| Fact: In 2005 over 500,000 new business
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| | up any equity, total self-reliance on
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| incorporations were organized in the
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| | yourself. Sell your product or service
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| United States.Fact: Of these 500,000 new
| |
| | before you have inventory. If no one buys
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| businesses less than 1,000 received
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| | you have lost nothing. If you receive
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| venture capital funding.There are vastly
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| | orders you know you have a winner. More
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| more entrepreneurs seeking start-up
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| | entrepreneurs successfully can start the
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| funding than there are available funding
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| | road to success by bootstrapping than by
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| sources and investment pools. This is a
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| | any other method.Licensing
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| fact. And yet, 499,000 incorporations
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| | Since the bubble burst in 2000, we have
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| occurred in 2005 without the cover of an
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| | done far more product licensing campaigns
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| investment funding commitment. Many of
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| | than any other deal style. Licensing
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| these new businesses will fail.
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| | requires a thorough foundation of
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| Nevertheless, the urge to seek the
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| | intellectual property protection. First
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| fulfillment, financial security, freedom
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| | to market advantage, a strong Unique
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| and the satisfaction of overcoming the
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| | Selling Proposition, lowest possible of
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| odds still drives us to try.The lingering
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| | goods (while maintaining highest possible
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| doubt, and hurdle each of these new
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| | quality standards) and verifiable sales
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| entrepreneurs confront is this, "where
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| | model.Angel Investors
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| does the money come from"? We look at,
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| | There are so-called angel funds, so
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| on average, 600 submissions per year in
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| | named because like fairies they sprinkle
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| my consulting business. The absolutely,
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| | a little dust on potential deals of
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| number one reason, most of these
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| | interest, just seed money basically.
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| presentations will not ever make it
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| | Angel funds tend to stick to specific
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| beyond the idea stage is an unrealistic
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| | fields (technology, wellness, software,
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| understanding on the role of investment
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| | etc.) where they have great experience
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| and sources of available start-up
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| | and contacts.
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| funds.My first assessment of an
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| | They typically take an oversized piece
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| opportunity is always the idea itself.
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| | of equity, as first money in is most at
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| Assuming the submission passes our
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| | risk. In addition, angels are few and far
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| layered analysis, the next hurdle is the
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| | between, hard to find. Look at local
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| inventor or prospective entrepreneur. Is
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| | Chamber of Commerce fairs and regional
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| he a dreamer, or a doer? And the first
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| | government incubators as a source for
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| disqualifying trip wire for a dreamer is
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| | networking angels.Mezzanine Finance
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| the expectation that they can have
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| | Once a deal has shown market potential,
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| someone incur all of the financial risk,
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| | sales are growing, the market is
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| 100%, while they commit nothing. When I
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| | responding and the risk factor has been
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| say nothing, I mean no patent filings, no
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| | mitigated, mezzanine financing becomes an
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| production quality prototypes, no
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| | option. Usually the mezzanine round is
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| qualified research, no testing, etc. They
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| | for far more investment money than the
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| have only an idea.Angel investors do
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| | angel-round, and the equity percentage is
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| exist, but even they do not very often
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| | not as dear. Many banks now have
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| consider investment in dreams, cocktail
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| | mezzanine arms to service growing, but
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| napkin designs or untested theory. And
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| | not yet mature opportunities.Investment
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| yet we eliminate 60% of the product
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| | Bank
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| opportunities we view, many with
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| | Investment Banks are very difficult to
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| interesting commercial potential, simply
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| | work with unless a project is typically
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| because the submitter can not, or will
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| | past the angel and mezzanine funding
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| not invest in their own opportunity. If
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| | stage. They want to see sales traction,
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| you do not believe in yourself, your
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| | even if in a limited test market.
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| opportunity, why would anyone else?The
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| | Investment Banks have exceedingly
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| development monies for patent and
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| | aggressive Harvest Goals, recognizing
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| trademark filing, design, research,
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| | that even with the most heavily vetted
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| creating working models is what the
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| | deals, only 2 in 10 or so will succeed
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| funding world calls 3-F money. 3-F money
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| | and pay-out.
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| comes from friends, families or fools.
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| | Also, Investment Banks are not
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| This is very high risk and usually very
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| | interested in small loan amounts. It is a
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| small amounts are needed. Most of the
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| | reality that it is easier to secure
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| products we see require from $12,000 to
| |
| | several million dollars than several
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| $20,000 to put in a professional
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| | thousand for a new project. They will not
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| presentation that could be of interest to
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| | be interested in a local bakery.
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| investors, licensees or partners. Most of
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| | A strong, experienced management team is
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| the people that submit to firms like ours
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| | always a top priority for Investment
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| have jobs, homes, and investments. Many
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| | Banks.Small Business Administration
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| love to chat about their boat, second
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| | The SBA is an excellent avenue for the
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| home or recent safari vacation. But they
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| | first time startup, minorities and women
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| claim to have no money to invest in a
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| | to utilize as a funding source. The SBA
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| project that they state is an absolute
| |
| | is government subsidized. That said; it
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| winner, and will make millions for
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| | is very slow, bureaucratic and risk
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| everyone involved.This is an absolute
| |
| | averse. A good source of funds for
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| deal killer, a non-starter. We are
| |
| | traditional types of businesses, such as
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| constantly solicited to become the
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| | retail, local service and light
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| inventor's partner, hundreds of times per
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| | manufacturing.Factoring
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| year. Investors must see passion,
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| | Again, this is a personal favorite, as I
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| commitment, confidence and an inventor
| |
| | have used receivable factoring to fund
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| with skin (dollars) in the game. The lack
| |
| | several of my startups. Basically, a
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| of personal commitment one brings to a
| |
| | factor is a financial institution that
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| project is proof that a dreamer is
| |
| | will buy the firms purchase orders, if
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| impersonating an entrepreneur.Friends,
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| | the orders are from top grade companies.
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| family and fools assist in funding,
| |
| | For instance, the entrepreneur receives a
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| investing or partnering most of the
| |
| | purchase order for widgets from Walgreen
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| 499,000 new incorporations filed in 2005.
| |
| | in the amount of $200,000. The order
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| This does not include the huge number of
| |
| | becomes a form of collateral and a
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| sole proprietorships established each
| |
| | pre-negotiated percentage is advanced to
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| year. Most new businesses do not require
| |
| | the vendor. This is used for working
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| the involvement of venture capital
| |
| | capital, often for completing inventory
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| funding sources, blind pools or
| |
| | production. The open balance, less
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| investment banks. Their scale is too
| |
| | factoring fees, is credited when Walgreen
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| small for consideration by firms seeking
| |
| | pays the invoice amount. Virtually every
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| larger investment opportunities with huge
| |
| | dry goods manufacturer factors
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| harvest (cash out) potential.Many
| |
| | invoices.In summary there are many
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| entrepreneurs have used credit cards,
| |
| | funding options available depending on
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| personal savings, a home equity loan,
| |
| | the size, scalability and current status
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| sell that antique car, tap a retirement
| |
| | of the new business opportunity, no
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| account, or utilize an inheritance to
| |
| | entrepreneur should ever attempt to
|
| fund their new enterprise. Just remember
| |
| | approach funding sources without a
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| however, this is high risk and more
| |
| | customized business plan, exciting
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| business start-ups fail than succeed.
| |
| | presentation materials and strong
|
| Nevertheless, securing the initial
| |
| | financial projections. The most likely
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| development funds in this way shows
| |
| | source of funding for 99% of all new
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| commitment and can advance a project to
| |
| | ventures will be personal resources,
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| the point where deal placement is a real
| |
| | friends, family and fools.Geoff Ficke has
|
| possibility.During the 1990's a gold rush
| |
| | been a serial entrepreneur for almost 50
|
| mentality occurred that distorted the
| |
| | years. As a small boy, earning his
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| financial markets. Money for many
| |
| | spending money doing odd jobs in the
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| investment types was readily available.
| |
| | neighborhood, he learned the value of
|
| Due diligence was morphed by theory and
| |
| | selling himself, offering service and
|
| new age abstract business models. The sky
| |
| | value for money.After putting himself
|
| was the limit.Well the sky was not the
| |
| | through the University of Kentucky (B.A.
|
| limit. The bubble burst and in the first
| |
| | Broadcast Journalism, 1969) and serving
|
| decade of the 21st century we are now in
| |
| | in the United States Marine Corp, Mr.
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| an investment cycle where cynicism rules.
| |
| | Ficke commenced a career in the cosmetic
|
| Every deal is thoroughly vetted and
| |
| | industry. After rising to National Sales
|
| re-vetted. Terms are very strident. A
| |
| | Manager for Vidal Sassoon Hair Care at
|
| submission must be absolutely
| |
| | age 28, he then launched a number of
|
| professionally researched and presented.
| |
| | ventures, including Rubigo Cosmetics,
|
| The market allows for no shortcuts or
| |
| | Parfums Pierre Wulff Paris, Le Bain
|
| errors in assumptions made.
| |
| | Couture and Fashion Fragrance.Mr. Ficke
|
| With this reality in hand, and the
| |
| | and his consulting firm, Duquesa
|
| knowledge that self-funding, or 3-F
| |
| | Marketing, Inc. ( has assisted businesses
|
| funding are the most prevalent options
| |
| | large and small, domestic and
|
| for startup monies, are there any other
| |
| | international, entrepreneurs, inventors
|
| options? What are they? There are
| |
| | and students in new product development,
|
| several, and I will be writing
| |
| | capital formation, licensing, marketing,
|
| specifically in more detail on each.
| |
| | sales and business plans and successful
|
| Consider:Bootstrapping
| |
| | implementation of his customized
|
| My personal favorite, as I successfully
| |
| | strategies. He is a Senior Fellow at the
|
| started my first business by
| |
| | Page Center for Entrepreneurial Studies,
|
| bootstrapping. What is bootstrapping?
| |
| | Business School, Miami University,
|
| Simply stated, this is an avenue to start
| |
| | Oxford, Ohio.
|
| your business without borrowing, giving
| |
| |
|
