The Intermediary's Role in Putting the Plan Together

The Intermediary's Role in Putting the Plan Together

Intermediaries do not put your plan together but will help you clarify your offering. They will know how attractive your proposal looks from an investor’s point of view and be able to help you improve it

The basic business plan is put together by the entrepreneur and the intermediaries know what the venture capital hot buttons are and how to turn them on or off. They can help ensure that the most attractive elements of your plan are clearly brought up to maximize the chance of investment by the venture capitalist.

As an example, there are many entrepreneurs who have intelligence, common sense, and a great business sense but are not skilled at writing things down on paper and creating a logical business plan. Northern Crown Capital has helped such individuals in clarifying their business plan and assisted them in then going after a significant capital investment.

For more information, visit www.EvanCarmichael.com.

How Many Venture Capitalists You Should Contact

How Many Venture Capitalists You Should Contact

If you approach them on your own, your personal time constraints will dictate how many you can contact.

It is an intermediary's job to determine how many to approach. The intermediary will take you to a larger number of venture capitalists because you cannot guarantee that all of them will be interested. A further number will provide unattractive term sheets. The end goal is to get a reasonable offer on the table from a reputable venture capitalist.

If the venture capitalist has lots of funds and is looking for deals, it is easier to raise capital. In today’s market, venture capitalists are saddled with too many problems from their current portfolio companies.

It is the job of the intermediaries to know which venture capitalists are tapped out and which are looking to invest. They must have a knowledge of the market and know who to take your proposal to.

There is a danger of "over shopping" the deal if you go to too many venture capital companies.

If you are turned down by 4 to 5 highly targeted venture capitalists, something is wrong. Either your company has fundamental flaws, your terms are unreasonable, or your business does not reflect current market trends.

For more information, visit www.EvanCarmichael.com.

What Venture Capitalists are Looking For

What Venture Capitalists are Looking For

Venture capitalists are in business to make money. They have to have the ability to select companies that will make more money than their rivals.

There are 2 types of companies. The first is a lifestyle business. These types of companies are centered around the lifestyle of the entrepreneurs. The owners will use the business to drive expensive cars and purchase big houses. These are not businesses that attract venture capital.

The second type of company is a gazelle. These companies are run by entrepreneurs who want to build world-class organizations.

There are three ways for a venture capitalist to exit from your business: acquisition, public offering or management buyout. Half of the decision to invest in your company is derived from if the venture capitalist can see a clear exit.

An example of a gazelle is Hewlett-Packard. Mr. Hewlett and Mr. Packard wanted to build a world class company. They recognized that they did not have the necessary skills so they hired professional management and became mentors and the elderly statesmen for the company. They were able to exit from the company and it became a huge success.

For more information, visit www.EvanCarmichael.com.

2005 Venture Capital Trends

"VC investment in IT was $2.6 billion in the first quarter of 2005, down from the $2.7 billion invested in the fourth quarter of 2004, according to a survey released Tuesday."

"Overall VC investment was $4.6 billion in the first quarter, down from $5.4 billion in the fourth quarter of 2004. VC investment has stabilized at between $4 billion and $6 billion per quarter for the past three years, after falling from the stratospheric levels of the dot-com boom, when VC investment topped $20 billion per quarter. "

"Software companies drew $1.1 billion in VC investment in the first quarter of 2005, down from $1.3 billion in the previous quarter. Biotechnology, the next highest category, drew $632 million, down from $1.2 billion in the fourth quarter. Software also led in the number of VC deals at 198, versus 68 for biotech. "

"Semiconductors were at $375 million, down from $520 million in the fourth quarter."

"Several IT categories posted gains: telecommunications ($371 million, up from $325 million in the fourth quarter), IT services ($302 million, up from $192 million in the fourth quarter), networking and equipment ($347 million, up from $322 million in the fourth quarter), and computers and peripherals ($109 million, up from $81 million in the fourth quarter). "

Read more here.

For more information, visit www.EvanCarmichael.com.

Northern Crown Capital’s

Northern Crown Capital’s Non-Disclosure Agreement

CONFIDENTIALITY AGREEMENT

BETWEEN: Northern Crown Capital Inc.
Suite 1705
8 King Street East
Toronto, Ontario M5C 1B5

Attention:
Michael Dinnick, Partner
Tel: (416) 364-6777
Fax: (416) 777-9605


AND: ABC Company
Street Address
City, Province / State
Postal / Zip Code

Attention:
Contact Name
Tel: (xxx) xxx-xxxx


RE: ABC Company
(the “Company”)


Northern Crown Capital Inc. (“NCCI”) has requested certain information (the “Information”) concerning the Company, which the Company considers valuable and confidential. As a condition of the Company furnishing NCCI with such information, NCCI hereby acknowledges and agrees that any and all written or oral information now or hereafter furnished to them concerning the Company, is confidential and that the Company’s business and operations could be damaged if any of the Information is disclosed to third parties.

NCCI agrees that such Information:

shall be kept confidential by NCCI and will not be disclosed, divulged or provided to any person without the Company’s prior written consent; provided however, that such Information may be disclosed:

(i) to the smallest practicable number of NCCI’s directors, officers, and employees, if any, who need to know such Information;

(ii) if such disclosure is required by law;

shall not be used by NCCI, and NCCI shall not permit the use of such Information, in a manner or for a purpose detrimental to the Company;

shall not be deemed to include information which:

(a) is public knowledge or becomes generally available to the public other than as a result of disclosure by the Company;

(b) becomes available to NCCI on a non-confidential basis, from a source who is not bound by a Confidentiality Agreement with the Company, and is in NCCI’s possession prior to disclosure by the Company.

In the event that discussions relating to this evaluation cease for any reason whatsoever, NCCI shall, within three (3) days of receipt of written notice by the Company promptly deliver to the Company and shall not retain, or permit its directors, officers, or employees to retain, any and all originals, copies, or extracts from the documents containing the Information.

It is understood and agreed that, in the event of any breach or threatened breach of the terms hereof, the Company shall be entitled to equitable relief, in addition to any other remedies which may be available to it, in any court of competent jurisdiction.

NCCI hereby acknowledges and agrees that the Company makes no representation or warranty, express or implied, as to the accuracy or completeness of the Information, and that the Company shall have no liability as a result of NCCI’s use of, or reliance upon the Information.

Acceptance of this Agreement by NCCI and the Company, and the terms set forth above shall be evidenced by the countersigning of this letter, and returning a copy of same to the parties.

Dated at City, Province / State this day of , 2005.


Northern Crown Capital Inc. ABC Company

_________________________ _________________________
Partner Contact Name

For more information, visit www.EvanCarmichael.com.

How to Handle Confidentiality

How to Handle Confidentiality

An intermediary should always sign a confidentiality or non-disclosure agreement (NDA). It is a 1 to 5 page document that acknowledges you have sensitive information that if released could harm your business and it should not be shared.

Venture capitalists, however, will not normally sign a confidentiality agreement. They see so many companies in the same industry that they cannot sign one agreement and risk not being able to invest in other potential good deals.

For more information, visit www.EvanCarmichael.com.

Where Are The Angel Investors?

"To the cash-challenged entrepreneur, angels can be truly divine messengers - slightly more earthly than the winged representatives from of the Big Guy upstairs, but every bit as welcome in times of trouble."

"Typically, angel investors are high-net worth individuals interested in putting up cash for promising early-stage companies in exchange for equity. While venture capitalists have garnered many of the headlines over the last decade or so, angels have soared quietly behind the private equity scene. But their pockets run just as deep, and their message - just as sweet."

"The only problem is: Many entrepreneurs just can't find them."

"While there have always been wealthy patrons willing to bankroll a great business idea, most of them expect a substantially higher return than they would get from more traditional investments, Sandles explains. "Many are successful self-made entrepreneurs with lots of money to invest. They want to help other entrepreneurs get their business off the ground" - and reap rewards commensurate with the risks."

"Angels technically bridge the self-funded stage of a business when cash from friends, family and the founder's savings or credit has been exhausted. Angel money gets the business to the stage where it could attract the next level of funding from a venture capitalist - somewhere in the $100,000 to $1.5 million range (funding amounts by VCs varies from $2.5 to $15 million). Angels like to make investments that look promising to them no matter the industrial segment."

"Angel networks invest primarily in start-up or early expansion companies, explains Sandles. "They like to invest in companies that interest them with at least one product in prototype," she explains. "Usually there is a customer or two and the product is in testing mode. Angels like to see customer acceptance.""

"They are usually more forgiving when it comes to investment requirements, too. "They don't want a fancy experienced executive," Sandles says. "They want a scrappy, can-do entrepreneur who has deep industry or product experience, not necessarily years of business experience.""

"While angels don't want to fund red ink, Sandles explains, they often are willing to abide a more modest present-day revenue trajectory, typically under the $1 million sales mark. And while VCs like to invest in their own backyards, they prefer high-growth tech or science-based investments. As a group angels are not partial to particular investment segments and invest across all industries, but they too like prefer to keep their money close to home investing in their state or close by. In exchange for their money, angels take a vested interest in the business with some becoming actively involved assisting in other aspects beyond the initial financial commitment, such as by supplying office infrastructure or management and marketing expertise."

Read more here.

For more information, visit www.EvanCarmichael.com.

Why the Venture Capitalist is Interested in You

Why the Venture Capitalist is Interested in You

Venture capitalists want to make money. They will either see you as an entry point into a new industry that that has potential or one where they are already invested in but you provide an exceptional case.

The venture capitalist makes their decision on two variables: greed and the probability of failure or success. If your company presents a great deal but is accompanied by extraordinarily high risks, the venture capitalist will not invest.

For more information, visit www.EvanCarmichael.com.

What the Proposal / Executive Summary Looks Like

What the Proposal / Executive Summary Looks Like

Make it so that your mother or grandmother can understand it. Entrepreneurs too often fill their business plans with of acronyms, tech terms, and buzz words. Intermediaries can usually tell after the first paragraph how difficult it will be to raise capital for your business.

Condense what you do and what you want into a statement that you can make very promptly in seconds or minutes. If you cannot communicate quickly, you will lose the investor’s interest.

You need to have a logical persuasion chain. You must persuade the venture capitalist to invest in your company just as you would persuade a customer to buy your product or service.

If you cannot explain your business on the back of an envelope, you will not get financed. You need to grab the investor’s attention in the first 3 to 5 minutes. If you cannot get their basic interest, you will not get their money.

Venture capitalists see 2 to 3 deals per day and will say no most of the time. You need to distinguish yourself through clarity.

Prepare an elevator pitch. Imagine getting on an elevator at the 20th floor of a building with the venture capitalists and getting a commitment by the time you reach the lobby.

Harold Ross' first prospective for the New Yorker was no more than couple hundred words. It was so clearly laid out that you could read it today, 80 years later and still recognize that it describes the New Yorker.

The venture capitalists will also look to the people behind the company. They are looking to see what the reputations of your chairman and board of directors are. This will help create credibility and trust.

For more information, visit www.EvanCarmichael.com.

Fewer VCs To Go Around

"The number of U.S. venture capital firms fell 21 percent in 2004, according to a study by Ernst & Young."

"The number of venture-backed startups worldwide fell as well. Portfolios shrunk 14.6 percent between 2003 and 2004 as venture consolidated companies and gave up on losing bets, the study said."

"Although the total number of startups declined, the number of new investments increased 4 percent. This suggests VCs are starting to accelerate spending to replenish portfolios as they exit from older companies. “The post-bubble clean-up is still under way,” said Ernst & Young’s Gil Forer."

"Despite the falling number of portfolio companies, VC spending has rebounded. Last year, venture-backed companies pulled in investments worth $20.4 billion, according to VentureOne. That’s up from $18.9 billion in 2003."

"A total of 257 venture-backed startups went out of business last year, about 5 percent of all the companies in VC portfolios. That was down from 2003, when 10 percent of venture-backed companies folded."

Read more here.

For more information, visit www.EvanCarmichael.com.

How to Introduce Yourself to a Venture Capitalist

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.

How Long it Takes to Get the Money

How Long it Takes to Get the Money

It will usually take between 3 and 4 months. It is very rare to obtain the money in under this 3 to 4 month period.

Raising money is not like hiring people or purchasing new machinery. It is about building confidence between yourself, your company, and the investor. There is a certain of amount of due diligence that will be needed to build this confidence.

Your ability to project your company in both a strategic and factual way will be critical to your success.

The timing also depends on the sophistication of the entrepreneur. It the financing presentation is well laid it, it will make it much easier for the intermediary to get you in front of a venture capitalist.

Make contact with intermediaries and venture capitalists before you need the money. This way they can track your progress, they know you before you need it and it will make it easier for you to obtain the necessary capital. Nobody likes to be rushed, especially venture capitalists.

For more information, visit www.EvanCarmichael.com.

Angel Investment Background

"First used to describe investors in Broadway shows, the term "angel" now is widely used for backers of businesses. Angels today fill the role venture capitalists filled 20 years ago. Now, venture capitalists generally will only fund companies that can grow huge, investing a minimum of a few million dollars, which leaves a big gap in funding for early-stage companies needing $200,000. Angels fill that gap."

"In 2004, angels actually invested more money in new companies than venture capitalists — a whopping $22.5 billion in angel funds compared to $18 billion in venture capital. According to the Center for Venture Research at the University of New Hampshire, 48,000 companies received funding from 225,000 active angel investors."

"The primary distinction between angels and venture capitalists is that angels invest their own money."

"They don't have to justify their investments to others, so they'll invest in a broader variety of businesses. They can have more patience in getting a return on their money, and they can invest in ideas that are just plain interesting, exciting or fun. Most are successful entrepreneurs themselves, so they understand and appreciate what you're going through."

"Here's a breakdown of the type of companies angels supported in 2004: 22 percent software, 16 percent healthcare/medical, 10 percent biotech, 8 percent information technology services, 8 percent financial services, 7 percent retail and 6 percent telecommunications."

Read more here.

For more information, visit www.EvanCarmichael.com.

Venture Capital On The Rise

"Venture capital investment has picked up amid rising corporate profits and an uptick in mergers and acquisitions -- developments that help VCs exit their positions with healthy returns in their pockets. "

"These days, VCs are insisting that young companies show they have a dependable client base and a steady revenue stream before funders hand over their money, experts said. "

""There's a larger and larger supply of capital to be invested that's been sitting on the sidelines for many years," said Mark Cannice, associate professor of entrepreneurship at the University of San Francisco and director of the school's entrepreneurship program. "At the same time, there isn't jubilation like there may have been five years ago, but instead a very sober confidence." "

"Meanwhile, the maturation of the information-technology sector has changed the playing field forever. "

""I think this is a broader story that many Silicon Valley companies have to learn," said Alexander Slusky, co-founder and managing partner of Vector Capital, a San Francisco private-equity firm. "We still see mature companies making projections wholly unsupported by the market realities." "

"Popular magnets for funding now include companies that offer adaptable Web-hosted business services and technologies for smart phones and other portable devices. "

""We're looking for companies that are, first and foremost, customer-rich, " Slusky said. On Wednesday, Vector announced a new $350 million fund for technology buyouts, spin-offs and recapitalizations. "

Read more here.

For more information, visit www.EvanCarmichael.com.

Valuating a Business: Examples

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.

Angel Investment

"When you hear the words "angel investing," it's pretty hard not to think of the bubble, when a lot of people scrambled to fund wild-eyed schemes only to lose money on the bad investments. The angels are back, but this time they may know what they're doing. "

"For entrepreneurs this is a very good thing. Angels come into a startup's funding life when the entrepreneur has exhausted the financial largesse of family and friends but the company is still too small or perhaps too unproven to capture a venture capitalist's attention. Angel investors, typically wealthy individuals who often have operating experience of their own, can bridge the funding gap during the seed and early stages with anywhere from $100,000 to $1 million. "

"Good angels can give a very early-stage company the financial boost it needs to get from an idea to a prototype, and then to a funding round of sufficient size that it will interest a traditional venture capital firm. But the ding against angels in the bubble years was that they were a bunch of opportunists who knew very little about the companies they invested in but always had something to say about how things should be run. Venture capitalists didn't like to get involved in an angel-funded company because the angels tended to slow down decision-making at critical points in a young company's growth trajectory. Angels need to get the membership together, vote on candidate companies, conduct due diligence, and pony up the cash. Because there are so many people involved, it can take some time. And even after the entrepreneur gets the money, there are still a lot of people who may want a say in decisions. "

"Angels have another problem: More venture capital firms are investing in the early stage these days, and they often put more than a few hundred thousand dollars into a deal. That rules out many of the deals angels live for. "

Read more here.

For more information, visit www.EvanCarmichael.com.

How Northern Crown Capital Valuates a Business

How Northern Crown Capital Valuates a Business

2008 Financial Projections

Earnings Before Tax
$5,865,000

Tax Rate
42%

Taxes
$2,463,300

Net Earnings
$3,401,700

Amount Seeking to Raise Today
$3,500,000

Discounted Value of Future Opportunity, 5 Years Out

2008 P/E Ratio
15

Value of Company in 2008
$51,025,500

Discount Rate Applied
30%

Year 2008
$51,025,500

Year 2007
$35,717,850

Year 2006
$25,002,495

Year 2005
$17,501,747

Year 2004
$12,251,223

Value of Company at Investment in 2003
$12,251,223

Less: Investment Amount
$3,500,000

Present Value
$8,751,223

Discount for Risk & Private Company
40%

Less: Discount for Risk & Private Company
$3,500,489

Private Company Value
$5,250,734

Present Value (What the Owner Keeps)
$5,250,734
60.00%

Financing (What the Investor Gets)
$3,500,000
40.00%

Total
$8,750,734
100.00%

For more information, visit www.EvanCarmichael.com.

Getting An Angel Investor

"Angels today fill the role venture capitalists filled 20 years ago. Now, venture capitalists generally will only fund companies that can grow huge, investing a minimum of a few million dollars. "

"That leaves a big gap in funding for early-stage companies, the type needing $200,000 not $20 million. Angels fill that gap. Until recently, there was no structure assisting these private investors. Entrepreneurs had difficulty finding angels. Angels had difficulty finding good companies. "

"In 2004, angels actually invested more money in new companies than venture capitalists — a whopping $22.5 billion in angel funds compared to $18 billion in venture capital. According to the Center for Venture Research at the University of New Hampshire, 48,000 companies received funding from 225,000 active angel investors. "

"The primary distinction between angels and venture capitalists is that angels invest their own money. They don't have to justify their investments to others, so they'll invest in a broader variety of businesses. They can have more patience in getting a return on their money, and they can invest in ideas that are just plain interesting, exciting or fun. Most are successful entrepreneurs themselves, so they understand and appreciate what you're going through. "

"Here's a breakdown of the type of companies angels supported in 2004:
• 22% software.
• 16% healthcare/medical.
• 10% biotech.
• 8% information technology services.
• 8% financial services.
• 7% retail.
• 6% telecommunications. "

Read more here.

For more information, visit www.EvanCarmichael.com.

How to Valuate Your Business

How to Valuate Your Business

The venture capitalists will usually look at your projected, or pro forma, earnings 3 to 5 years from the point of their investment. From there they will deduct a 30% annual return that they expect to receive and will subtract a further percentage for the fact that you are a private and therefore non liquid company. This is known as the pre-money valuation.

Right now, investment money is scarce and the venture capitalists are dramatically lowering business valuations.

For more information, visit www.EvanCarmichael.com.

Best Venture Capital Locations

"Top US venture capital locations: Silicon Valley, New England, New York City by ZDNet's IT Facts

Of the ten regions garnering the largest amounts of venture capital in 2004, more than half experienced an increase in investing over 2003.

Silicon Valley captured $7.1 bln, up 13% over the prior year. And, New England secured $3.1 bln, climbing 6.6% from 2003.

Some other regions chalking up sizeable increases in 2004 were the Southeast, San Diego, and the Northwest.

Taken together, the top three regions in 2004 - Silicon Valley, New England, and NY Metro - accounted for 56% of the dollars invested and 49% of the deals reported in 2004, according to PriceWaterhouseCoopers."

Read more here.

For more information, visit www.EvanCarmichael.com.

How Much Money To Ask For

How Much Money To Ask For

There is no such thing as an overcapitalized small company.


How to Select the Right Venture Capitalists for Your Firm

Some venture capitalists have highly targeted funds. These fund managers would have a full knowledge of your industry and be able to help spot the opportunity for your business.
Be comfortable with the venture capitalists. Seeking their money is only the beginning of a relationship with them. They will become board members and have a major say in the development of the company’s strategy and policies. It is important that you have good chemistry together, respect each other, and can get along.
An intermediary such as Northern Crown Capital can help you determine the right venture capital company for you.

For more information, visit www.EvanCarmichael.com.

The Types of Businesses Venture Capitalists Prefer

The Types of Businesses Venture Capitalists Prefer

Venture capitalists will not invest in anything illegal or immoral. Anything that involves laundered, dirty, or offshore money will not attract venture capital investment.
Otherwise, a venture capitalist will look at any business providing that it meets their criteria of providing a return on investment, having good management, supplying a sound business plan, and demonstrating a developed product or service with revenues.
Some venture capitalists as a matter of policy will restrict themselves to investing in a specific industry. It is the role of the intermediary to know which firms would be willing to invest in your company.

For more information, visit www.EvanCarmichael.com.

What to Consider Before Raising Venture Capital

What to Consider Before Raising Venture Capital

Venture capitalists want to see more than an idea. They want to see that you have a client list, a finished product that is beyond the beta stage, a clearly defined need in the market place, and sales. They want to see that you have significant traction in place.
Although during some periods, venture capitalists were willing to take a long-term perspective; this is a very rare phenomenon. Most venture capitalists want to see a return in a very short period of time.
An essential characteristic of a successful entrepreneur is the ability to raise capital.
Develop a relationship with your banker before you need the money. The final decision of whether to give you a loan or not rests with the loan officer. If she knows you and understands your business, your chances of receiving the money increase dramatically.

For more information, visit www.EvanCarmichael.com.

Venture Capitalists Fund Riskier Investments

"For the most part, companies that are small, undercapitalized and have little history have a difficult time getting loans from traditional banks or by going public. They're considered too risky.

As a result, that creates a market for alternative financing from angel investors and venture capitalists.

Angel financiers tend to be interested in projects under $1 million. In exchange for the loan, the investor gets equity and a bit of management control, perhaps participating in the daily duties.

Those companies seeking funding that are further along tend to go to venture capitalists. Those investors prefer businesses that have had some measure of success, either through contracts or sales. Those investors tend to loan more than $1 million."

"According to Mr. McCleary, the first criteria he looks at is the size of the market and whether it would be large enough to make a substantial return. The next guideline is the background of the entrepreneur."

""Who is the CEO?" he said. "Has the CEO been involved with growing companies in the particular field that this business is pursuing and has a track record?""

"And then that leads to the team the executive has brought on board, with successful companies having a "maniac and braniac.""

""Some of it is art," he said. "It's picking the right venture firm at the right time.""

Read more here.

For more information, visit www.EvanCarmichael.com.

Stages of Financing

Stages of Financing

The first stage of financing is to raise money from personal savings, credit cards, friends, and family. It is sometimes known as "golf-course preferred" when you ask people to invest in your company after meeting socially or playing a round of golf together.

You need to build significant critical mass before you can attract an outside angel or venture capital investor and eventually to secure an initial public offering (IPO). The developing of the necessary critical mass can take years of hard work.

There are some companies called incubators that will take an early stage business and guide them through the entire process of building an enterprise but will take a large percentage of your company in return.

For more information, visit www.EvanCarmichael.com.

How to Get in Contact with Northern Crown Capital
There are 2 ways that Matthew, Robert, and Michael can help your business raise capital:

1) Become your intermediary
· If you are based in Ontario and are looking for an intermediary to help introduce you to venture capitalists, present your case, and negotiate and close the deal on your behalf, visit http://www.EvanCarmichael.com/ for how to get in contact with Northern Crown Capital.

2) Review your business plan
· If you are looking to raise capital for your company and would like to know what investors would think about your business plan, you can get it professionally critiqued by Northern Crown Capital. Visit http://www.EvanCarmichael.com/ for more information.

For more information, visit www.EvanCarmichael.com.

Most Important Lessons from Northern Crown Capital To You

Most Important Lessons from Northern Crown Capital To You

· Michael
o Use an intermediary. The benefits of using one have been discussed throughout this program. Hopefully you will use Northern Crown Capital, but if not there are many good ones out there.
o Remember that in most cases, the deal you end up with is not the deal you thought you would get when you started. You have to be flexible and able to turn on a dime in order to make the deal progress.

· Matthew
o Deal with people of quality. Associate yourself with experienced people who have gone through several cycles and have a proven track record in a wide variety of industries.
o Do not be greedy. In the market the bears can make money, the bulls can make money but pigs go to slaughter. If you are too greedy, you cannot make a deal. Markets will change. Windows open and windows close. To some extent investing is a fashion business. Certain types of deals are in fashion and then they are out. When money is being made available you are better off to take it when it is being offered.
o Always be very open and candid in your discussions. Do not hide. Do not play games. Be totally open. And whatever you do, do not bluff. An investor will find out quickly when you are bluffing and you will lose the deal.

· Bob
o Financing is just one f the tools you need to build a good company. It is like the blood in your body. Financing is not the heart and soul – your business is.
o Good entrepreneurs build great companies because they are good at motivating their employees, excellent at working with suppliers, have an obvious ability to satisfy customers and they also treat the venture capitalist as a supplier, albeit a supplier of money and not a physical product. If you think of investors with a “me against them” attitude or with any degree of hostility you should not enter into the deal. You will need their support when times get tough. A good working relationship with investors will help ensure your long term success.

For more information, visit www.EvanCarmichael.com.

Venture Capital Governance Requirements

Venture Capital Governance Requirements

Once a venture capitalist becomes an investor they will want board representation. They will either nominate their own staff members or an outside representative of mutual consent. The last thing a venture capitalist wants to do, however, is run your company. They have enough problems trying to run their own firm and do not want to get involved in the operations of your business.

Board members want to stay informed, monitor your progress and feel comfortable with the progress that is being made.
A board of directors is like your own private management consultancy group. Some entrepreneurs are very good at getting the most out of their directors and some are not. Understand that directors are the cheapest consultants working for corporations.

Board members are elected to represent shareholders. Since the venture capitalists will become significant shareholders, they will usually request at least one seat on your board.

The board of directors is responsible for broad policies and strategies for your company. Directors will want to know what your budgets will be, who you are hiring and help you develop your ongoing business plan.

Remember that the board of directors is in a position legally to approve or disapprove your actions.

The frequency of meetings is usually a direct result of how effective you are at using your board and how well your group works together. The board can provide strategy and policy recommendations but can also help in specific ways such as introducing you to key players in the industry.

Some of the items that directors care about are law suits, environmental problems, and when you are about to sign a major new contract. Directors are highly allergic to unexpected bad news and unexpected good news. Make sure to keep your board and bankers informed at all times.

Generally, governance is a great help to you more than it is a hindrance. It will keep you focused on your business and help you grow. This is of particular importance if you have aims of one day going public.

For more information, visit www.EvanCarmichael.com.

How Venture Capitalists Structure Their Investments (Continued)

How Venture Capitalists Structure Their Investments (Continued)

A 30% annual return may sound high to you. The reason why venture capitalists require such a high return is that anyone can purchase shares in the public markets in major companies and get a 15 to 18% return on their equity. Venture capitalists do not have this flexibility because, as a private company, your shares are not very liquid. Investors are locked in for a period of years and face the risk of your company failing. They therefore need a higher rate of return to compensate for this risk.

Of every 10 investments, no one can predict at the outset which will be successful and which ones will not. On average 1 to 2 will be very successful, 1 to 2 will go bankrupt and the rest will be what are known as the "walking wounded." They will continue to operate but investors will never recover their investments in these companies. Venture capitalists therefore need to average out the good investments against the bad to ensure their 30% annual return.
An example is a department store that is unsure which items will sell the best over the next season. For that reason store managers will put a high markup at the beginning and at some point have to mark some of the products down. They just do not know which products they will have to mark down at the beginning of the season.

For more information, visit www.EvanCarmichael.com.

Venture Capital Internet TV Channel

"So at the end of April, Gardy's firm will launch VentureCapitalTV.com, an Internet site with streaming video broadcasts of entrepreneurs giving their quick-hit "elevator" pitches alongside related material. "

"Internet TV is still a fledgling concept and has yet to prove that content pumped onto a computer screen can garner enough of an audience to support itself through ad revenue or subscriptions. The medium is considered far behind digital music, for example, in tapping the Internet's distribution potential. Technology is one restraining factor: The audience is limited to people with fast broadband access. "

"The VentureCapital channel will turn the usual, advertising-based business model on its head -- charging entrepreneurs as much as $3,500 to "air" their pitch. They can also attach a PowerPoint presentation to the video, so investors see everything they normally would during a face-to-face meeting. If venture capitalists aren't interested -- and most say they know within the first couple of minutes -- they can simply click on to the next pitch without feigning niceties to the entrepreneur. "

""VCs spend a tremendous amount of time and money running around looking for decent deals," Gardy says. "If you just get a business plan, you can't hear the guy speak or read. . . . It's the pitch that's going to matter to VCs." "

"The site's other content will feature lots of familiar faces. TVWorldwide and Gardy's previous company, which also did Internet broadcasts, have been taping local technology events for years, and all of those videos will be streamed onto the venture channel. Viewers will see old clips of Netpreneur panels discussing marketing strategies and board development. Technology lawyer Andrew Sherman's lecture on business growth is on the site, as is a venture training session with the investors from Updata Capital. "

Read more here.

For more information, visit www.EvanCarmichael.com.