Monday, November 28, 2011
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Friday, November 25, 2011
High-tech entrepreneurs learn to tap angels, venture firms Read more: http://www.stltoday.com/business/local/high-tech-entrepreneurs-learn-to-tap-angels-venture-firms/article_5183cc05-2dfd-58a2-a837-f732b4a1fc5a.html#ixzz1emLp4jdu
So you've got an idea for a better mousetrap, but you need money to get it to market. What do you do?
According to entrepreneurs and investors in startup companies, here's the plan: Pray for angels.
Financing from "angel investors" — mainly rich folks with money to invest — is a crucial source for capital for high-tech entrepreneurs.
But to get this financing, you need to develop a working prototype and put it in the hands of potential customers, according to people who invest in startups.
Investors are happiest when they see customers itching to buy. A little revenue also does a lot to boost your chances.
If you're the nuts-and-bolts type (or the software or science type), you'll have to get a businessman involved. Investors want business and marketing skills in the ventures they back.
Next, pray to the "angels" that they will shower you with investment money — in trade for a stake in your business, of course.
That's pretty much what Nathan Pettyjohn of St. Louis did in 2008. Pettyjohn, 30 at the time, was in the retailing business. He'd watched customers wander clueless through stores, unable to find what they wanted.
Why isn't there a smartphone application for that? he thought. So he started Aisle411, a service for mobile phones that can guide shoppers directly to the item they're looking for in the store.
He interested a couple of partners with software backgrounds, and they went to work. Their problem: "very little money," says Pettyjohn. They tapped their own savings, and raised money from family and friends. It was enough to pay for a marketing study to determine what customers wanted.
Then Pettyjohn did two things that investors like to see: He got other businesses interested in his product. The Ace Hardware chain and a supermarket chain in Springfield, Mo., signed on and provided inventory data for their stores.
Next, he partnered with an experienced entrepreneur, Matthew Kulig, co-founder of the Clayton computer security firm Global Velocity.
That got Pettyjohn ready to meet the angels.
Angels are mainly wealthy people, although investment companies, state development agencies and universities sometimes pitch in. St. Louis University, for instance, is devoting $1 million from its endowment to the "Billiken Angels" group that invests in entrepreneurs with a SLU connection.
Angels invest in startups. Their bigger cousins, venture capital firms, come in later after a firm is better established and needs money to grow. Both hope to cash out big when entrepreneurial firms issue stock to the public or sell out to larger companies.
Angels know that half their investments will fail, and they hope to make it up by big profits from the other half. The long-term return for angel capital is 10 percent, which is only slightly better than the stock market.
The good news is that St. Louis is growing more angels.
"The real growth is in the angel funding area," says Jerome Katz, professor of entrepreneurship at St. Louis University and director of the Billiken Angel Network.
Angels work alone or form groups to screen investments for members. Besides the Billiken group, St. Louis has the Arch Angels. The FinServe Tech Angels invest in financial services technology.
Capital Innovators just launched a program to "accelerate" five fledgling entrepreneurs at a time, handing them $50,000 each, office space and mentoring over a 12-week period in St. Louis. They were chosen from 165 applications.
"We're looking for businesses that can scale up quickly and on a smaller dime," says Judy Sindecuse, CEO of Capital Innovators.
The Biogenerator Seed Fund and i6 project provide seed funding to biotechnology startups. Centennial Investments of Columbia, Mo., seeks startup investments in St. Louis, as does Electio Investments of Chicago, says Katz.
Most of those groups were formed in the past five years.
For their money, angels want a piece of the action, either an equity stake or loans convertible to equity. Entrepreneurs wince at the bite to their ownership, but it is usually well below 50 percent, says Katz.
"That makes a major difference in motivation," he says, and the angels want the entrepreneur to stick with the enterprise.
Angels also like to keep entrepreneurs close at hand. They want to act as advisers and keep close track of progress.
"The vast majority of angel investments are within a two-hour drive," says Katz. So, local entrepreneurs are more likely to find angel funding in St. Louis than elsewhere.
If the invention is really a mousetrap, it will have a tougher time getting funded. Biotech and software are the hot ventures both among St. Louis angels and the local venture capital firms.
That gave Pettyjohn an advantage as he made his pitch to the Arch Angels.
"It wasn't easy, especially at the time we did it," he says. As the Great Recession took hold, some of the investors who pledged funding backed out.
But he had a technology product, the engineers to produce it and an experienced business manager. Pettyjohn himself knew retailing. "People have to believe in the leaders of the company," he said.
He ended up with enough money to go on, although he's coy about the amount.
VENTURING OUT
Aisle411 signed up more stores, including Shop 'n Save and Schnucks. Then Pettyjohn did something economic development officials in St. Louis hate to see. He opened a second office in Silicon Valley and moved himself there.
The draw of the coasts is strong on technology companies. Aisle411 has to collaborate with other software firms, and they were generally in California. Pettyjohn found himself flying there so often that he decided it was easier to move.
Silicon Valley is also the world capital for venture financing, the next level of funding his company will need. The Valley alone had $8.4 billion in venture capital investments this year, compared with $1.1 billion for the Midwest. The national total was $21.2 billion, according to PricewaterhouseCoopers and the National Venture Capital Association.
Still, St. Louis offers good talent cheaper than in California, he says, so he plans to keep an office here.
St. Louis has its own crop of venture capitalists, but they tend to concentrate on biotechnology. Especially for technology businesses, it's still easier to land venture capital in California.
Venture capital firms are funded by pension funds, endowments, other institutional investors and wealthy individuals. Those investors saw their own holdings shrink after the 2008 stock market crash, and so they've shrunk the amount they allocate to venture capital.
It's a national phenomenon with venture investment falling from $30.7 billion in 2007 to this year's $21.2 billion.
In turn, venture capital firms have shrunk the amount of time they are willing to hold an investment before cashing out.
That's bad news for drug or medical device developers, who spend long periods in development and human trials.
"I've never seen the so-called valley of death between technology coming out of the universities and getting commercialized as wide as it is now," said Thomas Melzer, managing director at RiverVest Venture Partners, a St. Louis venture firm which has invested $164 million. "The venture industry has shifted further out on the food chain and is looking at later-stage operations."
That means that medical products usually must be into the human or animal testing stage before venture capital will commit. "It's a very tough sale," says Melzer, whose firm invests in medical ventures.
Investment has become so hard to get that he worries that it may choke off the pipeline of medical innovation as early-stage ventures are denied funding.
The national cutback is not as hard on technology entrepreneurs, who often have a shorter path to profitability. But new tech firms in St. Louis face another problem: Most venture firms here won't touch them.
RiverVest, Prologue Ventures and Oakwood Medical Investors, all in St. Louis, specialize in medical ventures. Advantage Capital takes a broader view, and uses state tax credits to favor entrepreneurs in lower-income neighborhoods.
St. Louis lacks venture capital focused on information technology, such as computers and software.
"I don't think there's a single venture capital fund in Missouri that specializes in (information) technology," says Sinecuse of Capital Innovators.
And that may mean more entrepreneurs like Pettyjohn moving to Silicon Valley.
via stltoday.com
Jg
Wednesday, November 23, 2011
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Monday, November 14, 2011
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Thursday, November 10, 2011
China threat ?
Defense giant GE is claiming that Congressman Randy Forbes (R-Va.) had "his facts wrong" when he demanded a Pentagon investigation into the company's partnership with China's AVIC aviation company aimed at building avionics systems for Chinese airliners.
Forbes wrote Defense Secretary Leon Panetta on Oct. 17, asking for the Defense Department to investigate the partnership, claiming that the avionics' design was based on the same systems used in the United States premiere fighter jets, the F-22 Raptor and the F-35 Joint Strike Fighter.
However, "Mr. Forbes did not have his facts right -- there is no correlation between the open-architecture operating system for the COMAC 919 to be provided by GE/AVIC and the avionics products provided by GE for the F-22," said GE spokesman Rick Kennedy in a Nov. 10 email to Military.com.
via military.com
Jg
India-China politics
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India's decision to boost its military capabilities near the border with China was a political move aimed at “containing” China's rise, the official newspaper of China's People's Liberation Army (PLA) has said.
The PLA Daily said that India's reported plan to carry out a $13-billion military modernisation, including deployment of 1,00,00 soldiers along the disputed border with China — the biggest expansion since the 1962 war — reflected “adjustments” to India's national security strategy that suggested New Delhi had begun to regard Beijing as a “de facto competitor”.
“India has begun to consider China as an opponent,” the PLA Daily said.
In recent months, tensions with countries across the South China Sea have prompted a flurry of commentaries in China's state-run media examining relations with neighbours.
India's plans to boost its border security have been viewed by some Chinese analysts as a part of a larger United States-led move to contain China, and by others as a reflection of China's less than successful policies towards many of its neighbours.
“The East China Sea and South China Sea issues have further continued to expose some countries' ‘envious, jealous and hateful' attitude toward China,” the commentary said. “The changes in the international and regional security landscape will negatively affect China and other countries involved, but they will benefit one country — India,” it added, noting that India had also “stepped into the South China Sea issue,” referring to recent cooperation with Vietnam.
Chinese analysts have particularly blamed the West for recent tensions with neighbours. Fu Xiaoqiang, a scholar at the state-run China Institutes of Contemporary International Relations (CICIR), told the official China Daily newspaper that India's move to boost its military strength was sourced in a larger plan by the West to contain China.
“The West's vigilance and confinement of China's rise are increasing,” he said. “One of its means is to take advantage of China's conflicts and issues with its neighbouring countries, and instigate and radicalise issues to exhaust China's energy, resources and strategic projection.”
Jin Yinan, head of the Strategic Research Institute at National Defense University, told the same newspaper that China should “not only remain alert of actions taken by parties to contain its rise, but also actively adjust its strategy and focus on improving its relations with neighbouring countries instead of the big powers.”
The PLA Daily said while relations between India and China had developed well with “harmonious” high-level exchanges, the border dispute and the “complex China-India-Pakistan triangle”, which was the “biggest problem” in the relationship, had created mistrust.
The commentary said it saw India's military upgrade as the reflection of an anxious domestic elite who viewed China's faster development as a threat.
“Deploying 100,000 more soldiers along the border areas with China is more of a political move than a military one,” the newspaper said.
“After taking necessary precautions, China just needs to continue to develop friendly relations with neighbouring countries and adhere to its established security strategy, and then India's troop increase will be in vain.”
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via thehindu.com
Jg
Tuesday, November 8, 2011
Monday, November 7, 2011
Sunday, November 6, 2011
Saturday, November 5, 2011
Texas Entrepreneurs network
Texas Entrepreneur Networks to hold its first Funding Forum in El Paso
3rd October 2011 · 0 Comments
Entrepreneurs from opportunities to pitch deals in front of qualified investors around the state
The Texas Entrepreneur Networks (TXEN) today announced that it will be holding its first Funding Forum in El Paso, Texas on November 1st, from 1-4 pm. The event will be hosted by the Greater El Paso Chamber of Commerce at 10 Civic Center Plaza, El Paso, TX 79901
Texas Entrepreneur Networks produces funding forums in the major markets around Texas featuring 10 entrepreneur pitches in front of different investor panels assembled in each location. Each entrepreneur will have 10 minutes to deliver their pitch, and investors will be given a few minutes to ask questions and can follow up directly with the entrepreneur for subsequent meetings. This funding forum will be open to the public for viewing.
“We’re excited to host our Funding Forum in El Paso to give some exposure to startups and investors in that area,” said Hall T. Martin, director of the Texas Entrepreneur Networks. “The goal of our funding forums is to facilitate the pairing of high-growth startups with angel and venture capital investors more rapidly through pitch sessions. Our range of funding forums around the state allows entrepreneurs to get faster exposure for their products and services in front of a variety of investor audiences resulting in a greater number of startups funded around the state.”
Entrepreneurs that are interested in pitching deals at the Funding Forum in El Paso on November 1st need to sign up for the Texas Entrepreneur Network CONNECT program at www.texasEnetworks.com/connect
All incoming deals are assessed for viability and scheduled appropriately into area Funding Forums.
More details are be available at www.texasEnetworks.com
About Texas Entrepreneur Networks (www.texasEnetworks.com)
Texas Entrepreneur Networks seeks to foster networking, mentoring and funding for startup companies around the state. Often times, a new entrepreneur doesn’t know where to start to gain information about starting a company or growing it to the next level. The Texas Entrepreneur Network provides information for that purpose through blogs on its website, aggregated event calendars, and catalogs of local resources to foster the growth of startups around the state.Tags: Angel Investing, Angel Investment, Angel Investors, Capital Ready, El Paso Startups, Entrepreneurs, Funding, Funding Texas, Hall Martin, Startup Capital, Texas Entrepreneur Networks, Texas Entrepreneurs, TXENetworks.com
About Hall Martin
Hall Martin is the director of the Texas Entrepreneur Networks and can be reached at director@txenetworks.com
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