Written by Jacklyn Rome on Wednesday, July 1, 2009
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.
Written by Dave Lavinsky on Tuesday, June 30, 2009
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.
Written by Jacklyn Rome on Monday, June 29, 2009
Many entrepreneurs and investors have been capitalizing on developing internet capabilities and the increased usage of social networks around the world by creating a new wave of social networks and Web 2.0 websites. Over the last few years, the Web 2.0 sector has seen a number of acquisitions for companies including Bebo, Blogger, Cork’d, Del.icio.us, Flickr, Jaiku, Last.fm, Picasa, Rojo, Skype, Sphere, StumbleUpon, and Webshots. Entrepreneurs have been encouraged by large scale transactions including YouTube selling for $1.7 billion, Facebook’s valuation at $15 billion based on Microsoft’s recent investment, and MySpace’s sale for $580 million.
Written by Dave Lavinsky on Thursday, June 25, 2009
In a world with a poor economy and uncertain economic outlook, the knee-jerk reaction of most entrepreneurs and business managers is to layoff employees and thus reduce labor costs.
While I agree that reducing labor costs is key, you can oftentimes do this by increasing the amount you pay your employees.
Take the case of The Container Store. This Texas-based company has a unique HR strategy. That is, they have just one employee for every three that their competitors have. But, they pay their employees double the industry average and spend 160 hours training them.
The result is that their employees are better trained and happier, and thus provide superior service at a 33% overall lower cost than competitors.
Interestingly, when The Container Store opened in New York City, it had 100 times more applications than available positions. With numbers like that, they are able to hire the best of the best each time.
Similarly, Harry Seifert, CEO of Winter Garden Salads gives employees bonuses just before Memorial Day, when demand for its products peak. The bonuses boost morale and cause the company's productivity to jump 50% during the busy period.
Paying employees more to improve performance and boost company-wide profits is a historically proven tactic. In fact, back in 1913, Henry Ford doubled employee wages from $2.50 to $5.00 per day. The move boosted employee morale and productivity and caused thousands of potential new workers to move to Detroit.
A final key point to note is that laying off employees is often a bad strategy. While it will save you money in the short-term, in the long-term, hiring new employees and training them is much more expensive than the cost of keeping the employees that you laid off.
Rather, a strategy that you should consider is to ask (or require) employees to take pay cuts and/or offer employees company stock in lieu of a portion of their cash compensation.
Written by Jay Turo on Wednesday, June 24, 2009
The general misery that the public markets have subjected us all to over the past year (and really the past 10 years, with the Dow Jones, the S & P, and the NASDAQ all trading lower today than they were in 1999), begs the question - how does stock market performance affect angel investing returns?
The answer, on the one hand, is very obvious. A falling tide sinks all boats. So as goes the public markets, so go the private equity markets, of which both venture capital and angel investments are subsets.
This is best illustrated by the amazing (and depressing) statistic that in the last 10 years there has been more money invested into the venture capital industry than has come out of it. A lot of effort for naught.
But in spite of this, and maybe even because of it, average angel investing returns this decade have been surprisingly, even shockingly good. According to data compiled by Thomson Financial, average angel investing returns have been in excess of 20% annually since 1999.
Why is this and will it continue? Well, it has to do with the difference between the "macro" and the "micro."
To hear more on this, please click the below.
Written by Dave Lavinsky on Tuesday, June 23, 2009
When entrepreneurs ask me what sources of capital to tap to fund their businesses, my answer is generally "as many as you can."
I often point to companies like Google, who relied on credit cards, angels and venture capitalists in its early days.
Recently Animoto heeded my advice. In it's most recent round of funding, Animoto raised $4.4 million from a venture capitalist (Madrona Venture Group), a corporate/strategic investor (Amazon.com), and two angel investors: iStockphoto founder Bruce Livingstone and angel investor Jeff Clavier (Clavier is also the founder and managing partner of SoftTech VC, a seed-stage venture capital firm).
What's even more interesting is what Animoto is. Animoto is a website where you can quickly and easily turn photos into videos. Why is this interesting? Because you can use Animoto to create a video about your company to market it to investors.
So not only is Animoto teaching each of us about how to best raise capital to fund our growth, but is offering a tool to help us market ourselves to investors.
To see how it worked, I created an Animoto account (doesn't cost anything and is quick to do) and created a quick video. I was home at the time with my daughter, so we did it together and created one with a few of her recent horseback riding pictures.
The good news is that it was really simple to create the video. The negatives were that 1) rendering time was slow (plan to wait at least 5 minutes before the video is ready to be viewed for a 30-second clip), and 2) the non-paid version only allows your video to last 30 seconds. Fortunately for $3 per video, or $30 for a year, you can create full-length videos.
Overall, Animoto is a great lesson in capital raising and a great tool to use when raising capital for your business!
Written by Jay Turo on Tuesday, June 23, 2009
Accelerant. C8 Medisensors. Dakim. DCIP. Free Conference. Fresh Games. Green Medical. Helix Wind. InfoSpace. Integreon. L3D3. Mobeze. MyPublicInfo. Nolatek. Ometric. Pocketsonics. Precision Time. Raise Capital. Recoup IT. Research Scientists. Sandel Medical. Spring Medical. Telverse. Thrombovision. XCOM Wireless. Xorbent.
These companies all share a few things in common:
1. They are either past or current Growthink clients and/or investments (though this is by no means a complete list).
2. They all either achieved - or are on the path to achieve - successful exits through a public offering or a company sale.
3. They are all led by CEO's and senior executives that are a cut above. Men and women that are entrepreneurs and business-builders in the best and highest sense - the kind of managers and visionaries that are the bedrock of America's vibrant, free enterprise system and way of life.
I have been privileged to work and get to know inspirational, entrepreneurial leaders like Dan Michel at Dakim, Liam Brown at Integreon, Walter Alessandrini at Ometric, Brian Ashton at Precision Time, Rick Singer at Raise Capital, Peter Sobotta from RecoupIT. Jack Smyth at Spring Medical Systems, Ed Teitel at Thrombovision, and Dan Hyman at XCOM Wireless.
Here are 5 qualities they all share:
1. Their Work Ethic is Off The Charts. This may sound really obvious, but the great entrepreneurs are extremely disciplined and organized and make the sacrifices to commit themselves fully to their business. Work - life balance is a nice theory, but in entrepreneurs to back, the more zealous the better.
2. They Have Great Numbers Fluency. As Guy Kawaski so eloquently puts it, we live in the age of excel, not of PowerPoint. Great 21st century leaders are "Super Crunchers," - they undertand the power of statistics, of "evidence-based" decision-making, of testing, and of managing by the numbers. They are not enslaved by the numbers nor do they lose sight of their human and qualitative aspects, but they are highly informed by them. They are hungry for unbiased, third-party information about their markets, their customers, their competitors.
3. They Have Done it Before. Following up on #2, the entrepreneurs most likely, statistically, to be successful are those that track records of success. It doesn't mean that just because they have succeeded in a past company mean that they will necessarily succeed in the next one. Nor do this mean that those who have failed in the past will fail in the future. Only that the probabilities are that this be the case. All of the managers above had track records before their existing business of successes - entrepreneurial successes, corporate successes, educational successes. Success follows them, not the other way around.
4. They Know When To Manage and When To Lead. Successful business exits require first and foremost, organization-building. Teams of people need to be assembled and directed to accomplish a common objective that can be quantified on the scorecards of business - revenues, profits, and cash flow. Balancing these left and right brain objectives require a sense of knowing when to manage and when to lead. Management is left-brained - it is analytical, numbers-driven, and dispassionate. It see business as a black box, with the sole objective of turning cash into more cash as fast as possible. Leadership is right-brained - it is conceptual, more long-term focused, and sees the business more as an organism as opposed to a collection of individual parts. Leaders sometimes will sacrifice short-term results for long-term gain, but do so carefully, deliberately, and warily. They are soft-hearted but hard-headed.
5. They are Proud and Humble. Great entrepreneurs are proud of their accomplishments and greatly desire more of them. They are confident in their vision and their abilities, and do not let adversity, criticism, objections or rejections deter them from their chosen path. They are not, however, headstrong nor arrogant. They respect facts, statistics, and informed opinions. And when these are in conflict with even their most dearly-held beliefs and strategies, they change. Not with the wind, but nor only at the point of a gun.
If you find these 5 attributes in an entrepreneur, savor them, appreciate them, learn from them, and back them. Till the cows come home. And then some more.
Written by Dave Lavinsky on Thursday, June 18, 2009
Over the past decade, I have written countless articles on how to raise capital. I have taught thousands of entrepreneurs how to create a great business plan, how to develop a strong financial model, and ways to devise a slide presentation that gets investors excited.
Written by Jay Turo on Tuesday, June 16, 2009
The typical wisdom regarding the appropriate financing course for startup goes as follows:
It all sounds wonderful and it is. The only problem is that it mostly a fairy tale. Here is what really happens:
New, groundbreaking research from the Ewing Merion Kauffman Foundation on Entrepreneurship shows that the #1 key for the angel investor returns in emerging technology deals is that there is never any venture capital invested in the company!
As interestingly, the data shows that when you remove a follow-on venture capital round from angel invested deals that expected returns skyrocket.
The data is somewhat inclusive as to why this is. I surmise three main reasons:
My suggestions for the angel investor looking to make money? First, look for "one and done" deals - companies that need just one round of outside capital to get them to positive cash flow. Second, look for companies that have short and realistic liquidity (exit, IPO) timelines. And third, don’t get star-struck by big VC interest in your deal. It can often be a double-edged and very sharp sword.
Written by Dave Lavinsky on Tuesday, June 16, 2009
Every day I hear pitches from entrepreneurs about the great new product or company they are launching (or want to launch).
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