Leverage your Private Equity

I periodically have companies seeking private equity or venture capital funding that need LOTS of funding. Such companies are quite often in the industrial services or products realm, but can come in almost any industry.

Companies that have viable business models, but capital requirements that exceed what typical PE or VC funding will provide have additional and sometimes prohibitive hurdles to overcome in order to make their visions a reality.

If a company is to make the leap from great idea to business reality, then the management team is going to have to strategize a way to leverage the PE or VC funding in order to reach even greater sources of capital. Those other sources of capital could be a public-private partnership, public debt or even a private-private partnership, but in any case there will need to be substantial thought given to the source of that second round of financing because the quality of the plan for realizing the second round will likely play a large role in whether or not the company gets the first round of financing.

Don't forget Uncle Sam

After reading Jeff McIntire-Strasburg's recent post titled: "Ecopreneurist: How to Approach a Venture Capital Firm with a Cleantech Business Idea" I was struck by the thought of a company I am working with at the moment in the Green Technology world.

One of our early conversations centered around their financial projections and pro-forma statements in which the company president proudly said "our figures don't include any tax based income or incentives, these are straight numbers." Of course, I wanted to see the non-tax based numbers in an overall evaluation of the business, but one of the things that really makes the green industry potentially above average regarding investment returns is the proliferation of numerous tax and government incentives and our management team was really missing the boat on potential tax strategies that could have a dramatic effect on both capital requirements and overall returns of the business.

Thankfully, we have now begun an analysis of the available tax strategies and we have already uncovered federal benefits that will significantly add to our bottom line.

So the moral of the story is...don't forget Uncle Sam.

Angel Soft - Open Deal

Large Angel Network software provider AngelSoft has now developed a new service designed to allow companies and entrepreneurs to mass submit offering to hundreds of angel groups at one time.

http://www.angelsoft.net/entrepreneurs/index.html

Could be a nice resource for overworked entrepreneurs searching for capital.

Angel Investors and the ACA

In addition to later stage VCs, startups have an old option that is getting fresh legs by being easier to navigate than before, in angel investor networks. The Angel Capital Association is a peer organization of angel investing groups in North America that includes over 250 angel groups.

The presence of such groups makes it much easier for startup companies and their entrepreneur leaders to find much needed seed capital in order to get good companies off the ground. In the past, active networking and luck might net someone that was interested in investing in a startup, but through angel networks entrepreneurs have access to literally thousands of potential accredited investors.

Some of the southeastern ACA members include:

Southeast
Angel Network of Sumner County/ Angel Capital Group - Hendersonville, TN
Ariel Savannah Angel Partners - Savannah, GA
Atlanta Technology Angels - Atlanta, GA
Charleston Angel Partners - Charleston, SC
Eastern NC - Investor Network - Greenville, NC
Emergent Growth Fund - Gainesville, FL
Fund for Arkansas' Future - Little Rock, AR
Huntsville Angel Network - Huntsville, AL
Inception Micro Angel Fund - Greensboro, NC
Mississippi Angel Network - Ridgeland, MS
Nashville Capital Network - Nashville, TN
New World Angels - Boca Raton, FL
Piedmont Angel Network - Greensboro, NC
Seraph Group - Atlanta, GA
Springboard Capital - Jacksonville, FL
Triangle Accredited Capital Forum - Wake Forest, NC
Wilmington Investor Network - Wilmington, NC
Winter Park Angels - Winter Park, FL

VC Symposium

Just a quick update on the Birmingham Venture Club Symposium yesterday.

We had a good crowd of 40-50 attendees at the symposium graciously hosted by Burr & Foreman in their beautiful conference room.

The panel covered a broad range of topics from the state of the economy, aka "Are we in a recession?" (which most felt we are or at least pockets of the economy are) to the current environment in the State of Alabama (which most seemed to see as under served). Overall, it was a very good event and one which I hope continues in the future.

The most interesting thing to me probably related to the realization that although the economy is slowing, deals are still getting done; however the interplay between a lot of VC dollars chasing fewer deals driving prices up and an accross the board increase in due diligence and the proliferation of good secondary market opportunities driving prices down seem to be largely cancelling each other out at the moment, but it is unclear if that balance will maintain.

Private Equity Symposium

Just an FYI, the Birmingham Venture Club - CFA MidSouth Chapter's Private Equity Symposium is today at 4:30pm in Downtown Birmingham at the Wachovia Tower, 3rd Floor.

*Members and Non-members may attend