Executive Summary Review - Howling Moon Designs - Highlights - A Growth Market

Online gaming is big business and while the online gaming market for PCs is expected to drop over the coming years, one exciting and rapidly growing area is Massive Multiplayer Online Role Playing Gaming.

According to Wikipedia, "a massively (or massive) multiplayer online role-playing game or MMORPG is a multiplayer computer role-playing game that enables thousands of players to play in an evolving virtual world at the same time over the Internet. MMORPGs are a specific type of massively multiplayer online game (MMOG)." An estimated 20 million people worldwide are spending time in massively multiplayer online role-playing games.

Project Entropia (http://www.project-entropia.com/) is a popular MMORPG where players can construct buildings, create businesses and make investments to build their in-game wealth, which they can then cash out back into hard currency. The projected GNP for the Project Entropia universe in 2005 is 1.5 billion PED, or US$150 million.

This is definitely a growth market and, while still very early stage, could be a big money-maker for savvy investors.

Next - Lesson #1 - How Are You Different?

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Important Business Plan Questions They Will Ask

- The main questions about your business plan will surround the assumptions you have made. Mistakes are most often made at the assumption level. Prepare for your assumptions to be tested.

- Avoid unstated or assumed assumptions. Make sure to write down every assumption that you have made in your financial projections. This is a critical part of developing the persuasion chain and convincing the venture capitalist to understand your numbers and eventually invest in your company.

- Intermediaries such as Northern Crown Capital will ensure that you are ready. They know the questions that are likely to be asked and ensure that you have the right answers memorized before going in. You must be confident when walking in the room and in answering every question if you hope to instill confidence in the venture capitalists.

For more information, visit www.EvanCarmichael.com.

Startups pledge future earnings

"Coralie Lalonde and Debi Rosati are on a mission to help launch the next wave of social entrepreneurs.

Ms. Lalonde is chief executive of Katsura Investments, a group of angel investors who co-invest in Ottawa-based tech startups. Ms. Rosati is president of RosatiNet Inc., a consulting company that develops financing strategies for tech startups. Together, the savvy entrepreneurs are bringing enthusiasm -- and their wide-ranging contacts -- to the not-for-profit world.

Along with the Community Foundation of Ottawa, which manages a growing endowment on behalf of donors, Ms. Lalonde and Ms. Rosati co-founded and launched Engage!

"Engage! is about asking entrepreneurs and investors to make a commitment today that when they are successful they are going to give back to their community," Ms. Lalonde says.

"Right now they are focused on making their own companies work. So they may not have the time or resources to commit to philanthropy. With Engage!, they sign a statement saying when they can, they will invest in their community. What we are really trying to do is provide people with the support they might need to get involved.""

For more information, visit www.EvanCarmichael.com.

Executive Summary Review - Howling Moon Designs - Overview

Howling Moon Designs is a gaming company proposing to create a Massive Multiplayer Online Role Playing Game (MMORPG), Destiny Online. Destiny Online will be a real world economic system that allows players to get jobs in the game, open stores, enter tournaments, sell items on a website, go on quests, and be part of teams.

The company is in the startup phase and projects that the game will take 3 to 4 years to complete. It is run by Lee Ing from Ontario.

Next - Highlights - A Growth Market

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

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What Happens in the Meeting

- Meetings with venture capitalists are also referred to as "the dog & pony show." It provides the first opportunity for investors to meet the management of your company face to face and assess the people behind the business. You could have a brilliant business plan backed by poor management. This will only become apparent to the venture capitalist in the meeting.

- There is an old British banking expression that asks: "Is someone the horse for the course?" In other words, do you have the right management team for the task at hand. It then follows that different horses are needed for different courses.

- The point of this initial meeting is to test the management face to face. The venture capitalist wants to build confidence with the management team.

- The intermediary�s prime role is to get a "dog & pony show" together with a number of venture capitalists.

- The venture capitalist may question your business plan to test you. Make sure to have someone with you who understands the finances and who knows the product or technology.

- The meeting will usually start off with a 5 minute update as to what has happened since you submitted your business plan. The rest of the meeting will be a question and answer session.

- People like to do business with people who they have an affinity for. The development of trust between yourself and the investor is paramount. They must get a feeling that they can work with you and that there is positive chemistry.

- As an example, an entrepreneur who walks into a meeting dripping in gold, diamonds and flamboyant suits will have a hard time raising capital because the venture capitalists will not feel comfortable with this person.

For more information, visit www.EvanCarmichael.com.

Angel investors crucial for new businesses

"Prabhdeep Singh, an ASU graduate research associate and CEO of Usuggest.com, recently won $20,000 from the Technology Entrepreneurship Challenge.

But he needs more to get his company going.

Singh is turning to angel investors to help fund Usuggest.com -- a Web site that allows shoppers to purchase products that have been recommended by other shoppers.

Angel investors not only help new businesses get started -- they also help boost local economies.

Angel networks, which are spread throughout the nation, are groups of individual investors who provide seed money for startup companies.

"We do need angel investors," Singh said. "That is how a typical company starts.

Thomas Duening, director of entrepreneurship programs at ASU, said angel investors are about making money, but they also help boost local economies."

For more information, visit www.EvanCarmichael.com.

Reader Question - Do I Need To Be Charismatic?

Hi Evan,
I have recently discovered your website and browsing the various resources that your site offers. I appreciate them very much. I am a fresh graduate from UBC in Applied Science, Electrical Engineering. I started working at Canada's number 2 telecommunications provider shortly after my graduation from UBC. I have searched within the organization to examine the leadership qualities exhibited by the company's executive leadership team. I have come to realize that leadership is based on very simple ideas.

I feel that I have the ideas and the intelligence (don't we all) to create and grow leading businesses. One quality that I feel I lack is charisma. I am not awkward, but I am not a salesman. In your experience, does someone like myself have the potential to grown that charismatic personality, or should I focus my career on developing my stronger traits, such as my analytical and creative abilities? If I will always be someone who lacks the charisma to charm all my audiences, should I give up the idea of being the CEO of leading edge companies, and focus on other roles, or do you think I could still fill such a role successfully?

Again, I would like to thank you for the resources that you have made available. I have a couple of business opportunities awaiting me, and I am in the due diligence stage of one of them. Because of the generosity of your site and the relationship it has built, I will openly look for ways that I can employ your services. Can you tell that I have been reading some of your Marketing advice from Michael Hepworth?

Sincerely,

Matthew


Hi Matthew,

The key is to know what you're good at and find a way to make money doing it. I've met a lot of entrepreneurs who have built multi-million dollar companies who are not very charismatic at all.

By the same token, I've made many charismatic people who have failed miserably at being an entrepreneur.

What you need to do is pick an industry that you are passionate about and you can be outstanding in.

Every company needs a team of people to be successful. The first step in building this team is recognizing what your individual weaknesses are. Surround yourself with people who complement your skills and can help you build a world class organization.

Good luck!

Evan.

For more information, visit www.EvanCarmichael.com.

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.

Health-Care Venture Capital Market Heats Up

"Health-care venture capital results for the six months ended June 30 primarily reveal rising trends, according to Healthcare Corporate Finance News, published by Irving Levin Associates Inc. in Norwalk, Conn.

The total amount of venture funding committed to health-care companies and the overall number of health-care venture capital financings increased during the first half of 2005. However, both the average, and median sizes of venturecapital deals decreased by approximately 16 percent during the period from the comparable, period last year.

Already this year, health-care companies have secured approximately $3.9 billion in venture funding, compared with about $3.6 billion for the first six months of last ear. So far, 235 venture financings in the health-care sectors have been announced this year, compared with 186 during the first six months of last year.
"Spinout companies emerging from universities and corporations account for a number or the smaller deals," commented Gretchen S. Swanson, editor of Healthcare Corporate Finance News.

Forty-eight health-care companies announced venture capital rounds of $25 million or more during the first half of this year, compared with 55 for the first, half of last year. Deals in this range account for approximately 54 percent of all venture capital committed to health-care companies during the period, but by comparison, accounted for approximately 65 percent of all health- care venture capital raised during the same period last year. "

For more information, visit www.EvanCarmichael.com.

Angels boost fledgling businesses

"When Stevens Point native Leon Ostrowski returned to Central Wisconsin eight years ago to retire, he brought with him 35 years of business development know-how gathered in Europe, Asia and the United States.

In May, Ostrowski joined with the Portage County Business Council, Wood County's Heart of Wisconsin Business Economic Alliance and a group of private investors to form the Central Wisconsin Business Angels. It is one of a dozen similar groups in the state and hundreds across the country whose goal is to help entrepreneurs in the early stages of their businesses receive the financing and guidance they need to bring their dreams to the marketplace.

"It's investing in all those things you need before you can even start a business," Ostrowski said of the $100,000 to $500,000 financing packages that are typically put together by angel networks. "Those amounts can't be obtained from a bank or other financial institutions because the businesses aren't developed yet."
Small groups of people have come together to invest in start-up companies for centuries. But the formalized organization of these groups into their own, separate entities for the purpose of early-stage, or angel, investing, is a new phenomenon that has taken off over the last few years.

Angel investing is different from venture capital investing, which normally involves millions of dollars and could include expanding a company's reach into a market. Angel investors look for the potential and business knowledge they see in a management team, whereas venture capitalists also look for a proven track record of a company.

Early-stage investing is just that; funding without which a company wouldn't be able to get off the ground. Venture capital, for the most part, is geared for companies that are farther down the business life cycle.

"If you don't have early-stage investors, there are not going to be any companies to put venture capital into," said Joe Kremer, director of the Wisconsin Angel Network, which helps support the networks across the state.

The financing often comes in the middle stage of the angel investing relationship.

"Sometimes I'll work with a company for two or three years before we bring it to the investment group for consideration," Ostrowski said, adding that during that time, attorneys, accountants and banks will be referred to the prospective business for guidance."

For more information, visit www.EvanCarmichael.com.

Reader Question - Selling My Invention

Dear Evan,

Claudio and I have been to some of your meetings which we enjoyed, we have developed a new wheelbarrow, it is a sort of self loading, but we are unable to find some manufacturers to take on this project, we had lot of good remarks from industries, we have corrected the negative remarks, and have a new prototype, drawings, but we don't have the necessary finances, it would be an ideal find an industry maybe in China to take over and maybe sell the all thing, we have filed in USA/ Argentina/PCT. And there should be no problems with the patent as we had some actions taken, but not really important, we have addressed them. Can you please give some advice on what next?

I thank you and hope to see you again.

All the best Maria Carosi


Hi Maria,

Moving from being an inventor to being an entrepreneur can often be a very challenging step. For an inventor to be successful he or she must be focused on satisfying a human need, which is to enhance our experience by giving us useful tools.

There are a couple of options that you can take. In terms of financing, your best bet would be to speak with angel investors (wealthy individuals like doctors, dentists, lawyers, etc.). They are usually reached through informal networks - your friends and family would be a good place to start to see if they know anyone who they can introduce you to. I've also written a section on my website dedicated to finding angel investors at http://www.evancarmichael.com/Angel-Investors/index.html.

A second option is to contact the BDC (Business Development Bank of Canada). They are a government run organization with a mandate to help Canadian entrepreneurs. They are not going to automatically approve you but they do take more risks compared to the typical banks.

You should also focus on getting some more traction with potential customers. You said that you've spoken with industries and have received good remarks. Will they purchase your product up front? Will they give you a letter of intent? Will they provide testimonials?

Often customers are great financing options for startup entrepreneurs. If they won't agree to buy up front then at least you can get their support to show potential investors. If you can show an investor or lender that you have clients lined up you've done more than 90% of the other business plans they've seen this month.

A final thought you might consider is to think about if you really want to run a business or not. Many inventors like to create but do not like the work that comes with operating a company. You need to focus on what you're the best at and bring others on who can complement you.

Good luck!

Evan.

For more information, visit www.EvanCarmichael.com.

Northern Crown Capitals Non Disclosure Agreement

CONFIDENTIALITY AGREEMENT



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



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.

Venture Capital: A new breed of Internet startups is here

"Just what is Web 2.0?

The latest buzzword in the technology industry can be a little tough to define. Interactive Web sites that tap the knowledge of users? Collaborative technologies for small teams? Software delivered over the Internet as a service?

Andy Sack, left, and Chris DeVore are co-founders of Judy's Book, an Internet company that encourages users to post reviews for local services. They have raised $8 million in funding, but you would never know it to look at their spartan Seattle office. The no-frills approach is one trait of a Web 2.0 company -- startups that are riding a second wave of Internet innovation.
Wikipedia -- the everevolving online encyclopedia that embodies many Web 2.0 characteristics -- even struggles with a concise definition.

"The term 'Web 2.0' refers to development of the World Wide Web, including its architecture and its applications," the site says.

"However, a consensus upon its exact meaning has not yet been reached."

Wikis, blogs, podcasts, really simple syndication, tagging and other technologies that help people share and distribute online content most frequently get slapped with the Web 2.0 label. Generally speaking, though, the concept embodies a new version of the Internet -- a second edition that is more dynamic than the static Web pages that were developed in the 1990s.

The backlash has already begun against the term, just as the words "dot com" took on a negative connotation five years ago. Blogger Chris Pirillo describes Web 2.0 as nothing more than "a $2,800 ticket to a tech conference," while venture capitalist David Hornik refers to it as "Bubble 2.0." Curious Office Partners co-founder Kelly Smith, whose 4-month-old Seattle firm invests in this new breed of Internet companies, admits that the Web 2.0 concept is elusive.
"I think it is an interesting editorial question," Smith said. "Is this a valid ter and why is it getting picked on?""

For more information, visit www.EvanCarmichael.com.

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.

Reader Question - Business Plan Guide

Hi - I'm interested in writing a business plan and would like to know what you would suggest as a good guide. I'm financially literate and have been involved in a number of different industries, so this guide doesn't necessarily have to be from a "beginners" perspective. Hope you can help.

David


Hi David,

This is one of the most frequently asked questions that I get. Having a solid business plan is critical for arranging the financing you need to grow your business as well as establish the confidence for yourself and your partners that your idea really could take off.

In response to a lot of feedback from website visitors, I put together a Sample Business Plan. It covers the important areas including:

1. Executive Summary
2. Company Description
3. Market Analysis
4. Marketing and Sales Activities
5. Products and Services
6. Operations
7. Management and Ownership
8. Funds Required and Their Users
9. Financial Data
10. Appendices or Exhibits

It can be found at: http://www.evancarmichael.com/Sample-Business-Plan/index.html

Another useful resource is the Business Development Bank of Canada. They have a free sample guide available as well. Since the link changes, simply type in BDC business plan into Google and it will pop up.

Good luck!

Evan.

For more information, visit www.EvanCarmichael.com.

Canadian venture capital investment declines in Q3 following Q2 spike

"Venture capital investments in Canadian companies declined during Q3 2005 following a very active second quarter. Total venture investment in Q3 was down 59 per cent to Can$261m from the Can$635m invested in Q2 2005, according to market figures released by Canada's Venture Capital and Private Equity Association and its research partner Thomson Macdonald.

In the year-to-date, venture capital investments in Canada amount to Can$1.23bn, down approximately ten per cent from the Can$1.36bn invested at the end of Q3 2004. Year-to-date, a total of 551 firms have received venture capital funding in Canada, slightly fewer than the 560 firms funded in the same period of 2004.

Rick Nathan, CVCA president and managing director of Goodmans Venture Group, said, 'Third-quarter activity levels are disappointing, however, there are often substantial variations in investment volume across quarters in any given year.'

'Clearly, the Canadian venture capital industry remains undercapitalised,' Nathan added. 'It is increasingly important for our domestic venture industry to address this chronic underfunding, if we wish to successfully finance the best emerging growth companies and entrepreneurs in Canada. This is the top priority of the CVCA, and we have a number of initiatives underway in this area.' "

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.

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.

Venture capital activity drops across Canada

"Canada's venture capital investments dropped 59 per cent in the third quarter compared to activity in the second quarter.

After a very active second quarter, Canadian and foreign investors are now pulling back and creating a decline, according to market figures released today by Canada's Venture Capital and Private Equity Association and its research partner, Thomson Macdonald.

"Third quarter activity levels are disappointing, however, there are often substantial variations in investment volume across quarters in any given year," says Rick Nathan, CVCA president and managing director of Goodmans Venture Group.

Total venture investment in the third quarter was $261 million, down 59 per cent from the $635 million invested in the second quarter of 2005. This drop resulted in year-to-date activity slightly below that of comparable periods in 2004."

For more information, visit www.EvanCarmichael.com.

Executive Summary Review - WaterWorld - Lesson #2 - Have You Done It Before?

One of the most important factors that investors look at is the management team. Has the president done it before and does he or she have the team to make the company successful or not?

Investors would rather put their money behind an average business plan with an outstanding president than an outstanding business plan with an average president.

In the WaterWorld summary the reader learns that president Mark Hall has various university degrees and is a small business lawyer from Minnesota. It also states that he "has helped start several small businesses for other entrepreneurs." What are these businesses? How was he involved? Did they turn into successful businesses? These are much more important areas to focus on than the university degrees.

The plan also states "We have several trusted and reliable persons who will assume positions in the company, after funding, that will significantly enhance our ability to serve the public, media executives and wholesale buyers through their years of industry experience." Who are these individuals? Why are they interested and what will their roles be?

Again, the investor is looking to maximize opportunity and minimize risk. This is done by betting on someone who has done it before. Whatever experience you do have running a business and being successful, leverage it in your plan. Investors care much more about your previous experience than your educational background.

If you don't have all the experience yourself, bring in a team and make sure to mention who they are and what their backgrounds are. Even having a reputable and experienced board of advisors can sometimes make the difference between getting funded or not.

Next - Lesson #3 - The Business Model

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.

Inside Entrepreneurship: The keys to writing compelling executive summaries

"Q: I'm writing an executive summary for my business plan. What are the components of a business plan executive summary that would help me appeal to angel investors?
-- Kunle O. Renton.

A: It is often said that people develop lasting impressions within the first 10 seconds of meeting someone new. The same can be said for individuals who read executive summaries. Harsh, but true -- if the first page of the document fails to stimulate interest, the potential investor will just click elsewhere or move on to another investment proposal.

While I appreciate that this is sobering to entrepreneurs, the good news is that anyone can prepare a persuasive document. It's more about content choices rather than style. Big words and long snakelike sentences are not required.

Before we review how to prepare three pages of brilliance, it's important to consider the expectations of your target audience. In my experience, there are two primary types of angel investors: "sophisticated angels" and what I like to call "sideline angels."
Sophisticated angels are generally active in the venture community, make at least one angel investment a year, and may belong to an angel investment organization such as the Zino Society or Puget Sound Venture Group.

These angels understand the current deal climate (meaning they won't overpay to invest in your company) and will scan for proven points of investment promise much like a skilled venture fund manager.

You could easily call sophisticated angels the "speed daters" of angel investing because they know exactly what they want before committing time to learn about a company.

Sideline angels tend to be in and out of the venture market or simply want to help family members start a business. Whereas sophisticated angels emphasize management experience and how they will get new products to market with the least amount of competitive risk, sideline angels focus on the innovative attributes of a new product and achieving first-market advantage."

For more information, visit www.EvanCarmichael.com.

Executive Summary Review - WaterWorld - Lesson #1 - Does It Work?

The summary provides the reader with information on what the benefits of the drinks are. For example, the company claims that the Victory drink can restore energy lost through exercise, training, and game time exertion, allow the heart muscles to withstand vigorous and strenuous exercise, fight and prevents lactic acid build-up, reduce and eliminate cramping, and boost energy reserves and accelerates muscle recovery time.

What is missing is the proof that it works. You need to demonstrate to potential investors that what you have is real. Show test studies, include testimonials, provide lab reports, have supporting quotes from respected individuals in your market. In other words "Show me the money!"

The problem is, while your product is probably excellent and can deliver on all the promises you are making, you need to remember that most of the other companies seeking capital out there are not marketing such reliable products. Unless you demonstrate that the product actually works then you are immediately lumped in with all the other "junk" business plans.

Investors see so many business plans every day that they are looking for reasons to say no. Don't make it easy for them to turn you down by not having supporting evidence for your claims.

Next - Lesson #2 - Have You Done It Before?

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.

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.

The right way to make a fast buck

"Speed dating met the business power lunch Tuesday. FundingUtah.com's first "speed pitching" luncheon rapidly matched 10 start-up companies with dozens of angel investors and venture capital firms.

With a giant clock display ticking down the seconds, entrepreneurs repeated five-minute presentations to tables of four or five investors, wooing their listeners for millions of dollars in capital.

"It was a first date on steroids - a first date with a more critical ending," said Wendy Bird, chief executive of My Princess Pearls. She was seeking $150,000 to move her home-based jewelry business into an office.

Bird's funding needs were relatively low. Most entrepreneurs were seeking $1 million to $5 million for enterprises that ranged from selling office phone systems in Costco to developing and marketing cameras that take three-dimensional images. Sweat dripped from the brows of some presenters as investors drilled them with questions.

"It was a little hectic," said Mark Evans, president of Direct Controls, a Provo-based technology company. "Every time they ask a question, you realize what you forgot to put in."

Besides touting business plans and company revenues, the new format was a way for entrepreneurs to showcase their charisma and credibility - two important characteristics that investors are seeking, said Jeff Jordan, a vice president at FundingUtah.com.

"We wanted the investors to get to know the entrepreneurs in a more intimate setting" than on the Web.

Paul Allen, founder of MyFamily.com, and David Bradford, former general counsel for Novell, launched FundingUtah.com in January. The online service allows entrepreneurs to post their business plans for investors to view. Under the umbrella of FundingUniverse.com, the company provides those services for businesses in every state. Close to 1,000 business plans have been posted on FundingUniverse.com, and $399 million in capital is available through its investor network - $126 million of that controlled by Utah investors.

Allen said he started the company to help other entrepreneurs such as himself secure capital, which he says is the hardest part of starting a business. He hoped the innovative luncheon would lead to new funds for some Utah entrepreneurs.

John Richards, a partner in Utah Angels, said he was interested in three of the start-ups but he'd need a second or third date to decide."

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.

Executive Summary Review - WaterWorld - Highlights - A Ready Market

What's good about this company is that it is attacking a ready market. Many companies seeking capital can only really be successful when a new technological breakthrough has been made, government approval has been granted, or an entirely new market has been developed.

This increases the risk for the investor as there is uncertainty if the necessary changes will occur or not. Before making a decision, investors will weigh the opportunity of putting money into a company against the risk of losing it all. Most entrepreneurs do their best to show the opportunity of investing in their company but do not focus any energy on demonstrating how the investor's risk will be minimized and money will be safe.

The markets that WaterWorld is targeting are existing, multi billion dollar industries which are looking for new, innovating products to solve their pain.

Next - Lesson #1 - Does It Work?

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.

Women lag in the scramble for startup venture capital

"VENTURE CAPITAL investment has risen from its post dot-com doldrums to $16.3 billion for the first nine months of this year, with 2,201 companies funded. That's a four-year high, according to the National Venture Capital Association.

But does that mean a commensurate rise in VC funding of startups run by women?

No. Not even close.

For almost a decade, the percentage of U.S. companies led by women receiving venture capital funding has hovered around 4 percent, according to the Women's Technology Cluster, a business incubator in San Francisco.

"You can talk about women's desire for balance and women's propensity against risk and women's (lack of) access to male networks," said the organization's CEO, Jennifer McFarlane, ticking off the often-cited reasons for why fewer women than men lead companies.

"But when I add all those up, I still don't get to that number. There is something more," said McFarlane. Moreover, less than half the U.S. startups receiving venture funding have women on the management team. Her organization aims to close the gender gap in successful, VC-funded companies.

Entrepreneurs and venture capitalists attending the organization's Entrepreneur Venture Conference last week in Mountain View said they did not think the disparity in who gets funding was a matter of overt discrimination. Rather, numerous subtle issues create a slightly tougher bar for women to scale than men in obtaining VC funding."

For more information, visit www.EvanCarmichael.com.

Executive Summary Review - WaterWorld - Overview

WaterWorld Enhanced Drinking Water (http://www.waterworldedw.com) is a manufacturer of energy drinks and spring water. The company has three functional energy drinks as part of its Peak Performance line of products. The three drinks are:

Amore', a sexual enhancement beverage with a natural aphrodisiac with a cherry/grape flavor that keeps him up and her feeling flush with a gentle warm feeling.

Trucker's Fuel, a tea flavor with a mild lemon twist drink for those who drive for a living or need to stay awake during a long day or need to study all night.

Victory, a lemon tasting beverage that can greatly reduce muscle fatigue, joint soreness, cramping, energy loss, and will speed energy recovery and increase energy reserves.

The company is in the startup phase and is run by Mark Hall, a Minnesota based small business lawyer. It is projecting to break even 6-12 months after funding and is searching for $1-4 million in capital at a $10 million valuation.

Next - Highlights - A Ready Market

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.

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.

Venture capital targets ID theft

"As fears of identity theft soar, investors are piling into startups creating anti-fraud technologies.

Venture-capital firms in this year's first six months pumped $70 million into companies selling anti-ID theft software, compared with about $101 million for all of last year, according to the MoneyTree Survey, which tracks venture funding.

The technology lets shoppers pay without handing sensitive information to cashiers. It protects online-banking customers by memorizing the rhythm of their keyboard strokes. And it helps retailers catch shoplifters posing as customers.

The financing surge comes amid well-publicized cases involving millions of Social Security numbers and other personal data.
"Identity theft and fraud are in the paper all the time," said Gus Spanos, executive vice president at Pay By Touch Solutions, explaining investor interest. The company recently announced $130 million in hedge fund and private equity firm financing."

For more information, visit www.EvanCarmichael.com.

Executive Summary Review - Howling Moon Designs - Lesson #3 - Get A Management Team

One of the most important rules for venture capital investors is make sure the company has a solid management team. Investing in early stage companies is as much about the team as it is about the idea, if not more. Venture capitalists want to see that you have some experience and that you have competent people around you.

Howling Moon Designs lays out an organization structure and identifies the team members they will need to make the project a success, but at the moment the company has only one person.

In the plan it is also unclear as to what the founder�s previous experience has been and what other companies he has helped to success.

A venture capitalist is unlikely to invest in a company with one person and a limited track record.

You need to build a team around you with complementary skills. If you do not have much experience in running companies then build a board of advisors with people who have. You want to show as much as possible that you have the existing personnel in place already to make this business a success.

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.

Angel Investors - What To Do

Lose your ego.

Ask for help, not money.

Get them involved, show them, let them get hands on instead of just reading a business plan.

Listen, don't sermon.

Respect their money.

Respect their time.

For more information, visit www.EvanCarmichael.com.

Angel Investors - Why Angels Say No

Angel and entrepreneur have different values, no trust

Entrepreneur shows resistance to due diligence and defensive responses

Entrepreneur has a passion for technology over flexibility

Entrepreneur has poor knowledge of market, competitors

Angel does not have ability to work with team

Entrepreneur has "shopped the deal" and seen too many potential investors

For more information, visit www.EvanCarmichael.com.

Executive Summary Review - Howling Moon Designs - Lesson #2 - Very Early Stage

The further along a company has gone towards generating real revenues and income, the easier it is to attract capital.

Howling Moon Designs has yet to deliver a prototype and is asking for enough money for the 3-4 years it will take to build the game.

Unless you've make a lot of money for investors doing it before or have a big customer lined up, investors are highly unlikely to risk a large amount of money for 3-4 years of development work.

Investors would rather finance marketing and expansion instead of research and development. You need to show as much as possible how the money will go towards sales and marketing and crunch down on your research and development timeline. There aren�t that many venture capitalists who are interested in funding ideas anymore.

Next - Lesson #3 - Get A Management Team

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.

Entrepreneurs Should View Raising Venture Capital as: The End of the Beginning

"Obtaining venture capital is rigorous, stressful, and demanding.
Time-consuming and distracting to CEOs and management teams, the process could be accelerated and the probability of success improved, but lean entrepreneurial teams are often consumed by the daily pressures of running and growing their companies. Many take long and unproductive steps due to their lack of experience in raising capital.

Business strategies and operational capabilities of companies seeking early-stage or expansion capital undergo scrutiny and dissection like never before. Investors react harshly toward ill-prepared suitors, so thoughtful planning, preparation, and concentrated attention are imperative. "Lucky" is not a word associated with raising venture capital these days.

Many that clear the first barrier of attracting serious interest stumble during the due diligence process. Unable to convincingly demonstrate performance to the benchmark standards – requisite skills of the management team, uniquely differentiated and sustainable business plans, defensible competitive positioning, etc. – investors will flee.

Those companies that obtain venture capital should view the achievement as "the end of the beginning". Closing a financing provides needed growth capital, gratifying validation, and marks a transition to a new level of maturity, responsibility, and expectation. There are now new partners and legal obligations to them and the investors who entrusted the venture firms with their capital. This is the moment to embrace a culture that fosters the company's future via a disciplined process of continuos improvement and renewal – the future that the investors truly bargained for.

It is absolutely critical that a company's management team and board maintain focus on the future of ever-shifting markets, demanding customers, and wily competitors, and not succumb to the "busyness" of daily routine. Strategic planning, often unattended in the background during the entrepreneurial early stages (except during the period leading up to venture financing when "proper" business plans are so central), must not be consigned to the "we'll get to it later when we have time" category.
Remember, a company's top customers and competitors devote concentrated resources to strategic planning, so emerging companies must do the same."

For more information, visit www.EvanCarmichael.com.

Angel Investors - Due Diligence - Legal

Legal - Questions Angels Will Ask

Is this company a legal incorporation?

Does the company have a shareholder's agreement?

Is it sophisticated enough to prevent company infighting?

Are the holdings fairly distributed to prevent future problems?

Is there a shotgun clause?

For more information, visit www.EvanCarmichael.com.

Executive Summary Review - Howling Moon Designs - Lesson #1 - How Are You Different?

You have to be different to attract investment dollars. A common question venture capitalists will ask is "what is your unfair competitive advantage?" They want to see not only that you have an edge over your competitors but that it's such a big advantage that it's almost unfair.

The description of Destiny Online sounds extremely similar to that of Project Entropia, the leading competing game in this market. The competitive advantages listed are:

"The character you create will allow the player to have the ability for full customization. We will gain the rights of a high quality engine to use for the game. Inside the game world we are able to show over 15 different revenue streams that allow us to make money. The game world will always be changing and offer main new areas for the players. As well the partnership with Vognesvit helps provides us with an engine and a well experienced team."

One of the main benefits of Project Entropia is that players can create a truly unique character through an intuitive user interface. In addition, Project Entropia does offer a number of revenue streams for its players. I'm left unclear as to how this game will be excitingly different.

You will always be compared to the gorilla in the market � the company that is leading the industry. You need to make sure that you clearly differentiate yourself from your competition. A simple table which highlights the different characteristics is usually a great visual to include in your plan.

Next - Lesson #2 - Very Early Stage

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.

Tech Investment Angels Soar

"Luis Villalobos, a tech entrepreneur with a penchant for grooming companies for success, launched a small Southern California investment group called the Tech Coast Angels (TCA) in 1997.

He'd been told that starting an angel group in Orange County was a waste of time, as there were few entrepreneurs and even fewer angel investors in the region. The prevailing thought was that Orange County was all about real estate, not technology.

He followed his gut anyway, which turned out to be right. In 2001, when the market and tech industry took a dive, TCA members actually made some money, a testament to the group's experience, knowledge, passion, and investment vigor.

The TCA now has 270 members – mostly former entrepreneurs with CEO experience, and some business leaders and venture capitalists – who have invested more than $60 million of their personal capital, coupled with another $607 million from venture capital firms and other co-investors, in more than 95 Southern California high-tech and life science companies.

TCA ranked number 7 (tied with four other firms) in the top 100 U.S. venture capital firms based on number of early-stage deals made in 2004, according to a MoneyTreeTM Survey from PricewaterhouseCoopers, Thomson Venture Economics, and the National Venture Capital Association.

Supporting and fueling innovations and the entrepreneurs behind them suits Mr. Villalobos and his angel group well. "The last couple of years have probably been the best time for the Tech Coast Angels," says Mr. Villalobos, who has invested in 56 early-stage tech ventures, with 12 exits and 25 companies remaining active. "We have learned a lot, we're attracting terrific people, and we're starting to see [that] a lot of our deals have successful follow-on funding rounds. I'm sure within a year or so we'll start seeing some very nice exits.""

For more information, visit www.EvanCarmichael.com.

Angel Investors - Due Diligence - Sales

Sales - Questions Angels Will Ask

Is the President a technologist or a business person who can make sales?

Are the projections realistic?

Do the sales channels and plan of attack make sense?

Has anyone on this management team sold to this industry before?

For more information, visit www.EvanCarmichael.com.

Executive Summary Review - Howling Moon Designs - Highlights - A Growth Market

Online gaming is big business and while the online gaming market for PCs is expected to drop over the coming years, one exciting and rapidly growing area is Massive Multiplayer Online Role Playing Gaming.

According to Wikipedia, "a massively (or massive) multiplayer online role-playing game or MMORPG is a multiplayer computer role-playing game that enables thousands of players to play in an evolving virtual world at the same time over the Internet. MMORPGs are a specific type of massively multiplayer online game (MMOG)." An estimated 20 million people worldwide are spending time in massively multiplayer online role-playing games.

Project Entropia (http://www.project-entropia.com/) is a popular MMORPG where players can construct buildings, create businesses and make investments to build their in-game wealth, which they can then cash out back into hard currency. The projected GNP for the Project Entropia universe in 2005 is 1.5 billion PED, or US$150 million.

This is definitely a growth market and, while still very early stage, could be a big money-maker for savvy investors.

Next - Lesson #1 - How Are You Different?

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.

Angel Investors - Due Diligence - People

People - Questions Angels Will Ask

Do we share the same values?

Can we work together?

Does the management team have accomplishments and a reputation in their industry?

Does the team have a history of running successful businesses and returning value to investors?

Are the key people in place? Are their any gaps?

Are the founding members still involved? How so?

How do I get along with the entire management team and not just the President?

For more information, visit www.EvanCarmichael.com.

Executive Summary Review - Howling Moon Designs - Overview

Howling Moon Designs is a gaming company proposing to create a Massive Multiplayer Online Role Playing Game (MMORPG), Destiny Online. Destiny Online will be a real world economic system that allows players to get jobs in the game, open stores, enter tournaments, sell items on a website, go on quests, and be part of teams.

The company is in the startup phase and projects that the game will take 3 to 4 years to complete. It is run by Lee Ing from Ontario.

Next - Highlights - A Growth Market

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.

Angel Investors - What They Look For

They have related experience and industry contacts.

You have a good story, honesty, and a passion for the business.

They want to live vicariously through you / relive past glory.

They like you and want to help.

You are a close distance from them (in the same city).

You have a solid business plan.

For more information, visit www.EvanCarmichael.com.

Reader Question - Do I Need To Be Charismatic?

Hi Evan,
I have recently discovered your website and browsing the various resources that your site offers. I appreciate them very much. I am a fresh graduate from UBC in Applied Science, Electrical Engineering. I started working at Canada's number 2 telecommunications provider shortly after my graduation from UBC. I have searched within the organization to examine the leadership qualities exhibited by the company's executive leadership team. I have come to realize that leadership is based on very simple ideas.

I feel that I have the ideas and the intelligence (don't we all) to create and grow leading businesses. One quality that I feel I lack is charisma. I am not awkward, but I am not a salesman. In your experience, does someone like myself have the potential to grown that charismatic personality, or should I focus my career on developing my stronger traits, such as my analytical and creative abilities? If I will always be someone who lacks the charisma to charm all my audiences, should I give up the idea of being the CEO of leading edge companies, and focus on other roles, or do you think I could still fill such a role successfully?

Again, I would like to thank you for the resources that you have made available. I have a couple of business opportunities awaiting me, and I am in the due diligence stage of one of them. Because of the generosity of your site and the relationship it has built, I will openly look for ways that I can employ your services. Can you tell that I have been reading some of your Marketing advice from Michael Hepworth?

Sincerely,

Matthew


Hi Matthew,

The key is to know what you're good at and find a way to make money doing it. I've met a lot of entrepreneurs who have built multi-million dollar companies who are not very charismatic at all.

By the same token, I've made many charismatic people who have failed miserably at being an entrepreneur.

What you need to do is pick an industry that you are passionate about and you can be outstanding in.

Every company needs a team of people to be successful. The first step in building this team is recognizing what your individual weaknesses are. Surround yourself with people who complement your skills and can help you build a world class organization.

Good luck!

Evan.

For more information, visit www.EvanCarmichael.com.

Angel Investors - Who Are They

Bridge the love money / venture capital funding gap.

Can provide both money and management expertise.

Invest in 60% of startup companies.

Invest 5 times more money than venture capitalists.

Are successful entrepreneurs and professionals.

Have an average annual income of $100-250k.

Work through informal networks of business associates and professionals (lawyers, accountants, brokers)

Are known for being private, independent and even reclusive.

For more information, visit www.EvanCarmichael.com.

Reader Question - Selling My Invention

Dear Evan,

Claudio and I have been to some of your meetings which we enjoyed, we have developed a new wheelbarrow, it is a sort of self loading, but we are unable to find some manufacturers to take on this project, we had lot of good remarks from industries, we have corrected the negative remarks, and have a new prototype, drawings, but we don't have the necessary finances, it would be an ideal find an industry maybe in China to take over and maybe sell the all thing, we have filed in USA/ Argentina/PCT. And there should be no problems with the patent as we had some actions taken, but not really important, we have addressed them. Can you please give some advice on what next?

I thank you and hope to see you again.

All the best Maria Carosi


Hi Maria,

Moving from being an inventor to being an entrepreneur can often be a very challenging step. For an inventor to be successful he or she must be focused on satisfying a human need, which is to enhance our experience by giving us useful tools.

There are a couple of options that you can take. In terms of financing, your best bet would be to speak with angel investors (wealthy individuals like doctors, dentists, lawyers, etc.). They are usually reached through informal networks - your friends and family would be a good place to start to see if they know anyone who they can introduce you to. I've also written a section on my website dedicated to finding angel investors at http://www.evancarmichael.com/Angel-Investors/index.html.

A second option is to contact the BDC (Business Development Bank of Canada). They are a government run organization with a mandate to help Canadian entrepreneurs. They are not going to automatically approve you but they do take more risks compared to the typical banks.

You should also focus on getting some more traction with potential customers. You said that you've spoken with industries and have received good remarks. Will they purchase your product up front? Will they give you a letter of intent? Will they provide testimonials?

Often customers are great financing options for startup entrepreneurs. If they won't agree to buy up front then at least you can get their support to show potential investors. If you can show an investor or lender that you have clients lined up you've done more than 90% of the other business plans they've seen this month.

A final thought you might consider is to think about if you really want to run a business or not. Many inventors like to create but do not like the work that comes with operating a company. You need to focus on what you're the best at and bring others on who can complement you.

Good luck!

Evan.

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 "Wow. 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."

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.

Guy Kawasaki Hosts Upcoming Venture Capital Webinar on Creating Leaders with Applied Research Corporation

DETAILS: Many early-stage executive management teams fail in the short term, creating an unstable environment that derails success. Even those possessing the skills to take a business from conception to a successful exit are rarely able to survive for the long-term, and are frequently asked to step aside or leave as the business matures. A portfolio of strong, evangelistic leaders is, therefore, essential for venture capitalists and entrepreneurs to drive their investments to successful exits.

Driven by the expertise of Kawasaki and Shappell, this webinar will provide answers to the critical leadership questions facing venture capitalists and entrepreneurs, including how to find outstanding leaders with the right characteristics to lead the business to a successful launch and how to help leaders take the business to the next level in order to maintain their seat at the helm. During the presentation, Shappell will share - for the first time - the results of a recent research study conducted with venture capitalists on these business-critical leadership topics. Webinar attendees will also learn:

-- What makes a leader an evangelist and why this is important to an emerging business -- How to read the often undetected signs during due diligence of a leader's ability to scale -- What to do to help leaders overcome scalability issues when retention of the leader is important -- What venture capitalists are doing to access and develop their portfolio leaders

REGISTER: http://arclead.netspoke.com

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.

Executive Summary Review - WaterWorld - Lesson #2 - Have You Done It Before?

One of the most important factors that investors look at is the management team. Has the president done it before and does he or she have the team to make the company successful or not?

Investors would rather put their money behind an average business plan with an outstanding president than an outstanding business plan with an average president.

In the WaterWorld summary the reader learns that president Mark Hall has various university degrees and is a small business lawyer from Minnesota. It also states that he "has helped start several small businesses for other entrepreneurs." What are these businesses? How was he involved? Did they turn into successful businesses? These are much more important areas to focus on than the university degrees.

The plan also states "We have several trusted and reliable persons who will assume positions in the company, after funding, that will significantly enhance our ability to serve the public, media executives and wholesale buyers through their years of industry experience." Who are these individuals? Why are they interested and what will their roles be?

Again, the investor is looking to maximize opportunity and minimize risk. This is done by betting on someone who has done it before. Whatever experience you do have running a business and being successful, leverage it in your plan. Investors care much more about your previous experience than your educational background.

If you don't have all the experience yourself, bring in a team and make sure to mention who they are and what their backgrounds are. Even having a reputable and experienced board of advisors can sometimes make the difference between getting funded or not.

Next - Lesson #3 - The Business Model

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.

Venture Capital Short Term Performance Improves in Q2 2005

"Long Term Private Equity Returns Continue to Outperform Public Markets

Short term venture capital performance showed signs of improvement at the close of the second quarter of 2005 with increases in the one and three year investment horizons, according to Thomson Venture Economics and the National Venture Capital Association (NVCA). The ten and twenty year horizons remain the strongest benchmark for the venture industry and are currently returning 25.8% and 16.0% respectively for the period ending 6/30/2005. For the same time horizon, buyout funds continued their sturdy performance with returns of 9.0% and 13.8%.

"Venture capital returns remain in line with expectations, both in the short and the long term," said Mark Heesen, president of the NVCA. "To stay the course of outperforming the public markets, we will be looking for a widening of the IPO window in the coming months and the continued strength of the M&A market for the remainder of the year."

Despite a weak IPO market during the second quarter with only ten venture backed companies going public, the venture-backed mergers and acquisitions market produced solid results with companies being acquired at high values. The mergers and acquisitions market provides another avenue for general partners to exit their investments and provide distributions back to limited partners. Five year performance for venture capital still is posting a negative return of -6.3% for the period ending 06/30/2005. This continued negative return is due to the remaining losses taken by firms that made investments in the closing stages of the Internet bubble era."

For more information, visit www.EvanCarmichael.com.

Is Your Business Underfinanced

Join the club.

As we move from an industrial to an information and service society, a new generation of companies is spawning. Entrepreneurs no longer have to buy expensive equipment or inventories to get their businesses started. They rely instead on their intellectual capital.

Two simple examples are software developers and consultants. These entrepreneurs depend more on their own skills, time, and knowledge than any other "fixed" asset.

The good news is that these types of businesses are easy to set up and have minimal associated costs. The bad news is that because you don't have many fixed assets, traditional lending institutions like banks don't know how to valuate your business.

You can have rapidly growing revenues and still be underfinanced.

In fact, the statistics show that if you are a high growth company, you are more likely to be underfinanced!

Overall, 20.7% of companies are underfinanced. But when you look at companies that have grown their revenues by 20% or more over the past three years, you'll find that 30.8% of them are underfinanced!

It is obvious from this data that it is the young, high performing companies that are currently experiencing the greatest difficulty in obtaining the financing they need to operate their businesses.

Many entrepreneurs are so discouraged that they don't even apply for financing. In 2000, only 60% of small and medium sized companies tried to raise capital. Only 53.8% of businesses with zero to four employees applied for financing.

As a result, in the late 1980's, only 15% of entrepreneurs were concerned over their financial situation. Fast forward to 2002 and that number rises to almost 40%! So why are these numbers so discouraging? Most entrepreneurs only turn to one source of potential capital: Banks.

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Executive Summary Review - WaterWorld - Lesson #1 - Does It Work?

The summary provides the reader with information on what the benefits of the drinks are. For example, the company claims that the Victory drink can restore energy lost through exercise, training, and game time exertion, allow the heart muscles to withstand vigorous and strenuous exercise, fight and prevents lactic acid build-up, reduce and eliminate cramping, and boost energy reserves and accelerates muscle recovery time.

What is missing is the proof that it works. You need to demonstrate to potential investors that what you have is real. Show test studies, include testimonials, provide lab reports, have supporting quotes from respected individuals in your market. In other words "Show me the money!"

The problem is, while your product is probably excellent and can deliver on all the promises you are making, you need to remember that most of the other companies seeking capital out there are not marketing such reliable products. Unless you demonstrate that the product actually works then you are immediately lumped in with all the other "junk" business plans.

Investors see so many business plans every day that they are looking for reasons to say no. Don't make it easy for them to turn you down by not having supporting evidence for your claims.

Next - Lesson #2 - Have You Done It Before?

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

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Growing Pains

"Make sure your angel investors won't hold your business back when it's time to graduate to larger investors.

These days, investors at medical services company Inoveon in Oklahoma City are a pretty happy lot. The company recently celebrated its 40,000th customer and revenue has passed the $1 million mark, so investors have much to celebrate. But Inoveon co-founder Dr. Lloyd Hildebrand will tell you that bringing together three founders, seven angel investors and five VCs was not always a party.

When Hildebrand, 48, and his partners decided to commercialize the technology they had been working on at the University of Oklahoma, they started the way most entrepreneurs do--by digging into personal savings and asking friends and family for help. In total, the three founders and seven outside investors put together about $250,000 in seed capital.

From the outset, however, Hildebrand and his team knew that the angel investors' capital wouldn't be enough to get the company off the ground. If Inoveon's technology to diagnose eye disease in diabetic patients was ever to see the light of day, they'd need millions more. Still, they couldn't afford to worry about that in the beginning.

"At that time, we needed dollars to demonstrate the concept would work," Hildebrand says. "Money was more important than smart money at the beginning. We needed capital to stay alive."
That's a typical--and potentially dangerous--predicament for a young company, says Jonathan Karis, partner and chairman of the Business Practice Group at Boston law firm Nixon Peabody. Karis advises entrepreneurs to consider the time when their company may need more money than the angels can provide. Too many unsophisticated or inexperienced angel investors create management headaches and get in the way of raising future capital from VCs."

For more information, visit www.EvanCarmichael.com.