Thursday, January 31, 2008

More on what investors want

Several years ago, Cliff Ennico interviewed me for his online column at Cliff is an attorney, syndicated TV host, expert on legal and tax matters for Ebay University and more. He's also a great person. I was reminded about this interview when someone saw it and contacted me. The funny thing is, in five years what investors want has not changed. They simply want to get an excellent return on their investment. And they've figured out ways to find the companies that are most likely to do that. I'll be writing more about this topic in the weeks to come.

In the meantime, please email me with any questions you want answered via this blog. Join or create a discussion.

Here's a link to Cliff's article.

What VCs Want

What do venture capitalists want? That's a question many entrepreneurs ask me. At the Connecticut Venture Group's January meeting in Stamford, CT, I got to hear ten providers of capital give some answers. Brad Palmer of Palm Ventures said he's looking for recurring revenue models in underperforming companies. Dave Tamburri of Susquehana Growth Equity said he's looking for financial tech, health tech, software and business services companies with $5 million in revenue. Alex Zisson of Thomas, McNerney and Partners wants early expansion companies in healthcare, biotech, medical devices, diagnostics and pharmaceuticals. The list goes on.

As you can see, most VCs want to invest in companies that already are on the road to success. That's why when you start out, it's good to create your own road map, or business plan. You have to figure out what it will take to get started in terms of time, money, people and resources. And you have to be willing to forego a salary and to tap savings, credit cards, lines of equity and friends and family to get off the ground. Then, you have to execute your plan. It's only after you're a going concern that you venture toward the venture capitalists.

If you have questions about your business, I'll be happy to answer them in this blog. Just email me at

For more information about the Connecticut Venture Group, visit their website at:

Tuesday, January 29, 2008

Angel Investors

At the Connecticut Venture Group meeting last week, Andy Hanson, who is an angel investor, told the audience that finding angel capital in Connecticut is not easy. To illustrate his point, he asked for a show of hands -- how many angels in the audience? 11. How many entrepreneurs? About 150. Andy mentioned three angel groups in CT -- CT Angel Guild, Angel Investor Forum, and Private Investors Network.

Angel investing, according to Andy, fills that gap between friends and family funding and venture capital. It's for early and seed stage investors. Typically, an angel will invest in a company with a product and at least one customer who has written a check. The business must be scalable; i.e., readily expandable/growable. The angels want to get at least 10 times their money back. That makes it hard for entrepreneurs to get funding.

For every 10 plans an angel reads, he or she will see 3 owners and fund 1 or 2 businesses. That's why having a great executive summary or one-page angel sheet is essential. To get money from the angel groups Andy is connected with, go to the Connecticut Venture Group and fill out their seed/early stage form.

If you need advice about filling out these forms or improving your executive summary, please visit my website: or email me at:

Monday, January 28, 2008

Bear Naked

Bear Naked Granola started in my home town, Darien, CT, and what a success story it's been. Two young adults made great granola and sold it locally. They listened to consumers and to retailers. They attracted local investors. They believed in good corporate citizenship and in being philanthropic. They built sales to $65 million.

Now, they've sold their business to Kellogg's for $122 million. You can read about it in the Connecticut Section of the New York Times:

It's a great article. The founders of Bear Naked deserved their success. A few years ago I tried to nominate them for E&Y's Entrepreneur of the Year award. But they hadn't been in business long enough. I know some members of the Flatley family. Kelly's younger sister tutored my daughter in math during grade school -- a fifth grader tutoring a third grader. I just can't say enough good things about the Flatleys or Bear Naked.

Friday, January 25, 2008

What I Learned at the Connecticut Venture Group - 1

Last night I attended the Connecticut Venture Group's ("CVG") forum on venture funding and term sheets. For the next week, I'm going to write about all the things I learned at the meeting.

Entrepreneurship is hot in Fairfield County, Connecticut. Typically, when the economy is disrupted, people turn to starting businesses. The meeting was packed with about 150 entrepreneurs all seeking capital. We did hear from 10 investors (an angel, a banker and eight VCs), who spoke about their areas of interest, their firms and how much they are looking to invest. What amazed me is how much venture capital is available in my area -- millions of dollars. However, each venture capitalist or angel tends to want to invest in specific areas that mesh with their own expertise and their investment criteria. Some want software companies with $5 million in revenue seeking expansion capital. Others want to invest only $500,000 in early stage companies which actually manufacture something and have at least one paying customer. The list goes on.

It's important for anyone seeking capital to be strategic. Discover what the investors want before sending out your plans or executive summaries. One way to do this is to attend meetings like the one I attended or to attend venture fairs. CVG runs the largest venture fair in the Northeast, called Crossroads. I was a judge for last year's event. About half the companies that apply to present are accepted. Go to the CVG's website to learn more about Crossroads and other CVG events.

Thursday, January 24, 2008


When VCs or other investors hear an entrepreneur claim that "there are no competitors," they immediately tune out the story. I can't tell you how many times I've heard that claim, only to go online and immediately find a slew of competitors. When you think of competition, you've got to think not only of direct competitors, but also indirect competitors. You've got to think of your entire category. If you bake specialty artisan bread, all bread bakers are your competitors because consumers must decide where to spend their bread money and which bread calories they want to consume. Analyzing the competition is very useful. You can find out what they do, how they do it, what their financial structure is, their suppliers, their allies and who they believe their competitors are. You can also learn more about the industry from reading competitive information. Finally, studying the competition is the best way to figure out what your competitive advantage is. If you don't have time to do the research yourself, you can hire an expert to do it for you.

Friday, January 18, 2008

From Forbes carries a lot of great stories for entrepreneurs. This one about healthcare if particularly good. It shows how small business owners can be agents of change.

In working with companies in other countries, I've learned that when a company doesn't have the health insurance burden, all that money flows to the bottom line. Our businesses are at a competitive disadvantage.

Thursday, January 17, 2008

Boomer Women Rule

MediaPost has a great article about the amazing power of the women of the Baby Boom generation. The title is "Middle-Age Women Are the Driving Force in Our Society - Better Get Out of the Way." 40 million women know what they want. Advertisers and marketers who figure out how to reach them with better products and better advertising will win big bucks, in my opinion. Read the article at:

I also think this group of people is our nation's greatest untapped resource. We're well educated, can multitask and have the value of experience. Women own one third of businesses. We are ready for more success.