Growthink Blog

CleanTech Nation: Why Investments Have Risen 477%


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You've likely heard all of the hype regarding Cleantech.

How the Obama stimulus plan fuels $83 billion into the sector.

How cleantech investment today is more than 477% greater than what it was in 2005.

How Vinod Khosla, arguably the world's most famous and well- respected venture capitalist, last week raised another $1 billion - including $150 million of his own money, to invest in it.

Wind. Solar. Geothermal. Water treatment. Smart grid. Fuel cells. Carbon capture. If you have turned the TV on at all over the past year, you've probably heard about all of these.

And here is one you probably haven't heard - Bio-friendly pesticides

Who cares?

Well, if you're interested in capitalizing on one of the great arbitrage opportunities of our time, you should care.

Because bio-pesticides, an environmentally friendly option to synthetic chemicals, is the perfect storm about to happen.

We're talking about a $70 billion+ industry, where new, effective and safe pesticide products are gaining traction.

One where governments worldwide are mandating -  through strict, new regulation - a fast transition from the old, synthetic-based products that have been damaging our health and the environment for far too long.

An industry that includes dozens of completely under-the-radar, private companies.  And cash - rich big boys, like DowAgro and Monsanto - on acquisition sprees.

Meet the Industry Leader

I would like to invite you to an exclusive opportunity to meet, via web conference, the CEO of one of the fastest-growing and most dynamic companies in the industry.

He will talk about the super-fast growth his company is currently experiencing, and how they relate to his public offering and acquistion plans.

If you're interested in learning how money is really made in emerging technology, then this is a presentation you don't want to miss.

Capital Raising Bootcamp Preview


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Here is a video that explains precisely why raising capital is so important to your business.

And, importantly, it includes details regarding why it’s critical that you understand how to raise capital from multiple sources, even if you currently are only seeking one particular type of capital...

Near the end, I reveal a fantastic (and perhaps my favorite)  tip, which is the single most controllable factor that you have to improve your success in both fundraising and successfully growing you business.

 


Creative Business Finance: The Story of the Chihuahua & The $1.5 Billion Man


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I'd like to tell you brief story about a Chihuahua who was taken along on a safari vacation. The story is important as it probably holds the answer to your capital-raising needs.

On the first day of the Chihuahua's trip, the Chihuahua wandered off too far and got lost in a bush. Unfortunately, within minutes, the Chihuahua encountered a very hungry looking leopard.

Realizing he was in trouble, but, noticing some fresh bones on the ground, the Chihuahua started to chew on them, with his back to the leopard. As the leopard was about to leap, the Chihuahua smacked his lips and exclaimed loudly, "Boy, that was one delicious leopard. I wonder if there are any more around here."

The leopard stopped mid-stride, and slinked away into the trees.

"Phew," said the leopard, "that was close - that evil little dog nearly had me."

A monkey nearby saw everything and thought he'd win a favor by setting the leopard straight.

(Fortunately, the Chihuahua saw the monkey go after the leopard, and guessed he might be up to no good.)

When the leopard heard the monkey's story, he felt angry at being made a fool, and offered the monkey a ride back to see him get revenge.

As the leopard and monkey approached, the Chihuahua once again turned his back and pretended not to notice them. And when the pair got within earshot, the Chihuahua said aloud, "Now where's that monkey gone? I sent him ages ago to bring me another leopard..."

The moral of the story is that the Chihuahua survived because he was creative, and because, the second time, he planned ahead.

The same is true when it comes to financing your business. While most entrepreneurs are extremely creative when it comes to coming up with unique business ideas and marketing plans, they tend lack creativity in the area where they need it most - fundraising.

Remember, without adequate capital, even the best business and marketing ideas will fail.

Fortunately, I am just about to release Growthink's "Definitive Guide to Creative & Alternative Financing Sources."  The report gives you a detailed overview of the twelve most common types of capital used to start and grow business. And then, it provides twenty-eight (28) creative and alternative sources of financing that resourceful entrepreneurs have used to more easily finance their businesses.

One of the stories in the Guide is one of my favorites...the one about Kenneth Cole. Well before global retail sales of Kenneth Cole products reached $1.5 Billion last year, Kenneth Cole was a struggling entrepreneur with no money.

But he believed in himself and his designs, and used his creativity not only on his products and his marketing, but on his financing plan. Cole's plan was this - to find a struggling shoe manufacturer in need of customers (because the economy was weak then like it is right now) to manufacture his shoes on consignment. That is, Cole would only have to pay for the shoes AFTER he sold them.

Well, Cole was able to easily find the manufacturer who financed his business buy giving him hundreds of thousands of dollars of shoes. The rest, as they say, is history.

If you are seeking financing for your business, and you have not devised a creative plan to raise capital, I urge you to learn these great, creative financing ideas and use them to raise money for your business.

I will be releasing this report later this week. But I prefer it if you start right now. Take out a sheet of paper and write down your creative ideas to raise capital. Then, later this week, I'll give you 28 more ideas so you can complete your list, figure out which sources you are most comfortable raising money from, and begin financing and really growing your business.

Portfolio Theory and Angel Investing


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One of the most exciting trends in angel investing and private equity over the last 6 months has been the application of traditional

Some of the most interesting investment research over the last 6 months has been the application of traditional portfolio theory and hedging  techniques to angel and private equity investing. Research compiled by the National Venture Capital Association, by the Kaufman Foundation for Entrepreneurial Activity, and by the Entrepreneurship in the United States Assessment, highlight a number of both subtle and startling insights.

When compared to other asset classes, there is relatively little correlation between various private equity investing sectors. In other words, while the share  prices of publicly traded aerospace and software companies, for example, will move up and down more or less together, the success probabilities of that hot drug development company and that wind energy startup are reasonably uncorrelated.

Why is this important? Because it creates a far greater hedging opportunity than is available in public stocks, whereby the investment combination of the wind  startup and the drug development company has disproportionately less risk for the expected return.

The research also shows that the smaller the size of an equity financing deal, the less correlated is the success probability of that deal with the equity markets as a whole. A subtle, but critical point that had made a HUGE difference in investment returns over the past 10 years. Try on these two facts:

1) The venture capital industry as a whole - with average financing sizes over the past 10 years of greater than $8 million/deal - has returned ZERO percent to investors during that time frame.

2) In contrast, the average return on private equity classified as "early, or angel stage" had an average annual return during that same period of a whopping 32.9%! (Thomson/Reuters).

I talk about more about the application of portfolio theory to private equity and angel investing in the video below:



For our Friday live deals call, click here: www.growthink.com/livedeals

 


Growthink Live Deals - Friday Conference Call


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To register for the call, click here: www.growthink.com/livedeals

 


Creative Business Financing Techniques - Donations


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One neat thing about helping entrepreneurs fund their businesses is that whenever someone comes up with a cool way to finance their business, I end up hearing about it.

Whether they email me directly, or someone else finds out and lets me know, it always ends up in my inbox. Which is a good thing.

For years, I’ve been keeping track of these emails and stories and have decided to put together a report. The report, which will be called Growthink’s “Definitive Guide to Creative & Alternative Financing Sources” will detail tons of ways to finance your business that you probably don’t know about or haven’t considered.

One such creative financing technique is using donations. Months ago I received an email about a horoscope website, Birdielawson.com, which solicited donations from its visitors. The site has generated thousands of dollars in funding from these donations. And it’s using these donations to grow further.

Another great example of donation financing is FeedDigest. FeedDigest was founded by entrepreneur Peter Cooper in 2004. At that time, Cooper added a PayPal button to his website and asked users of his website to donate money.

His visitors subsequently donated enough money to allow him to start really growing the company. Soon after, an angel investor wrote him a check for even more money. FeedDigest grew and grew based on those investments, and in August 2007 was acquired by Informer Technologies, Inc.

And finally, perhaps the most famous recent example of donation financing is Wikipedia which has raised several million dollars in donations to date.

So, if you have a website (if not, you should create one), one source of capital that you should consider is donations. Soliciting and accepting donations is as simple as creating a PayPal account and adding a PayPal button to your website.

Alternative Business Financing: 40 Tactics to Employ


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Did you know that when I started Growthink ten years ago, I knew very little about raising capital?

Sure, I knew a lot about raising venture capital, but I didn’t know much about financing sources like angel capital or SBA loans. And I knew virtually nothing about creative and alternative financing sources. In fact, since starting Growthink, I have uncovered 40 tried-and-true ways that entrepreneurs can fund their businesses. Most of these ways I had never heard of before. But they work.

Now I’d like to share them with you.

In a few short weeks, I’ll be teaching a select group of entrepreneurs all about these 40 financing sources in a unique multi-part teleclass.

Why is it important to know all of these options for raising capital? You might be thinking “But I just need a loan right now,” or “I’m just looking for angel capital,” or “I know that venture capital is right for me.”  

Knowing these 40 options provides you with the flexibility you need to raise capital from multiple sources NOW. it also gives you the ability to raise various rounds of capital in the future.

The truth is, most successful businesses utilize at least 3 types of capital, and usually a combination of debt and equity, as well as “creative” or alternative financing.  If you’re only using 1 type of capital, but your competitors have access to several types of capital, you’re at an automatic disadvantage. 

More importantly, not knowing about these 40 financing sources, and going after the WRONG sources of capital, is the #1 reason why most entrepreneurs enter the “death spiral.”

What is the “death spiral”? Well, the death spiral is the unfortunate process that typically occurs when an entrepreneur has a great idea and needs money to execute on it.

The death spiral has four parts:

1. The entrepreneur learns a little bit about how to raise money.
2. The entrepreneur gives a whole or half-baked effort to raise money.
3. The entrepreneur fails to raise capital (in fact, they fall flat on their face) because they don’t fully know what they’re doing and/or go after the wrong funding sources.
4. The entrepreneur’s dreams die and they return to their 9 to 5 job.

If you want to avoid the death spiral, and raise funding for your business, I will teach you how to do it. As mentioned, later this month, I will be offering a unique multi-part teleclass that teaches entrepreneurs like you how to really raise capital.

ARC Stabilization Loans - 35,000 More Reasons the US Government Rocks


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The next time you get frustrated that the taxes you pay to the U.S. government are so high, realize that the government gives a lot of this money back to entrepreneurs. And one of these entrepreneurs can be you!

In fact, last year, the U.S. government provided funding to 69,434 companies through its Small Business Administration (SBA) lending program. And last month, the SBA stepped up its efforts even further to help entrepreneurs and small business owners.

Specifically, last month, the SBA created a new type of loan called the "America's Recovery Capital" loan, or "ARC."  This loan is specifically designed to help existing businesses who are currently experiencing distress due to the economy.

What's great about ARC loans is that they are deferred loans.  The funds are dispersed to you over a period of up to 6 months, but you are not required to make any payments until 12 months have elapsed since you were funded.  Payback terms are up to five years.

The maximum loan principal is $35,000.  And there are no fees to the borrower. And the government guarantees 100% of the loan to the SBA partner bank. Finally, the interest rates are extremely reasonably; only prime plus 2%.

To learn more about and how to get an ARC, SBA or other bank loan to fund your existing or startup business, instantly download our new report entitled "Growthink's Step-by-Step Guide to Raising Capital from Banks & SBA Lenders" here: http://www.growthink.com/products/loanguide


Israel Venture Capital: The Silicon Valley of the East


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Israel, more fondly nicknamed as the “Silicon Valley of the East”, is the largest recipient of United States venture capital, absorbing 7.7% of outbound investment dollars. For a small and relatively new country, Israel has jumped into the limelight as one of the largest producers of new technologies. The country is responsible for some of the most prominent inventions over the past several decades, including drip irrigation, instant messaging (ICQ), Intel’s Centrino computer chip, and voicemail technology.

Israel also holds the second greatest number of foreign companies on the NASDAQ, second only to Canada. Some of the more prominent multi-billion dollar corporations listed on the exchange include TEVA Pharmaceuticals (market cap: $41 billion), the world’s largest generic drug manufacturer, and Gilead Sciences (market cap: $43 billion), which develops therapies for viral diseases, infectious diseases, and cancer.

In 2008, over $2 billion was invested in 480+ Israeli high-tech companies, an increase of 18% over the prior year. Roughly 50% of funds came from outside of Israel, primarily from the United States, which has also shown significant investment in Israel by building Israeli satellite offices for American companies. In 1974, Intel chose Israel as the location for its first design and development center outside the United States, and thereafter opened 8 locations, employing over 5,300 employees. International companies such as Microsoft, IBM, Nokia, and Motorola have also followed in the footsteps of Intel Corporation by opening offices in Israel.

So why has Israel drawn so much VC funding and attention from the international business community?

Israel has the highest number of university degrees relative to the population and the largest number of scientists per capita in the world, with 145 scientists per 10,000 citizens, in comparison with the United States at 85 per 10,000. Additionally, Israel has the highest number of start-up companies in the world outside of the United States.

Israelis also receive extensive technical training through their compulsory military service and have adapted several advanced military technologies to other applications. For example, Given Imaging, which in 1998 came out with the first ingestible disposable video camera for viewing and diagnosing the small intestine, developed and adapted their product from an electro-optical device for military missiles.

The enormous pool of talented workers in Israel is also much more affordable for technology companies than those in Silicon Valley, and the government has been a strong supporter of growth in the hi-tech sector. The Israeli government provides incentives and grants to encourage capital investment and scientific research within the country.

Growthink has worked with dozens of Israeli entrepreneurs throughout its ten years of operations and has several strategic alliances with individuals within the Israeli Venture Capital community.

One Really Big Organization that Wants You to Succeed


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If you own an existing business, or are planning to start one, there is one organization who really wants you to succeed.

In fact, this organization is even willing to loan you money to start or expand your business. And they will give you this money with favorable interest rates and payback terms.

That organization is the United States government.

The U.S. government has learned over time that giving capital to entrepreneurs creates more jobs, improves the economy, and expands the tax base. All the things they really want to achieve.

Many years ago the U.S. government set up the Small Business Administration (SBA) specifically to make loans to entrepreneurs and small business owners. In fact, the SBA currently has $45 billion in loans outstanding to entrepreneurs.

And, in addition to SBA loans, there are several kinds of debt capital that may be available to start or grow your business such as business lines of credit and traditional bank loans.

Each of these types of capital are covered in detail, including a step by step plan for getting these loans for your business, in our new report entitled "Growthink's Step-by-Step Guide to Raising Capital from Banks & SBA Lenders."

Among other things, the report covers:

* The differences between raising debt capital and equity capital that you need to understand (Page 2)

* The important elements of loans and what you need to know BEFORE you look for one (Page 7)

* Exactly what lenders are looking for when they consider whether or not to fund your business (Page 9)

* The biggest misconception about loans that keeps many entrepreneurs from getting funded (Page 11)

* One easy, but seldom used trick to maximize your chances of getting a loan on the best possible terms (Page 12)

* The key types of loans and what you need to know to make sure you get one that's right for your business (Page 13)

* The best way for startups to overcome a key SBA requirement and quickly get the perfect SBA loan (Page 19)

* Assessment of every type of SBA loan to allow you to quickly determine the optimum one for your business (Pages 19 to 24)

* The hands-down fastest way to get an SBA loan (Page 29)

* Growthink's proven 6-step formula for getting an SBA or bank loan (Pages 32 to 36)

* The 30 U.S. banks that are most likely to loan money to your business (Page 37)

 

To learn more, click here.


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