credit Cards
Credit cards offer quick and easy access to capital but watch out! High interest rates can quickly overwhelm your cash flow and an overdependence on credit cards can make it challenging to obtain further loans from banks or investors.

Outside Investors
Companies with high growth potential often need more capital than is available through traditional sources. These businesses are called "gazelles" and require professional investment from angel or venture capitalist firms.

Read more here.

For more information, visit www.EvanCarmichael.com.

For more information, visit www.EvanCarmichael.com.

VC Healthcare Investment Rose 23% in 2004

According to Irving Levin Associates over $6.9 billion was invested in 390 companies in the healthcare sector in 2004. This represents an increase of 23% in dollar terms over 2003.

The two largest deals of the year were in Jazz Pharmaceuticals ($250 Million) and Ion Health Holdings ($200 Million).

"Despite the recent problems with the large, publicly traded pharmaceutical stocks, venture capital funds continue to flow into the sector," said Managing Editor of Irving Levin Associates, Inc., Stephen M. Monroe.

TOP 15 VENTURE INVESTORS, YEAR ENDED DECEMBER 31, 2004

Venture Capital Firm Number of Investments
Burrill & Company 18
3i Group 16
Alta Partners 16
MPM Capital 16
Oxford Bioscience 15
TVM Techno Venture Management 14
Novartis Venture Fund 13
New Enterprise Associates 12
Novo A/S 12
Versant Ventures 12
InterWest Partners 11
MDS Capital 11
Schroder Ventures 11
Sofinnova Ventures 11
Prospect Venture Partners 10

Read more here.

For more information, visit www.EvanCarmichael.com.

Venture Capital To Explode In 2005

2005 Predicted A Great Year For Venture Capital
In 2004, US venture capitalists raised $10.3 billion in the first three quarters. The fourth quarter is expected to be as much as the first three quarters combined.

VCs are raising more money and creating bigger funds. There is a $75 billion overhang in the market that will mean a rise in the number of deals done and better valuations for entrepreneurs.

Going Global
Venture capitalists are starting to invest in companies outside of their traditional geographic regions. Increasingly, investments are being made in companies located in Australia, China, India, Eastern Europe, Korea, and Singapore.

Going Public
Taking a company to IPO is still challenging - you'll need at least five quarters of profitability to get any serious attention. The IPO market is improving but most VCs are looking to acquisitions as their exit strategy.

Read more here.

For more information, visit www.EvanCarmichael.com.

Launch of iwantcapital.com

Having trouble getting capital? Want to see how other entrepreneurs are presenting themselves? Then you should check out www.iwantcapital.com.

This newly launched website tries to bring angel investors and startup entrepreneurs together to match the funding with the idea.

After six weeks in operation, the network has over $100,000,000 in available capital. It is free for investors to sign up while entrepreneurs pay an advertising fee to list their profile.

Even if you don't end up signing up it's a good opportunity to see what other inventive entrepreneurs are up to, how they position themselves, and what kind of expectations they are setting for themselves.

Read more here.

For more information, visit www.EvanCarmichael.com.

VFA Lines Up $3 M Of Venture Capital

VFA is a Boston based provider of software and services for facilities management and capital planning. They have recently raised $3 million in venture capital from Edison Venture Fund.

The planned use of funds are:

• Expand the sales force
• Grow indirect distribution channels
• Accelerate software development
• Promote the consulting business

VFA has assessed more than 16,000 properties globally and has a number of big name customers like ABN Amro Bank, University of Georgia, and the National Cancer Institute.

Read more here.

For more information, visit www.EvanCarmichael.com.

Profile: Raised $700K, Seeking $1-2M

Company:
Real User Corp. Invented a user verification system to provide an extra layer of security beyond text-based passwords. Real User Corp. was founded in the mid 1990's by Hugh Davies in Britain and relocated to the US in 2001.

The company has seven employees, a number of strategic partners including BearingPoint, and has landed large accounts like the U.S. Senate, the Congressional Budget Office, and Titan Corp.

For more information visit www.realuser.com.

Funding:
Real User Corp. has raised $700,000 in angel capital and are looking at raising an additional $1 to $2 million by June of 2005. Their projections call for having over 100,000 users on their system by December 31, 2005.

Read more here.

For more information, visit www.EvanCarmichael.com.

How to Introduce Yourself to a Venture Capitalist

- The first option is to approach venture capitalists yourself. This is a very time consuming process and you risk taking your mind and attention away from your business.

- The best way to find a venture capitalist is through an intermediary. They know the important players on the street and what they are looking for and investing in. The venture capitalist relies on recommendations of the people they trust. If the intermediary has established friendly relationships with them, it will boost your chances of getting in.

- Going after a venture capitalist without an intermediary is like going to court and trying to represent yourself instead of having a lawyer.

For more information, visit www.EvanCarmichael.com.

Reader Question - Starting A Company

Evan,

I wanted to start a small importing/exporting company buying and selling handbags and ladies accessories. Can you give me direction as to what the best steps to take are? Also if there are any resources that I can research or use to get this going?

Thanks.

Karmela




Karmela,

Congratulations on your ambition to start a business!

My top three suggestions for you are the following:

1) Model Success. Find someone who has achieved business success who you admire. Look at people in your industry as well as outside your industry. For example, who is the most successful importing / exporting company right now for handbags? What about importers / exporters for other products? Who are some other successful entrepreneurs you look up to? By studying their stories and learning how they got started you can create a model of success for your own business. For some ideas you can visit my Modeling Masters blog at http://www.evancarmichael.com/Masters/Masters.html

2) Start Small. As an entrepreneur you�re bound to have many great ideas as to where your business can go. There are always new markets to tackle, new products to sell, and new opportunities to conquer. Many entrepreneurs, however, try to take on too much too quickly. The first year of a small business is about survival � making enough to pay the bills and ensuring you�re still going to be around next year. Most entrepreneurs who act big too quickly end up going bust. Build your foundation, dream big and take small steps today for what will soon be your outstanding company!

3) Set Goals. When you have a clear sense of what you want to do with your business, you are much more likely to achieve success. If you start driving without any destination in mind then you could spend your entire time driving around in circles! Take some time and write down where you want to take your business. Make long term goals as well as short term ones � what are you going to do this week to move forward on one of your long term goals? Set your direction and take steps every day to get closer to your goals.

Good luck in building your business and keep me posted!

Evan.

For more information, visit www.EvanCarmichael.com.

Executive Summary Review - WaterWorld - Lesson #3 - The Business Model

The business model section of a plan is important because it outlines how your company will make money. The business model has to make sense, be a win for all parties involved, and be realistic.

WaterWorld's business model is to "sell directly to media executives and wholesale buyers in exchange for advertising and publicity. We give up a percentage of the sales garnered from the particular media. They in turn will distribute our products to their customers at the retail level. In many instances WaterWorld will get the orders directly and ship straight to the end user and then remit earnings to the media that generated the sale."

The typical business model for a media company such as a television station is to sell advertising � not products. They get paid based on the amount of air time you want and during which time as supposed to how successful your advertising is.

This strategy may work with smaller outlets who are having a hard time attracting enough companies to fill their advertising spots but does not lend itself well to the larger players.

Just as you need provide proof that your product works, you need to demonstrate to investors that your business model works and makes sense � especially when you're assumptions are based on activities that are outside the norm. Have media companies already agreed to this method of cooperation? Who are they? What have they said? How many more can you get and is this enough to push the product?

Reduce the risk for the investor by showing them that the business model works and is well thought out.

Would you like your Executive Summary reviewed? Click on the "Get Your Plan Reviewed" button at the top of the page.

For more information, visit www.EvanCarmichael.com.

Valuating a Business Examples

- Over the past 3 to 4 years, venture capitalists have been very conservative with their investments. This is because they have had so many problems within their current portfolios that they cannot afford to take the same risks on new companies.

- The method of valuation will also depend on your industry. In a traditional, or smokestack, industry there are typically many comparative examples. Here you can work from the earnings before interest, tax and depreciation (EBITDA) of similar companies and apply a ratio to your own business.

- New products and technologies pose a valuation problem due to the lack of comparative companies. It is much more difficult to valuate these businesses.

For more information, visit www.EvanCarmichael.com.

VCs Investing In Traditional & Non-Traditional Spaces

Traditional areas of VC investment are:

• Software
• Life sciences
• Wireless technologies.

New sectors that have opened up over the past year include:

• Alternative energy
• Security
• Entertainment

Investors are looking for niche opportunities with little competition and are no longer funding multiple companies involved in similar lines of business. They want to dominate a category.

One non-traditional company that received funding last year was Konarka which manufactures plastic panels to convert solar rays into power.

Read more here.

For more information, visit www.EvanCarmichael.com.

Venture Capital Investment Booming

Venture capitalists invest in new and growing companies using money from pension funds and other institutions. Technology startups especially depend on VC money to build their businesses.
In 2004, VCs invested $20 billion into startup companies according to a MoneyTree survey. 2003's total was $18.7 billion making it the first rise in investment since the bubble burst in 2000.

Two emerging trends in the VC market are:

• A Hot IPO Sector: IPOs represent an exit opportunity for VCs which is a critical factor for their investment decisions. 2004 saw 250 IPOs versus only 85 in 2003.
  
• Hot Industries: VCs are mainly interested in software, biotechnology, computer hardware, and other technology companies because of the market returns they can generate. One of the largest deals of 2004 was eHarmony, an online dating website, which raised almost $110 million from Sequoia and Technology Crossover Ventures.

Read more here.

For more information, visit www.EvanCarmichael.com.