Where should you be if you are an Entrepreneur?

We have compiled a study on where are good locations in the world for entrepreneurs; some cultures and some societies tend to accept them more; and appreciate innovative skills more; and some economies offer more opportunities; here we highlight some of the countries based on our recent survey from 500 respondents; these are not in any order; but summarizing the facts.

USA: Despite of the recession, the vast majority of people still tick USA as the favourite place for entrepreneurs. It still offers very supportive environment and also very well established economies especially for new opportunities. It also has a culture for business innovators; its universities are teaching students to be innovative and be different; which is very different from most of education systems in the world.

China: China is an interesting case, where the society is changing, but there is a culture “not to be different” from others. Many still think the best way to make a living is to work for Government which is a life-time guaranteed job. However, with influx of overseas students from other economies; and new technologies; there has been a general rise in entrepreneurship in the coastal cities of China, and there is also a strong increase in venture capital activities to support these new ventures.

India: Compared to China, the 2 rising economies have a lot of similarities; where families have high savings and importance of education. India, however, has been a breeding ground for IT and Engineering entrepreneurs; and its universities and education systems are also evolving into good training grounds for entrepreneurs.

Israel: Israel is a classical example of a society where it values and respects entrepreneurship; they see it as a distinguishing factor for Israel; and most of Israeli firms also have very strong ambitions in becoming global players; the Government has been very supportive to support these programs either by funding or through regular incentives such as networking events; it also has an established venture capital networks to fund new inventions.

Canada: Canada is very much a global village, its proximity to USA is also an interesting case where it likes to compete with US companies; and also receives support from US investors and businesses frequently. Being the world’s most integrated multicultural society also gives Canada an advantage in connecting with businesses and investors around the world. The Government is also very supportive to entrepreneurs noted by number of scholarships and funding programs available.

Germany: Germany is always a nation that supports and values entrepreneurship and technologies, this culture is well remained in today’s society; and its Government and education systems also encourage innovative ideas and support them. In addition to the well known industries like automotives and engineering, German Government and institutions are also highly supportive for cleantech, filming, media and financial industries.

UK: UK is also a perfect ground for entrepreneurs; as evidenced by its innovations in several industries including the financial services industries; aviation industries and biotechnology. Certain cities like London, Oxford are particular good places for entrepreneurs to live where they can find their like minded networks and also concentration of many venture capital firms.

South Korea: If you can speak Korean and if you are in technology, biotechnology and film industries; Korea is a nice place to be in. Korean Government has been implementing many policies for over 20 years in developing the nation’s capability and technical-know-how, it is one of the most ambitious and active governments in Asia in supporting new innovations.

1 in 100 companies gets funded by Venture Capital firms? Why?

Is this just pure statistics or are there really different strategies you can use to make your opportunity more appealing to investors? Why some firms can attract 10 venture capital firms bidding for it, while others can not even raise $1?

I am fortunate to have experience from both sides, I had worked with venture capital firms for many years; and as a entrepreneur, I have also been on the other side of the table being interviewed by venture capital fund managers.

I really think a lot of companies have missed out some key points; some are basic but critical mistakes; and here are some of them:

1.      Too many technical terms: This remains as the most critical mistakes, I went to 4 investors meetings last week, and 3 of them are great products, but the founders have talked in great lengths about the technical implications, and this has turned away potential investors.

As much as we hope all investors are well equipped with technical knowledge – they don’t! And it is very common that they don’t understand what you are talking about.

2.      I don’t have competitors – I found this interesting, some founders are over-confident that they don’t have competitors. In reality, everyone has competitors, while you may not have direct competitors – you would have “some competitors”.

Inclusion of competitors in your Business Plan is important as they are often the first companies investors will go to for comparison. When you say you don’t have competitors, it actually makes their evaluation more difficult.

3.      Unable to identify market size – this is very hard exercise I admit, many companies are unable to quantify how large the market size is. This is especially difficult for start-up companies where technologies are not even proven. This comes back to my 2^nd point where you should look at competitors as part of your research.

Let’s look at Customer Relationships Management software (CRM) for example, when we looked at one company, they actually mentioned “Excel” as their competitor, this was dated back in the early 2000s, when Salesforece was not even existent, and back in CD installation software days. Back then, sales people actually use Excel for sales reports!

So, their market size analysis was to approach those uses still use Excel as primary sales tools – and had been successful.

When asked to quantify your potential market size, we do not ask you to come up to precise figures, but rather, at least some ideas where your potential markets are.

4.      You can’t have too many sales channels & strategies.

If you are a business owner you will understand what I mean. You need to have staged plans for your sales & channelling strategy. You can’t say we will start with 3 direct sales, 3 sales channels and 4 resellers – this actually means you will be spending all your time just figuring out the sales strategies and not achieving sales.

In your business plan, layout the staged approach. Typically, this starts with direct sales – followed by resellers or sales channel partners. Most investors would prefer to see majority of sales coming from direct sales if not at least a fair proportion – as this often means better profit margin unless you are positioned as a reseller business model yourself.

5.      Overstating your financial figures.

We all want to talk up our figures, and I have done many times for my own businesses – of course you want to talk up your figures especially when you are asking for investments. The problem is, how confident are you to achieve this? 99% of times you will miss the stated revenue target, and there is also a fair chance, probably 30% to 40% time, where start-ups can’t even generate $1 in revenue in the first year.

Venture capital investors are not just risk takers, they will “hedge” their bets on the best positioned companies. This is why they often invest in companies that have existing revenue, and they can demonstrate a trend.

Remember the old rules: Always come up with 3 scenarios: Optimistic, Likely and Pessimistic. I actually personally think you should “under-state” your revenue target as there are too many variables, and by doing so, you will demonstrate that you have considered all circumstances that could impact on your income projections.

6.      More than just Financial Investment

Another important area that many entrepreneurs have missed out – your company is not just about your revenue. There are other ways you can demonstrate the value of your business: Branding, Membership, Circulation Rate, Applications, Intellectual Property.

We assisted several companies from Internet space, some do not even have revenue, yet, they could sign up 20,000 members within 2 weeks of their campaigns. Later on, we changed their business model to become a digital PR agency just for new technology and greentech companies – as they could utilize the membership database and monetize from them.

I recently established another listing website with my partners, where we could reach Chinese & Asian individual investors looking for international projects, the revenue was small as it’s only 1 month old – but within 1 month, we had over 3,000 members signed up. Again, from investors’ point of view – this is more valuable than the revenue.

Many of you would have heard of Hotmail and other mergers and acquisitions in the Internet Service Providers & Cable-TV industries. So think about what else you can do outside revenue.

7.      How much have you put in yourself?

The last point I would like to make this week is “How much have you invested in yourself?” Not everyone is a millionaire, we understand that, but if you have invested nothing or very minimal amount of works or funds – then you are not putting enough heart into your project.

Some entrepreneurs I have met have mentioned they have given up on their daily jobs, which could be US$50,000 or US$70,000 a year, that’s the sacrifice they decided to take and devote to become business owners.

While others have said, I can only work during lunch-break and after works, I can only do this on part-time basis. If you are an investor, which one would you invest?

Often, being a business owner / entrepreneur, it needs a big sacrifice from your routine life, or at least you should invest your salaries into this business, perhaps hiring an additional consultant or a someone to run a marketing & sales campaign. You need to show investors that you are taking more risk than anyone else, as that is often a good sign that you are a very serious entrepreneur.

Researchwhitepaper (www.researchwhitepaper.com) provides a large number of capital raising related reports including 110 Capital Raising Strategies and a wide range of Capital Providers Guides for different regions and industries. For more information, please visit our website on http://researchwhitepaper.com

 Camino Real Estate to invest heavily into Mexico Real Estate Industry

The recently announced investment from Camino Real into expanding in Mexico’s key beachfront tourism areas is a positive sign for the Mexico Real Estate industry, which enjoys many benefits from the strength of the country’s international tourism.
As Camino Real is about to invest heavily into hotel and resort expansion within Mexico, the move points to confidence in the country’s tourism industry; together with the increase in services and infrastructure which this type of investment brings, this confidence is a very good sign for the Mexico Real Estate industry, which is closely tied to international tourism.

Camino Real is currently budgeting from 120 to 150 million dollars to expand in Mexico, with key tourist destinations such as Cancun, Playa del Carmen, Puerto Vallarta, Nuevo Vallarta and Los Cabos receiving the bulk of the investment.

This is one of the many real estate investment firms now returning back to Mexico, which have seen a sharp decline in hotel investments in 2009; but investments have returned both from traditional North American

Investor Profile: Bishop Capital Corporation

Bishop Capital Corporation, through its subsidiaries, engages in the development and sale of real estate properties in the United States. The company owns and operates a 328 unit apartment complex located in Colorado Springs, Colorado. It also owns approximately 2 acres of developed and 16 acres of undeveloped land in Colorado.

The company is developing a 16 acre parcel called The Crossing at Palmer Park and 11 acre parcel called Creekside Center at Galley. Interestingly, it also has a royalty interest in a natural gas property located in Wyoming. The company is based in Riverton, Wyoming.

Investor Profile: Forest City Enterprise, Inc.

Forest City Enterprises, Inc. (Forest City) is engaged in the ownership, development, management and acquisition of commercial and residential real estate properties in 27 states and the District of Columbia.

The Company operates in three business units: Commercial Group, Residential Group and Land Development Group. Commercial Group owns, develops, acquires and operates regional malls, specialty/urban retail centers, office and life-science buildings, hotels and mixed-use projects.

The life-science buildings is an interesting sector to invest at present time as it involves in both hospital developments; and potentially, buildings for life-science R&D facilities. The company had senior living portfolio in the past but had sold that in 2009.

Looking for real estate investors for your projects, why not consider our Global Real Estate Investors Guide now available from http://researchwhitepaper.com

Capital Raising Strategy: Debt or Equity, Part 1

When you get serious about raising capital for your business (and anytime you need cash, it’s serious), consider two major avenues:

• Debt financing means borrowing money for a fee. Debt financing is ideal, for example, when you don’t want to dilute ownership of your business in exchange for the cash you need. Of course, on the downside, you have to repay the full amount of the debt plus interest at some point in the future. If the debt exceeds your ability to pay it back on schedule, you may be forced to liquidate assets or go into bankruptcy.

• Equity financing means selling a piece of your business in exchange for a cash investment. Equity financing is great if you don’t want an obligation to repay a lender, but, on the downside, you have to give up a portion of your ownership in the business. Give up too much ownership, and you may lose control of your business.

So which approach is better for your company? The answer to that question varies depending on the goals that you have for your business, the ability of your firm to repay its debt, the amount of money needed, and many other factors. Each approach has its good points and its bad.

Many companies utilize a combination of both kinds of financing, maintaining a balance between the two. A business with a line of credit, automobile leases, and an assortment of trade credit and short-term loans (all forms of debt financing) may, for example, look to venture capitalists for an infusion of cash to fuel expansion, offer stock options to its employees, or float an initial public offering (IPO) of its stock (equity financing options).

A company that doesn’t use debt financing at one time or another is rare. You can find plenty of different ways to use debt to fuel your business. Here are some of the more common types of debt financing, just to give you a taste of what’s available:

• Short-term commercial loans
• Long-term commercial loans
• Home equity loans
• Working capital lines of credit
• Leasing
• Credit cards
• Accounts receivable financing
• Inventory financing
• Corporate bonds
• Letters of credit

Be careful about the extent to which you use debt financing in your business. Too much debt piled up against your available assets creates an unfavorable debt-to-equity ratio (which reflects upon your ability to repay your debt and can provide a clear warning sign to potential lenders — generally a debt-to-equity ratio in excess of 1 is considered bad).

Our 110 Capital Raising Strategies is now back, we will start publishing useful tips / strategies we have collected from investors and capital seekers.

That old familiar saying states: “It takes money to make money.” Ask any business founder, entrepreneur, or top executive, and chances are that he or she will tell you that statement isn’t just a quaint old saying; it’s a fundamental truth of doing business today.

No business can operate without the money necessary to pay employees and vendors, and internal sources of cash aren’t always enough to keep a business going — especially for start-ups and fast-growing companies that tend to suck up cash far faster than it comes in from sales of company products and services. Sure, all the money in the world isn’t always enough to ensure business success — creating a successful business requires hard work, great ideas, dedicated and talented employees, and more than a little bit of luck — but at some point every business needs to raise capital to survive and to thrive.

For most businesses, the four major sources of capital are

• Founder’s or personal investment
• Internally generated cash
• Credit granted by vendors (trade credit)
• Customer advances
• Cash borrowed from lenders
• Cash from sale of an ownership stake (equity) in the business

The first step in raising capital is understanding how much capital you need to raise.

Do you need $10,000, $100 million, or something in between? Although you don’t necessarily have to know this answer down to the last penny, you need to have a pretty good idea of where you need to end up, because the answer has a significant impact on determining what type of financing is appropriate for your needs and where you’ll go to get it.

As you begin to get your arms around this magic number, be sure to focus on your long-term and short-term needs. Successful businesses anticipate their future cash needs, make plans, and execute capital acquisition strategies well before they find themselves in a cash crunch. When it comes to figuring out how much money you’ll need, keep these three axioms in mind:

As businesses grow, they often go through several rounds or stages of financing.

These different rounds are often targeted to specific phases of a company’s growth (for example, the seed round is applicable to start-up companies that are too early in their development to attract the attention of the larger venture capital firms) and, therefore, require different strategies and different networks of potential investors.

• Raising capital will be an ongoing issue for your business — you’ll never have too much cash. In fact, company growth, acquisitions of other firms, and unforeseen problems can put a very real strain on your company’s financial health. Plan for the capital acquisition process to become a way of life for you and your business.

• Capital never arrives as quickly as you think it will. It can take some time (from a few months to many, many months) from identifying the need for capital to the time you can actually raise it.

• Foreseeing your capital needs well in advance through periodic plan updates can avoid delays in getting your financing and growing your business.

The above 3 are the most common and critical problems faced by business owners even the most veteran business owners; we have a client that has constant need for capital raising, in fact, he raised over $50 million over past 10 years, but he always did that at last minute like, we need pay employees next month, let’s go and raise capital now.

Capital raising will be an ongoing exercise for any company, and as the matter of fact, you should always make it as a priority even if your business is a mature business; to sum up, capital raising really determines your firms’ cashflow projection and analysis capability.

In our next article, we will continue cover other problems often faced by start-up companies when comes to capital raising and cashflow projections.

110 Capital Raising Strategies is now available from ResearchWhitePaper (http://researchwhitepaper.com) as well as other Capital Providers Guides relating to industries and regions.

Australia, which Australians also call themselves “Great Southern Land” is a growing economy with its economy mainly driven by primary resources including mining activities.

The country is also becoming a major financial market in the Asia Pacific region, with Australian Securities Exchange (ASX) now becoming a diversified exchange with many global reputable companies such as Macquarie Group, Westfields, WorleyParsons and also large mining companies BHP and Rio Tinto.

So, is Australia a good market to seek venture capital & private equity? Below are the unique points about the Australian VC market:

1.      Never forget the size of its superannuation fund which ranks amongst one of the top 4 in the world, the sheer size of super fund means there is a large pool of investments can be potentially accessed.

2.      Australia is a small market which means limited opportunities, subsequently, this means Australian VCs are more likely to invest in international opportunities, or at least, Australian companies that will expand into global markets.

3.      The Australian VC market remains small in global scale, so if you have a large project, it is usually co-invested by several partners. Having said that, Macquarie Group has demonstrated its strength globally, although much of its revenue is now generated outside Australia.

4.      Australian financiers have specific interest towards infrastructure financing, its experience has been built upon many public-private-partnerships in Australia, and have since expanded its expertise into Asia, Europe and North America.

5.      Australia is a high-interest market, with its official interest rate generally 4 to 5% above the rest of the major economies. Therefore, if you are looking for debt-financing, this is a factor you have to consider.

6.      Because of its tradition and size in the mining activities, Australia has more companies dedicated towards mining & natural resources financing activities, it is one of the top 5 markets to raise “mining capital” (Canada, Australia, United States, United Kingdom and Hong Kong).

7.      Unfortunately, Australia lags in areas including technology, biotechnology and lately, environmental / cleantech investments despite of many successes from local companies like CSL, Cochlear even Suntech, the world’s largest solar panel manufacturer whose founder was an Australian-Chinese.

Overall, Australia is a market that should be considered by companies seeking investment capital especially in the Mining, Oil & Gas, Infrastructure Financing and increasingly, Real Estate Development opportunities as Australian Property groups are very active in international opportunities.

For more information about Venture Capital Destinations, please visit our website www.smallcapwrap.com or www.researchwhitepaper.com on our Australian Capital Providers Guide.