Entrepreneur

By Krista Tuomi, Associate Professor, American University

Editor’s Note:  As businesses start and grow it is important to think through the best kind of financing for the business.  Entrepreneurs can talk with a variety of business coaches and counselors for advice and information, and may also approach angel investors as they mentor startups in their communities.  Angels need to stay on top of the news about commercial loans and other kinds of financing to help build the success of the startups they support. Some experts say that bank loans are the dominant source of finance for young firms, with as much as 40% of all initial startup capital, although this information may be dated.  Dr. Tuomi takes a look at the current state of bank loans for startups and questions whether this is still the case.

Bank loans are appealing to startups who fear loss of control/equity in their venture. 

By: Elizabeth Usovicz, General Manager of Transaction Commons, as part of a series she writes for ACA aimed at entrepreneurs, "Your Pitch is Just the Beginning."

As an entrepreneur, your pitch is arguably the most important message about your company’s investment-readiness that you will ever deliver. Most entrepreneurs develop two versions of a pitch: a short, elevator version, and a longer, investor presentation with a slide deck. Your elevator pitch is much more than a compressed investor presentation without the slide deck. It’s a precious few seconds of your listener’s attention in which to communicate your passion, describe your innovative product or service and clarify its value from an investor’s point of view.  

By: Elizabeth Usovicz, General Manager of Transaction Commons, as part of a series she writes for ACA aimed at entrepreneurs, "Your Pitch is Just the Beginning."

A few weeks ago, I spoke to MBA candidates at a business school conference. They were passionate about becoming entrepreneurs and were in the process of refining prototype products. Yesterday, I met with another aspiring entrepreneur – a corporate veteran with a product, a patent and a launch plan. Despite the obvious differences in career and product development timing, the students and the corporate veteran shared common traits: they were passionate about their ideas, dreaming big and determined to perfect their investor pitches.

What does it take to be named the most innovative ACA angel invested company for 2015? Well, Ann Arbor, Mich.-based RetroSense Therapeutics, has just raised the bar. The high-flying biotech is developing life-enhancing gene therapies designed to restore vision in patients suffering from blindness due to specific ailments.

RetroSense Therapeutics CEO Sean Ainsworth stated, "It's really exciting and an honor to win the Luis Villalobos Award, which highlights some of the amazing innovations that can come to life through the power of angel investing. Our angel-backed series A, of $7 million, has enabled us to complete studies needed to enter clinical trials and will fund early clinical development.  It's great to have the recognition from ACA for the progress we're making toward restoring vision.

Which of the thousands of startups funded by the 12,000+ members of the Angel Capital Association (ACA), the world's leading professional association for angel investors, will win the coveted Luis Villalobos Award?  It will be one of these three just announced finalists: ActX (Seattle), GroundMetrics (San Diego), and RetroSense Therapeutics (Ann Arbor, MI).  These companies will be honored and the winner will be announced in a special awards ceremony on April 15th at the world’s largest gathering of angel investors, the 2015 ACA Summit taking place in San Diego. The award is named in memory of Luis Villalobos, who angel investors nationwide admired for actively investing in and mentoring ingenious, creative and innovative startups.

“These finalists are at the top of their game and represent the pinnacle of startup innovation and ingenuity,” said ACA Executive Director Marianne Hudson. “Each company is representative of the strong leadership driving the type of innovation that ACA’s 12,000+ angel investor members look for when selecting companies to financially support and mentor.”

By: Elizabeth Usovicz, General Manager of Transaction Commons, as part of a series she writes for ACA aimed at entrepreneurs, "Your Pitch is Just the Beginning."

As an entrepreneur, you live for that big idea that blends innovation, an untapped market and high growth potential.

It’s been said that ideas are the currency of the 21st century, and like all currencies, the value of a big idea can fluctuate. Some days, you can’t seem to find the discipline to execute. Other days, you’re distracted – a competitor surfaces, a strategic relationship falters or a regulatory issue becomes a setback. Your business focus vanishes and distraction takes over, keeping you up at night and making you miserable by day.

By: Ken Kousky, BlueWater Angels and Krista Tuomi, American University

Federal and state governments are beginning to recognize the important role that startups play in job creation. (A recent article by Neumark, Wall, and Zhang notes that they account for almost 20 percent of gross job creation.) For these startups, early stage financing is increasingly necessary given the shortened product life cycle - businesses can only succeed by moving rapidly from ideas to product distribution.  Banks do not provide this type of funding; family and friends rarely have enough; and the public stock market is only an option for established firms. The 2014 Joint Small Business Credit Survey Report emphasizes this. In particular, it finds that the majority of small firms (under $1 million in annual revenues) and startups (under 5 years in business) are unable to secure any credit. (The average approval rate from all sources was only 38%). Not surprisingly, lack of credit availability was the top listed challenge for startups in 2014.

By: Elizabeth Usovicz, General Manager of Transaction Commons, as part of a series she writes for ACA aimed at entrepreneurs, "Your Pitch is Just the Beginning."

Carmine Gallo, author of “Talk Like TED”, calls ideas “the currency of the 21st century.” It’s true that consistently refining and taking action on relevant ideas leads to business innovations and scientific breakthroughs.

For entrepreneurs with an innovative business concept, the process of refining a big idea and taking relevant action includes the ability to synthesize input from a wide range of sources. Input from too many sources can leave you feeling as though there are a hundred voices whispering in your head, muddying your refinement process and making it harder, not easier, to make decisions and take action. Making sense of this varied input requires having a framework for filtering and evaluating those voices.  Here are three framework components to consider.

By: Christopher Mirabile, ACA Board and Launchpad Venture Group

This post originally appeared on Inc.com

Most people are pretty confused about what crowdfunding is and is not. Here are the ten key concepts entrepreneurs and investors need to understand.

1. Product crowdfunding and equity crowdfunding are really different.

Most people still confuse them. Product crowdfunding is done on sites like Kickstarterand Indiegogo. It allows you to finance innovation directly, at the product level; contributors pre-purchase products or simply donate. Conversely, with equity crowdfunding investors take stock ownership in the company making the product, which is very different and quite a bit more complicated. Equity crowdfunding is not yet fully democratized for ordinary investors, but sites like AngelList and WeFunder allow larger (accredited) investors to do it.

By: Elizabeth Usovicz, General Manager of Transaction Commons, as part of a series she writes for ACA aimed at entrepreneurs, "Your Pitch is Just the Beginning."

Asked to explain his investment philosophy to a group of entrepreneurs, the founding partner of an investment fund put it this way: “There are only two things I care about: Can you make product, and can you sell product?”  If you’re the founder of a startup, you know first-hand that sales drive revenue, and revenue drives both investment and growth. How good are your sales skills?

All sales are the result of creating a connection with the buyer, and the best salespeople are adept at developing meaningful business relationships with their prospects. Here are some essentials to developing relationships like a sales pro.

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