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Working with Venture Capitalists...
This thread has 12 replies. Displaying all posts.
Post 1 made on Thursday March 26, 2015 at 13:49
Mr. Stanley
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Have any of you worked with venture capitalists before to grow your business?

Any suggestions oaside from having a strong business plan to present?
"If it keeps up, man will atrophy all his limbs but the push-button finger."
Frank Lloyd Wright
Post 2 made on Thursday March 26, 2015 at 14:10
juliejacobson
CE Pro Magazine
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required reading: [Link: cepro.com]
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Post 3 made on Thursday March 26, 2015 at 14:30
Archibald "Harry" Tuttle
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Be prepared to have MBA know-it-all experts who don't know shit about your business become your business "partners".
I came into this game for the action, the excitement. Go anywhere, travel light, get in, get out, wherever there's AV trouble, a man alone.
Post 4 made on Thursday March 26, 2015 at 15:38
FunHouse Texas
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Why would you do this? Is a bank loan or Line of Credit not available? They are likely going to want equity in the business = decision making power. if they know less than you about this unique business you will have your hands full.
I AM responsible for typographical errors!
I have all the money I will ever need - unless i buy something..
OP | Post 5 made on Thursday March 26, 2015 at 15:59
Mr. Stanley
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On March 26, 2015 at 14:10, juliejacobson said...
required reading: [Link: cepro.com]

Thanks Julie!

My kid works in a Venture capital company with some deep pocketed guys... Just got me to thinking... I'll read that, and NO, I wouldn't go to the company my son works for in case things didn't go well! 8>)
"If it keeps up, man will atrophy all his limbs but the push-button finger."
Frank Lloyd Wright
Post 6 made on Thursday March 26, 2015 at 17:03
Dean Roddey
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Though you can perhaps find an angel type investor who just happens to be sympathetic to you or interested in your particular industry for his own amusement, most VCs are not interested in a fair fight or in established industries. They want an untapped market (or some proof that you are going to completely disrupt an existing one) and/or they want some very unfair advantage that you have over any potential rival.

That could be some technical innovation or some coming together of highly visible previously big winners in a way that can be used to convince the world that you are unstoppable in some way, or some already large company with the visibility it can use to leverage its way over the existing players, etc...

That seems sort of a long stretch for the home automation market, right? At least in terms of the integration business. Of course if you can invent a thermostat that films your every activity and posts it real time to your social media account, then you could sell out for billions.

In the area of technical venture capital, a 1 in 10 (or lower) success rate is pretty common, so the 1 winner has to pay for the 9 losers. So they want every one of them to be potentially a big winner, and they want a very big cut of the pie (unless you are an already very successful player or have a VERY good story that multiple VC firms are bidding up.)
Dean Roddey
Chairman/CTO, Charmed Quark Systems
www.charmedquark.com
OP | Post 7 made on Thursday March 26, 2015 at 18:01
Mr. Stanley
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On March 26, 2015 at 17:03, Dean Roddey said...
Though you can perhaps find an angel type investor who just happens to be sympathetic to you or interested in your particular industry for his own amusement, most VCs are not interested in a fair fight or in established industries. They want an untapped market (or some proof that you are going to completely disrupt an existing one) and/or they want some very unfair advantage that you have over any potential rival.

That could be some technical innovation or some coming together of highly visible previously big winners in a way that can be used to convince the world that you are unstoppable in some way, or some already large company with the visibility it can use to leverage its way over the existing players, etc...

That seems sort of a long stretch for the home automation market, right? At least in terms of the integration business. Of course if you can invent a thermostat that films your every activity and posts it real time to your social media account, then you could sell out for billions.

In the area of technical venture capital, a 1 in 10 (or lower) success rate is pretty common, so the 1 winner has to pay for the 9 losers. So they want every one of them to be potentially a big winner, and they want a very big cut of the pie (unless you are an already very successful player or have a VERY good story that multiple VC firms are bidding up.)

This isn't in home automation. It is a small line of products, that I get asked about every day 3 or four times a day. Products we used to feature, but some brilliant bean counter for the company dropped that product which was our winner, when we got a new owner. Its a largely untapped market.
"If it keeps up, man will atrophy all his limbs but the push-button finger."
Frank Lloyd Wright
Post 8 made on Thursday March 26, 2015 at 18:09
FunHouse Texas
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i want in!
I AM responsible for typographical errors!
I have all the money I will ever need - unless i buy something..
Post 9 made on Thursday March 26, 2015 at 18:27
bcf1963
Super Member
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Stan,

I've been involved with and pitched to VC's and Angel's. The following article talks a bit about the differences.

[Link: rockiesventureclub.org]

After reading that, are you still looking for a VC, or an Angel? Either way, does your business plan show how they exit in 5 years with 10x their investment?

I think Dean Roddey's comments about what a VC or Angel are looking for is pretty spot on. If you need capital to start a business, you are much better off looking for a SBA loan or business loan through a bank. It's not uncommon to bootstrap finance a new business through loans from friends, family, and credit cards.

So a good business plan is only a start. You can have a great business plan, and get zero interest from VC's or Angel's, because your plan just doesn't support the model where they get their investment return.
Post 10 made on Thursday March 26, 2015 at 18:40
BigPapa
Super Member
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On March 26, 2015 at 17:03, Dean Roddey said...
That could be some technical innovation or some coming together of highly visible previously big winners in a way that can be used to convince the world that you are unstoppable in some way, or some already large company with the visibility it can use to leverage its way over the existing players, etc...

That seems sort of a long stretch for the home automation market, right?

Stanley, pitch it to VIA.
Post 11 made on Thursday March 26, 2015 at 19:04
brucewayne
Advanced Member
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I was approached this week by someone willing to invest. We be came are own bosses for a reason remember that. More money isn't going to change my company it's just going to give me a boss.
brucewayne
Post 12 made on Friday March 27, 2015 at 03:32
Eastside A/V
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1,782
Bruce, be careful what you wish for when partnering with a VC. Depending on what the project entails, be prepared to give up a lions share at a less than favorable rate...though there are a few Angel investors and a few VC's that operate differently.

Good luck and if you want to talk strategy off line, I'm happy to help.
Bryan Levy
www.eastsideav.com
Gallery: [Link: eastsideav.com]
OP | Post 13 made on Friday March 27, 2015 at 14:43
Mr. Stanley
Elite Member
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All good points, and yes---I will basically be their bitch once they cough up the $$$$ Oh well.

I might look into kickstaarter also... But thanks everybody (BCF & Julie)...

Last edited by Mr. Stanley on March 27, 2015 15:06.
"If it keeps up, man will atrophy all his limbs but the push-button finger."
Frank Lloyd Wright


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