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.

FundingUniverse.com Registers Entrepreneurs in Every State - FundingUniverse

"FundingUniverse.com is helping entrepreneurs in 50 states raise seed capital for their businesses. The site has attracted at least one entrepreneur in every state across the nation.

“No single state has the monopoly on entrepreneurship,” said co-founder Paul Allen. “There are entrepreneurs with great ideas all over the nation, and we’re glad to play a part in helping those ideas come to life.”

The site is growing exponentially, registering nearly 800 entrepreneurs in the month of September. There is nearly $300 million in available angel capital for entrepreneurs across the nation. The site’s largest concentration of entrepreneurs lies in the South and the West. Utah, California, Texas, Georgia, and Florida all registered 100 entrepreneurs in just two months.

“We’re pleased to be a resource to entrepreneurs in so many places,” said Marketing VP Jeff Jordan. “We also look forward to helping more angel groups find ideas that are ready to blossom into tomorrow’s next big thing.”

Entrepreneurs can visit one of the 50 FundingUniverse.com sites and upload their business plans for investors to review. Angel investors log in and view posted business plans with FundingUniverse.com’s innovative DealFlow Suite software. DealFlow Suite allows entrepreneurs to submit business plans to specific angel groups privately, where registered angel groups can rate and choose plans to fund."

For more information, visit www.EvanCarmichael.com.

How Venture Capitalists Structure Their Investments

- It is first important to understand how venture capitalists achieve their targeted rates of return of 30% per year. Not every company will make this return on equity but there are ways around it.

- Much depends on the exit value of your company. A 30% rate of return reflects a price-earnings ration of 3. If the investor can exit at a higher price-earnings ratio they will earn more than their 30% desired return.

- Another way to reach this target is by offering options. An option is the right to purchase shares of your company in the future at a pre-determined price today. If you grow at 20% annually and your earnings were 100 in the first year, your earnings would be 120 in the second year and 145 in the third. By using options the investor can then immediately purchase additional shares at 100 and sell them for 145 which can be added to their 20% annual return to reach the desired 30%.

- A 30% return is an average figure and relates to the degree of perceived risk. If you have an early stage company you will need to provide a high rate of return. If you have a more mature business that has traction and you need financing for expansion or working capital, 30% may not be the required target due to the lower risk level.

- Younger companies may also be forced to give up a disproportionately high percentage of shares to compensate for the high degree of risk. However, venture capitalists will frequently sell a certain amount back to you based on you meeting clearly defined performance objectives.

- Another investment structure is subordinated debt. This usually caries a high yield and is usually not accompanied by equity. Subordinated debt is ideal for companies with solid cash flow and who need addition capital to grow thereby raising the value of their shares before raising any equity capital.

For more information, visit www.EvanCarmichael.com.

Can tech people be business leaders? Upcoming seminar may have the answer | WTN

"When Cay Villars worked in marketing for the biotechnology sector, she began to notice a certain pattern: Scientists with a good idea for a new product could find the business world to be a much different place than academia, with a different set of skills required to succeed.

"Along the way, I realized that it was that people dynamic inside a company that could make or break a product just as effectively as a competitor," Villars said. "I got into coaching and understanding the dynamics of human performance. What makes people top performers, and how do they leverage the best of what they have?"
Villars, now the principal consultant at Celebrus Consultants Group, will be leading seminars in that very question at the Leadership In Technology Companies. The seminars, set for Oct. 11 and 13, are being sponsored by the UW Small Business Development Center and will be hosted at the Biotechnology Center Institute on the Promega Corporate Campus in the Madison suburb of Fitchburg.

"We know through our own experience and talking with people, leaders and managers that have a scientific and technical background, they tend to look at things a little differently from a lot of non-technical people," explained Barry Roberts, education program manager for the SBDC. "There are certain challenges with that scientific, technical background when they get into leading people.""

Read more here.

For more information, visit www.EvanCarmichael.com.

BitTorrent gets $8.75M from venture-capital firm

"BitTorrent, developer of one of the most popular software programs for acquiring free video and other large files on the Internet, has raised $8.75 million from a venture-capital firm.

BitTorrent says it will use the funds from DCM-Doll Capital Management to improve its infrastructure and make it more appealing to Hollywood.

The investment comes as file-sharing companies — most of them tiny start-ups — are scrambling to legitimize. In June, the Supreme Court ruled that file-sharing service Grokster and StreamCast Networks, which operates the Morpheus service, could be held liable for their users' actions.

"The piracy business is not something anyone can make money on," says Ashwin Navin, who co-founded BitTorrent with Bram Cohen. "We want to distribute paid and ad-supported content, using this technology."

BitTorrent is the second-most-popular file-sharing program, with 33% market share, according to research firm CacheLogic, after eDonkey's 50% share. BitTorrent specializes in helping users nab huge files quickly.

Navin concedes that some users download movies without paying for them but says BitTorrent isn't the only technology that can be used illegitimately. "You can also use a browser to view child porn and Microsoft Word to cut and paste and plagiarize," he says.

He says the company is meeting with movie studios and other copyright holders to negotiate use of BitTorrent to distribute content."

Read more here.

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What the Venture Capitalist Due Diligence Process Looks Like

- The venture capitalist due diligence process is intense and can take weeks or months depending on the complexity of your company. It will be the most intensive look at your company that you have ever experienced.

- The venture capitalists will want to know everything from your standard articles of incorporation, directors, and shareholder agreements up to the details of how your business processes are run.

- The purpose of the initial meeting and draft term sheet is to get an approval in principle. From there the venture capitalist will carefully examine the details of your company before making an official offer.

- An intermediary can be helpful in speeding up the process, especially when dealing with the lawyers on both sides. The intermediary is responsible for "cracking the whip" and ensuring the process is progressing. The faster you can make lawyers work, the lower your bill will be. Generally, if you give lawyers enough time, they will make sure to use it and bill you accordingly.

For more information, visit www.EvanCarmichael.com.

How Intermediaries Can Help

- Preparing for the meeting is a key role of intermediaries. They will go through a number of rehearsals with you and sit down for several sessions that could last for a couple of hours each to go over the likely questions you will be asked. They will also make sure you have the right answers committed to memory and can back up your assumptions properly.

- A successful meeting with venture capitalists will result in good chemistry having been developed early on and at the end of the meeting. The venture capitalists will have openly expressed an interest in moving on and there will be a general level of enthusiasm at the end as supposed to the objective analysis of the business plan which occurs at the beginning of the meeting.

- The intermediary knows the venture capitalists and their different accounts. Intermediaries know the sensitive points and help tailor each presentation to the particular venture capitalist. Every venture capitalist will have a different approach and the intermediaries will help you prepare for their potentially hostile questions.

- Preparing for the meeting is much like preparing for a case in court. You only have one chance at it and you better do it right!

For more information, visit www.EvanCarmichael.com.

Scotsman.com Business - Economy - Tech firms 'too quick to float'

"TOO many technology companies are rushing to the stock market too early, threatening their founders' interests and those of their shareholders, one of Scotland's top business angel investors has warned.

Twelve Scottish companies have floated in the past year - more than in any other 12-month period on record. But Geoffrey

Thomson, the chief executive of Braveheart Ventures, said in many cases those companies should have waited until they were bigger.
Recent stock market debutantes include Stem Cell Sciences, which is worth £21m, MicroEmissive Displays, with a market value of £15m, and Glen Group, headed by Atlantic Telecom founder Graham Duncan, worth £1.7m.

Thomson, who represents 100 wealthy investors, said: "Market values of about £20m are unlikely to give pre-IPO [initial public offering] round investors the necessary levels of return to compensate for risk when they are typically raising £5m to £15m of new money."

Founders could lose out if they brought companies to market too early, Thomson said. "Unless the business is robust, they could trip up. Once they've got the money they've got it, but if the share price falls and they don't get the news flow, it can be desperate."
The boom in small company flotations has been powered by the growth of the Stock Exchange's Alternative Investment Market, which is now home to 1,300 firms."

Read more here.

For more information, visit www.EvanCarmichael.com.

Venture Capital: Open source startups are hot -- too hot?

"At the WSA Investment Forum earlier this week, Frank Catalano joked that he had discovered at least one way to make money in the burgeoning open source movement.

The technology guru, who was moderating a panel discussion on the topic, then held up a brochure from a law firm that was marketing seminars on open source software.

"When the attorneys are getting involved, you know you are having success," added panelist Stuart Cohen, CEO of the Open Source Development Labs.

But lawyers aren't the only ones looking to cash in on what many believe will be a tectonic shift in the technology industry -- possibly shaking up the way software is developed, distributed and sold.

Venture capitalists are tossing money at open source startups every chance they get, prompting some to utter the dreaded "B" word: bubble.

"As an investment community, we need to not get caught up in yet another bubble," said Blueprint Ventures' Jim Huston. "When you see $15 million blowing into a series A (financing) for an open source company, it is questionable.""

Read more here.

For more information, visit www.EvanCarmichael.com.

Other Information the Venture Capitalist Will Ask For

- Venture capitalists will not go into too much detail in the first meeting.

- They essentially want to meet your team and assess them. They will then decide if they want to move forward with you or not and begin their due diligence procedure, a process which continues right up until closing day.

- Ultimately the potential investors wants to make sure that they clearly understand how your business operates and how your team can work together to fulfill the objectives of the company.

For more information, visit www.EvanCarmichael.com.

Major Questions You Should be Prepared For

- The first meeting is primarily a question and answer session to see if you have the right management team in place. However, the venture capitalist can have specific questions for you to test such things as your technology. They may bring in a technology expert to get further clarification on points made in your business plan.

- The venture capitalist can also use this meeting to test you on sensitive areas such as your company valuation and the eventual exit strategy. Investors will not want to go too far down the road with you if you cannot agree to basic terms with them. If you think your company valuation is $100 million and they determine your value to be $20 million, you have a sizable gap that may be too large to close and come to mutually acceptable terms on.

- Another potential problem is that if you are wedded to your company and do not ever want to sell, it decreases the likelihood of an investor exit which lowers your chance of receiving the necessary capital you need to grow.

- One example from Northern Crown Capital's experience was when they found a perfect venture capital match for their client but the company's management started disagreeing in front of the venture capitalists during the meeting. The marketing people were arguing with the research people and the venture capitalist needless to say did not invest.

For more information, visit www.EvanCarmichael.com.

Time ripe for venture capital | CNET News.com

"HUNTINGTON BEACH, Calif.--With the war in Iraq, reconstruction after Hurricane Katrina and skyrocketing gas prices all signaling a weak economy, one might assume that today presents a poor landscape for venture capital.

But that's not the case, Mark Heesen, president of the National Venture Capital Association, told fellow VCs at the Demofall 2005 technology conference here.

In fact, Heesen said Wednesday morning, the time is ripe for a new cycle of investment, even if the size of funds has dropped significantly since the bubble burst on the Internet boom.

"There is an awful lot of money trying to get into this industry," he said. But where VCs are talking about how their "last funds might have been $400 million," today's funds might be only $250 million, he said.

Heesen predicted that the venture capital industry is about to go through what he called a "bifurcation." Effectively, he said, where there used to be a plethora of small, medium and large funds, the next generation of funds will likely be either very large--or smaller, $100 million funds focusing on specific technologies or geographic regions.

"Midsize funds are the ones that are getting stuck" without a lot of opportunity, he said."

Read more here.

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What do most start-ups use when they present to VCs

Reader Question:
What do most start-ups use when they present to VCs when they need to show more than a Powerpoint presentation - and would it help a start-up's chances if they had a working prototype or simulation?

Evan's Answer:
There are typically two opportunities that startups will have to present in person to venture capitalists. The first is through venture fairs. Each fair has its own format but essentially the entrepreneur will have an allocated amount of time to present the "elevator pitch" and give enough information to convince the investors to set up a meeting with you. A PowerPoint presentation here is typically very useful as it allows you to reinforce the points you're talking to and give the VCs something to take away if you print off copies. Due to time restrictions, it is usually not worth going into a prototype demonstration or simulation as the VC wants to see the big picture of how you are going to succeed before getting into the details of how your product or service works. They want a high level overview of your entire business (management team, use of funds, marketing plan, etc) of which your product is only one element. You want to give them a taste of each component and follow up in more detail at the face to face meeting. That being said, there are always exceptions. If you have a product that speaks for itself and a demonstration that will blow people away, use it!

At the face to face meeting with the VC, they have already read your business plan and related materials. They now want to get to know you a little bit better and ask clarifying questions. Here you do not want to get into a long PowerPoint presentation as they already know the basic plan for your business. You should give a very quick 2 minute summary and update them on any new developments that have occurred since they read the plan (new client, R&D breakthrough made, media coverage, Board of Director appointed, etc.)

At this meeting you are bound to get questions about your product or service and how it works. You should definitely come prepared with a prototype or simulation in addition to support materials such as patents and customer testimonials. Make sure it is clear, impactful and to the point - VCs don't have a lot of time to waste and are looking for reasons to say no. If they can't get their head around what you're selling then they won't spend the time trying - they will invest in another company.

Do you have a question? Email me by filling out the form on the right hand side of this page near the bottom.

For more information, visit www.EvanCarmichael.com.

Formative Ventures Raises $77.5 Million Venture Capital Fund: Financial News - Yahoo! Finance

"Formative Ventures' Debut Institutional Fund Attracts Strong Roster of Investors with Harvard as Anchor Limited Partner

MENLO PARK, Calif., Sept. 19 /PRNewswire/ -- Formative Ventures, an early-stage venture capital firm launched by partners with firsthand operating experience in growing start-ups into successful companies, has closed its first institutional fund at $77.5 million. Harvard Management Company, which manages the University's endowment, serves as the anchor limited partner for the Formative Ventures Emerging Technology Fund.

In addition to Harvard, Formative Ventures received investment commitments from groups such as the University of Virginia Investment Management Company (UVIMCO), the University of Pittsburgh, and GKM Newport Generation Funds. In all, 13 institutional investors contributed to the Formative Ventures Emerging Technology Fund, with almost 90 percent of the commitments coming from foundations and endowments. The balance came from contributions from fund-of-funds, private investment groups and individuals.

"We pride ourselves in finding new venture groups that we feel can become 'blue chip access-only' funds, and are particularly excited about working with Formative Ventures," said Erica Bushner, Managing Director of GKM Newport Generation Funds, a fund-of-funds investor in Los Angeles. "We believe that Formative Ventures has the drive, determination, and know-how to become a next-generation leader in early-stage venture capital.""

Read more here.

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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.

Venture Capital: Business blogging on rise in Seattle

"Mobile Research founder David Adams started blogging eight months ago as a way to chronicle life inside his newly formed startup technology company. Now, the 36-year-old entrepreneur admits to occasionally suffering from "blog withdrawal" when he doesn't get time to post his comments at www.MobileStartup.com

Adams is one of a handful of entrepreneurs in the Seattle area who have turned to blogging -- online personal journals -- to help tell their stories, market their products and let off a little steam from the daily grind of starting a new company. Many of the blogs attract only a few hundred visitors per week, but the entrepreneurs say it is still a great way to get the message out and put the business in perspective.

"A blog is an ideal way of doing a brain dump on a daily basis of what is going on right now, the weird, the exciting and the awful things" said Adams, whose seven-person company conducts research on mobile phones. "I also wanted to have a record for myself, just for posterity.""

Read more here.

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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.

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.

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.

How Northern Crown Capital Valuates a Business

2009 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 2009 $51,025,500
Year 2008 $35,717,850
Year 2007 $25,002,495
Year 2006 $17,501,747
Year 2005 $12,251,223

Value of Company at Investment in 2005 $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.

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.

Why Banks Say No

Finally, according to a CFIB survey of entrepreneurs who have applied for bank loans, here are the most common reasons the banks give them for why their application was rejected:
� 26.6%: Too much outstanding debt
� 26.6%: Lack of owner equity
� 24.8%: Insufficient cash flow
� 17.2%: Too new in business
� 13.7%: Poor industry conditions
� 11.6%: No reasons were given
� 7.8%: Products not considered profitable
� 4.1%: Inadequate business plan
� 4.0%: Environmental risk factors

These are the major warning signs that bankers will look out for before approving your loan. Before submitting your application you must try as hard as you can do anticipate and counter possible arguments in each of these areas.

One disturbing fact is that over 11% of entrepreneurs who get their loan applications rejected are not given a reason from the banks as to why this happened. The most important thing you can do if you get rejected is to listen to your banker. Always find out the reasons why you got turned down. Then ask what you can do over the next couple of weeks or months to improve your business so that they will accept your application.

Working with banks is not always an easy thing for entrepreneurs to do. They are, however, going to be important to the growth and success of

For more information, visit www.EvanCarmichael.com.

Who Makes The Decisions

When applying for a loan it is also important to know who is going to be making the final decision as to whether you get accepted or rejected.

According to recent CFIB data, the decision maker breakdown looks like this:
� 36% of decisions are made by the head or regional offices
� 31% of decisions are unknown who the final decision maker is
� 25% of decisions are made by the local branch office
� 8% of decisions are made by automated credit scoring models

What is interesting to note is that most of the decisions are still made by real people, not computers. And people make emotional decisions, not always rational ones. By presenting your case and letting the decision maker get to know you and your story, you can increase the chance that they will say yes.

For more information, visit www.EvanCarmichael.com.

Size Of Company

Finally, the size of your company will be a crucial factor in the bank's decision to give you a loan or not. Again, remember that banks like lending safe capital to low risk borrowers. They do not like high risk entrepreneurs. Therefore, the bigger you are, the safer you are and the more likely you are to get your loan.

The loan rejection numbers by size of your company look like this:
� 0 to 4 employees: 13.6% rejection rate
� 5 to 19 employees: 10.7% rejection rate
� 20 to 49 employees: 6.0% rejection rate
� 50 to 99 employees: 4.1% rejection rate
� Over 100 employees: 2.5% rejection rate

For more information, visit www.EvanCarmichael.com.

Business Banking Services

Let's say you run a website design company. You have two clients. One client uses your services on a regular basis. Every month she comes to you with a plan to update her site and she sees you as a trusted business partner. The other client had you set up her site but you have not heard from her for six months for any improvements or updates. She sees you as a necessary evil to getting her business going and wants to deal with you only when she absolutely has to. Now, say both clients come to you and want site changes but neither can pay up front. They want you to credit their account and they offer to pay you in a couple of months. Assuming you could only grant the credit to one person, who would it be?

The answer is obviously the first client who uses you on a regular basis and sees you as a trusted business partner.

Banks work the same way. The more you use their business services and the more you are in contact with them, the more they get to know you, the more they want to keep you as a client, and the more likely they will give accept your loan application over other businesses, with all else being equal.

Develop this relationship by setting up all of your accounts with one bank. Use them for your checking account, your savings account, your credit cards, your
Loans and lines of credit, and every other business banking service you end up using. When you sit down with your account manager for your loan application and she pulls up your account history on her computer, you want her to be thinking qWow. This client is really using a lot of our services. I want to do as much as I can to make sure I can keep her at our bank.q

For more information, visit www.EvanCarmichael.com.

Billion-Dollar Baby Dot-Coms? Uh-Oh, Not Again - New York Times

Billion-Dollar Baby Dot-Coms? Uh-Oh, Not Again - New York Times

JIM BREYER, a top Silicon Valley venture capitalist, knows that the $12.2 million his firm paid for a modest stake in Facebook, an online service immensely popular with the college set, is a lot of money.

So he's not surprised that some are pointing to that deal as proof that inflation is back in the venture world - a development that can't help but stir memories of the late 1990's.

"Certainly relative to many other deals, especially deals at this same stage, the price was significantly higher," said Mr. Breyer, of Accel Partners.

Venture capital, to be sure, is a sport played best by risk takers who understand that the cost of getting into a deal doesn't matter nearly as much as the price someone else - whether a larger company or investors through an initial public offering - is willing to pay at the exit. There were plenty of V.C.'s who once declared absurd the $4 million that Kleiner Perkins Caufield & Byers paid in 1994 for roughly a quarter of Netscape. That, of course, proved to be one of the more lucrative venture investments of the Internet era.

And there was no shortage of naysayers in 1999, when Kleiner Perkins and a second firm, Sequoia Capital, spent nearly $25 million combined to buy 10 percent each in Google - an ownership stake that eventually would be worth multiple billions.

For more information, visit www.EvanCarmichael.com.

Business Experience

Banks want to lend money to established businesses with a track record of experience. The reason is pretty simple: you have proven that you can achieve certain results which make your future projections less risky. If you can show that you have done it before it is easier to have faith that you can do it again compared to a startup with no experience.

Banks prefer companies that have been around for 10 years or more. These companies:
� Get rejected for loans over 50% less frequently than inexperienced firms
� Pay around 0.4% less interest on their loans

If you do not have 10 years of company history, as most entrepreneurs do not, point to your other experiences that will help give you credibility. Maybe you worked as an employee in a small company and helped double their sales. Perhaps you ran another small business and made it profitable within 6 months. When you do not have the company track record, the banker immediately flags your business as having an increased risk of not being able to pay back the loan. You need to show whatever experience you can from related jobs or companies to reduce the banker�s perceived risk and maximize the chance of you securing the loan.

For more information, visit www.EvanCarmichael.com.

Account Manager Turnover

Your bank account manager is responsible for understanding your business and going to bat for you within the organization when you need a loan approved. If she does not have an established long term relationship with you it will be difficult to get her to pull strings for you.

The chance of you being rejected for a bank loan depending on how many account managers you have is as follows:
� One account manager: 7.1% rejection rate
� Two account managers: 8.5% rejection rate
� Three account managers: 16.3% rejection rate
� Four or more account managers: 22.8% rejection rate.

Develop a good relationship with your banker early. Talk to her before you need the money and she'll be there for you when you actually go for the loan.

For more information, visit www.EvanCarmichael.com.

IOL: Venture capital investment up 25.7%

Venture capital activity for the first half of 2005 in Ireland has increased by 25.7% in comparison with the same period last year.

The increase came despite a decrease of 11.5% in the total amount invested across Europe, from €1,872.16m in the first half of 2004 to €1,657.21m in the first half of 2005.

The results of the European Venture Capital Report released by Dow Jones VentureOne and Ernst & Young show that a total of €70.88m has been invested by venture capitalists in Ireland so far this year, up from the €56.41m invested in the same period last year.

Ireland has continued to buck the European trend of decline in venture capital investment, helped by a particularly strong performance in Q1 2005, when figures invested here reached €43.51m, a level not recorded since 2001. Deals recorded in Q2 2005 are valued at €27.37m.

For more information, visit www.EvanCarmichael.com.

Key Loan Factors

According to the Canadian Federation of Independent Business (CFIB), there are four key factors that can dramatically increase your chance of obtaining a bank loan. They are: account manager turnover, business experience, business banking services, and size of company.

For more information, visit www.EvanCarmichael.com.

Allylix Announces $1.5 Million in Series A Funding and Appointment of New CEO

Allylix, Inc., a natural and fine chemical company, today announced that the company has successfully secured $1.5 million in capital and appointed Carolyn Fritz, M.B.A., as its new CEO. The financing will be used to fund the development and scale-up of its first products. The close of this round of funding was lead by President and CEO, Carolyn Fritz.

Allylix is a biotechnology company focused on the development and commercialization of terpenes, a class of natural chemicals found in plants. These natural chemicals are of significant interest to the food, agriculture and pharmaceutical markets as a result of their use as fragrances, flavors, agricultural products and new medicines. Historically, these natural chemicals have been too costly for most applications because of the expense of extracting them from plants. Allylix's technology allows it to cost effectively produce a wide range of these natural chemicals using its high yielding fermentation process and thereby making these valuable compounds available to many new market applications.

The company was founded by Dr. Joseph Chappell at the University of Kentucky and Dr. Joseph Noel of the Salk Institute for Biological Studies in San Diego, Calif., along with Corporate and Intellectual Property Attorney, Tom Jurgensen to commercialize their research.

"This funding is a major step towards the realization of our goal to bring these natural chemicals to market," said Carolyn Fritz, president and CEO of Allylix. "With this technology, we are able to provide vital compounds to our customers, thus enabling the development of products that would have otherwise been too costly."

Leading the Series A funding is the Bluegrass Angels, a group of Kentucky investors seeking to develop start-up companies in the region by providing entrepreneurs with seed capital. Also contributing to this round are California angel investors, the Commonwealth Seed Fund of Kentucky, a state-managed venture capital fund, and the Kentucky Commercialization Fund, a state initiative administered by the Kentucky Science and Technology Corporation.

For more information, visit www.EvanCarmichael.com.