Tag Archives: Startup Funding

The Importance of Bookkeeping for a Startup Business

The Importance of Bookkeeping for a Startup Business

Bookkeeping, by definition, is the process of recording a company’s financial transactions and history.

It is the first step in the broader accounting process which involves reporting and analyzing data to make business decisions.

Many entrepreneurs find that they are wearing too many hats as it is and they just
don’t have time to dedicate towards proper bookkeeping.

However, bookkeeping is crucial for any startup for several reasons:
First and foremost, it helps companies make better financial and management decisions. Proper bookkeeping can help you understanding the key financial benchmarks that determine whether your company is operating successfully or not. Bookkeeping also helps with managing cash flow and answering questions such as: who owes you money, who do you owe money to, when should you send an invoice, when are your bills due, etc.

Second, consistent bookkeeping will help minimize the headaches when it comes to preparing your annual taxes. If you can provide your accountant with a well maintained balance sheet, cash flow statement, and profit and loss statement he/she will be able to dedicate their time towards making sound tax decisions rather than fixing problems with the financial statements.

Third, sound books will help you with planning your business’ next steps. By understanding key benchmarks such as cost to acquire a new customer and cost of goods sold you can begin to make educated decision about the best way to grow your business.

Fourth, investors require solid books. The frequency of which you report financial records will be determined by you and your investors. In any case, the more automated and uniform your financial reporting systems are for reporting crucial financial information the happier your investors will be. It will show to them that you understand your cash flow needs and the business key performing indicators that will allow the business to scale.

Furthermore, when raising capital, sound records will instill confidence in your investor and significantly increase your likelihood of receiving a check.

Now that you are on-board with the important of bookkeeping for a startup, let’s look at 10 of the most common types of bookkeeping accounts for a startup or any business for that matter:

Cash:

This is your most basic account and it tells you exactly how much cash you have in your
bank. Many businesses will monitor their cash account by separating cash receipts and cash
disbursements.

Accounts Receivable:

Not all companies will have accounts receivables. Receivables represent
money that is due from customers and is therefore only applicable to companies that sell
products or services prior to collecting payment or a portion of the payment upon the time of
sale. Tracking receivables will help you understand cash flow and keeping a detailed list of your various receivable accounts will help you stay on top of billing and invoices.

Sales:

The sales account is closely tied to cash and accounts payable but provides slightly
different insight. Sales is where you track anticipated incoming revenues from what you sell.
Tracking sales accurately will help you understand whether your business is on track to meet
predetermined metrics and benchmarks.

Accounts Payable:

Similar to accounts receivable, accounts payable represent money that you
owe to your suppliers and vendors for products and services that you did not pay for entirely
upfront. Tracking your payables will help you with managing cash flow, ensuring that you don’t
pay your bills twice, and may even make you eligible for discounts if you are able to pay early.

Inventory:

While inventory is not equivalent to cash or accounts payable it is certainly an asset on your balance sheet that needs to be carefully accounted for and tracked. Properly managing your inventory will help with understanding cash flow and anticipated production runs.

Loans Payable:

You loans payable account tracks the amount of capital that you’ve borrowed, how much you still owe, and how much is due in the next billing cycle.

Purchases or Cost of Goods Sold:

This account helps you understand the cost of delivering your product and service and when subtracted from your Sales account you end up with gross profit.

Payroll:

Payroll is the biggest expense for most businesses and should be monitored closely. Maintaining an accurate payroll account will pay dividends when it comes to tax and
government reporting requirements not to mention understanding your personnel expenses.

Retained Earnings:

Retained earnings are simply profits that are not paid out to owners or shareholders. Retained earnings are cumulative, or a running total, and demonstrate the profits that are reinvested back into the business.

Owner’s Equity:

This account simply tracks the capital investment that the owners’ have put into the business. This account is particularly pertinent if there are multiple owners who have put in disparate amounts of capital.

If you have a question about your Startup business idea or you’d like to discuss our Book Keeping Management Services, feel free to contact us for a free consultation!

SEC Oks Equity Crowdfunding with Regulation A+ Changes to the JOBS Act

SEC Oks Equity Crowdfunding with Regulation A+ Changes to the JOBS Act

On March 25, 2015 the SEC amended Regulation A, commonly referred to as Reg. A+, to further implement Title IV of the JOBS Act.

The amended regulation seeks to create an environment where emerging enterprises can efficiently raise public capital through crowdfunding.

Historically, Reg A has not been widely used for two reasons:
1) the $5M offering size limit was perceived as too low

2) the blue ski registration and qualification requirements were too onerous.

To address these concerns, Reg A+ increases the offering size limit to $50M in a Tier 2 offering and up to $20M in a Tier 1 offering.

Additionally, certain Reg A+ companies will be able to avoid the SECs blue sky reporting regime.

Reg A+ are public offerings, similar to an IPO, however the regulatory obstacles are far lower thereby making this type of investment much more accessible to all investors, accredited or otherwise.

This is particularly welcoming to small and medium sized businesses that struggle to raise capital from high net worth investors or institutions. These small and medium businesses can now raise capital from a much larger pool of investors (commonly referred to as the crowd) which will increase capital formation thereby growing jobs and the economy as a whole.

There are still many nuances associated with Reg A+ but overall the SEC’s amendment is widely seen as a step in the right direction. Some of the differences between Tier 1 and Tier 2 regulations are outlined the chart below:
Equity Crowdfunding From The Startup Garage

If you have a question about your Startup business idea or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

7 Lessons Learned From A Vegas Tech Startup Conference

Collision Con From The Startup Garage

7 Lessons Learned From A Vegas Tech Startup Conference

“ It’s A different kind of Vegas.”

Collision Conference invaded and innovated downtown Las Vegas, Nevada Cinco De May and 6th.

The 48 hour “crash course” included 7500 attendees representing 89 different countries, with a legendary guest-list that included: 200 WorldClass Speakers, 1000 Startup Businesses, 451 Tech Investors, and countless “smart” entrepreneurs.

Equally as interesting to the individuals that attended the conference, was where the event took place, “The Downtown Project” (Psst..If you haven’t heard this name get familiar with it, you’ll be hearing a lot about it.)

It’s there, just 6 miles from the infamous Las Vegas Strip, a small Startup town is brewing. The cutting edge urban revival project was heavily invested ($350million) in by Zappos frontman and startup cultural icon, Tony Hsieh.

His business model; to create a community of happiness, in an other wise depressed and dilapidated city centre… which leads us into lesson #1.

Lesson #1 Recognize potential and invest in it’s possibilities.

Startups Entrepreneurs are familiar with taking risks and getting comfortable in the uncomfortable. Tony Hsieh didn’t see the “Fremont Experience” and think let’s avoid this rundown area at all costs. Instead he said let’s immerse our company, culture and entrepreneurial energy into the infrastructure, and make old bones dance.

Lesson #2 Conferences, especially tech. conferences, need female minds in attendance.

Collision Conference acknowledged the fact that tech conferences tend to be sausage fests, and did something Different. They invited the top 150 females in technology to attend the conference complimentary, there by subtly shifting the dynamics of a male centric space.

Lesson #3 There’s an organic type of networking, it’s called Collision.

A Collision with another person, moves away from the hunt and gather mentality of standard networking events, and allows for the natural serendipity of individuals paths to cross.
Colliding with the right people at right place, and the right time, can become a natural and common occurrence.

Lesson #4 Never underestimate the power of food and lasting impressions.

Each morning upon entering the “event” attendees were treated to freshly baked blueberry muffins. The DoubleTree may have started this trend with freshly baked chocolate chip cookies, but the result remains the same… A feeling of being welcomed, comforted, and wanting to return for more.

Lesson #5 Collaboration is the easiest way to breed successful innovations.

In the chaotic sea of 1000+ Startup Businesses prepping and pitching to investors and want to be investors for funding and mentorship. I found myself wondering, how many of the Startup entrepreneurs conversed and collided with one another to exchange ideas and information? (please tweet us @startup_garage if you have a great Startup to Startup Collision story)

It seems that Collision Conference was the perfect landscape for new startup business ideas to emerge, and preexisting ones to flourish with new insights. However, my experience was everyone was there with laser focus in the hopes swooning the VC or Angel.

Lesson #6 You can’t talk Marketing without the other M word… Millennials.

#Millennials isn’t just a trending hashtag, they’re a population of 77 million people, 1/4 of the American population, who are socially and economically savvy. Millennials have big brands via-ing for their attention and approval. As a generation with an insatiable appetite for quality content and the Tinder mindset (swipe left and move onto the next) marketing power is shifting into the hands of the consumer.

Lesson #7 Innovation never sleeps.

Innovative ideas and solutions have no On and Off switch, they’re a constant switching in the mind of Startup entrepreneurs. It’s not enough that there’s a solution, the questions remains whether it’s the smartest and most effective solution possible.

There’s Startup towns brewing, do you hear it percolating?

A Tech Startup conference shifted my perception of Vegas from an epicenter of gambling, strippers, and intentional debauchery to a sustainable community of like-minded entrepreneurs, that when colliding together, have ability to transform even the most unsuspecting places.

The Correlation between A Startups Seed Round and Series A Round

The Correlation between Your Seed Round and Your Series A Round from The Startup Garage

The Correlation between A Startups Seed Round and Series A Round

Here at The Startup Garage we are often asked, “Has it become harder to raise capital for Startups nowadays?”

 

The answer is, yes and no.

On the one hand, the total dollars invested in U.S. startups in 2014 reached its highest point since the dot-com boom in 2000, according to Bloomberg. On the other hand, there are more startups competing for these dollars than ever before.

One of the hardest rounds to raise, and subsequently one of the biggest hurdles to startup success, is the Seed round. This round is potentially the riskiest round for an investor as most startups raising Seed capital have yet to accomplish any significant milestones that prove the concept.

The technology or product development is usually in its infancy,
The team is lacking,Traction is nominal if present at all, and The key benchmarks for success have yet to be proven. As a result, many good ideas never make it out of the gate.

Those that successfully navigate the Seed round significantly increase their chance at entrepreneurial success and at raising their next round of capital, the Series A round.

When raising a Seed round the question becomes, “How large of a seed round should I raise to maximize my chances of raising a Series A round?”

Smaller Seed rounds seem like a quick fix because they are simpler and faster to raise as they typically require less investors.

However, in order to raise a significant Series A round, the startup needs sufficient capital to accomplish enough milestones that will attract Series A investors. As a result, we see a direct correlation between the amount of capital raised in the Seed round and the amount of capital raised in the subsequent Series A round.

According to data from CB Insights, companies that raised both a Seed round and a Series A round can be categorized as follows:

  • Small – Below the 25th percentile (<$360K for Seed, <$2M for Series A)
  • Average – Between 25th and 75th percentile (between $260K and $1.5M for Seed, between $2M and $7M for Series A)
  • Large – Above 75th percentile (>$1,5M for Seed, >$7M for Series A)As depicted in the chart below, nearly half of all large Seed deals became large Series A deals. Most of the other large Seed deals went on to raise average Series A rounds with a small number raising a small Series A round.

For companies that raised small Seed rounds, 57% went on to raise an average Series A round, and only 13% raised Series A rounds of $7M+. Lastly, 63.8% of companies that raised an average Seed round went on to raise an average Series A round.

Moral of the story: if you plan on raising a Series A round, don’t cut yourself short during your Seed round.

Seed Funding From the Startup Garage

If you have a question about your Startup business idea or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

7 Common Tax Mistakes Made by Startup Businesses

7 Common Tax Mistakes Made by Startup Businesses

A common misconception among many entrepreneurs is that their startup will not face any tax filing requirements while in the early stages of the business.

However, this is not the case.

If you incorporate your business or form an LLC you have tax and other government filings that are due, even if you had little to no financial activity.

As a result, it is important to understand the tax laws associated with your startup’s legal entity as they may differ depending on whether you are a sole proprietor, a partnership, or some form of corporation.

There is no “right” type of entity that can be applied to all startups. Rather, there is the type of entity that is right for you and your startup.

Below are a few common startup tax related mistakes that can save you time and money in the long run:

1.Proper Record Keeping

It is important for a business, no matter how big or small, to have its own set of books. If the startup team lacks a solid bookkeeper or someone with financial expertise it can be very inexpensive to hire a bookkeeper on a part-time basis. You can also hire a consultant or accountant to help you setup a system that you can maintain going forward.

2.Quarterly Taxes

While you are exempt from paying quarterly taxes in your first year it is still a good habit to get into. First and foremost, you don’t want to get sticker shock when it comes time to pay taxes and you haven’t been setting aside cash every quarter. Secondly, you are going to have to start getting in the habit of paying quarterly taxes sooner or later so you might as well start now.

Additionally, set up separate accounts for anticipated taxes like self-employment and employee withholding. The biggest problem for many business owners when it comes to tax season is having enough cash on hand to pay for taxes.

3.Record Your Startup Costs

Almost every cost you incur when starting your business is eligible for a tax deduction – think market research, travel, customer surveys, prototypes, advertising, branding, etc. All startup costs up to $5,000 are deductible in full in the first year. Furthermore, if your costs go over $5,000, you
can potentially roll out the deduction for up to 15 years.

4.Track Expenses Correctly

While many of your startup costs are deductible be sure that you are recording these expenses correctly to ensure protection if audited. For travel and entertainment expenses over $75 you need to maintain receipts and a recorded reason for the expense. When using your personal credit card be sure to write an expense report to the business shortly after incurring the expense. Track your miles if you plan to deduct car travel to and from your office.

5.Know How To Classify Employees

Many startups think they can avoid paying payroll taxes by classifying their employees as independent contractors. However, the IRS is cracking down on this misclassification and this is one penny that is not worth pinching.

There are a lot of nuances surrounding the differences between an employee and an independent contractor. The biggest factor has to do with how you control this person’s time. If you are telling them when and how to work they are most likely an employee.

6.Blending Business and Personal Finance

Many entrepreneurs make the mistake of neglecting to claim certain expenses as business expenses, such as a home office. On the other hand, many entrepreneurs fail to separate their personal finances from their business finances and often get sued or are forced to pay additional taxes. Be sure to maintain a clear line between your business and personal finances.

7.The Difference Between Equipment and Supplies

Typically, equipment expenses are amortized over the lifetime of that piece of equipment and therefore face unique deduction eligibility requirements. Supplies on the other hand, such as pens, notepads, and printer ink, have a lifetime value that expires far more quickly. In order to get the most out of your deductions be sure to track your expenses accordingly.

If you have a question about your Startup or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

San Diego High-Tech Startup Scene Booms

San Diego High-Tech Startup Scene Booms

In March of last year Forbes Magazine named San Diego the best city to start a business in 2014.

Apparently the magazine was onto something, as demonstrated in the recently released San Diego Innovation Report by Connect.

According to the report, which tracks and compares economic data in the region from the past year and a half, the strength and impact of the Innovation Economy in San Diego is growing and strong.

1h 2014 report saw the most new innovative Start-Ups ever created in San Diego in a 6-month period. SD entrepreneurs started a record high 228 high-tech companies, which secured $470 million in funding in the first half of last year.

The startup growth spurt includes:

• 128 Software Startups

• 43 Communications Computer & Electronics Startups

• 39 Life Science Startups

• 7 Environmental Technology Startups

The $470 million dollars in Venture capital funding was raised among 53 San Diego companies, and includes the following breakdown:

• $234 million to 20 Early Stage Companies

• $14 Million 3 Start-up Stage Companies

• $17 million 11 Connect Springboard and graduate companies

In addition to venture capital funding, companies raised $200 million in initial public offerings, $620 million in private placements and $1.6 billion in follow-on public equity offerings.

“We are delighted to celebrate the new start-ups born in San Diego, as well as the growth and expansion of the start-ups that attracted $470 million in venture capital to our region. These first half results demonstrate a thriving economy fueled by the growth of knowledge-based industries. More start-ups were founded in San Diego in the first half of 2014 than any other period in our city’s history. Additionally, more jobs were created and innovation economy jobs are higher-paying than the average job, which is great news for job-seekers.” stated Greg McKee, CONNECT’s chief executive officer.

Great news indeed, 885 new jobs at an average annual salary of $114,730 were created by San Diego start-ups created in the 1st half of 2014. This was a 40% increase over the number of new jobs created by innovation start-ups in the 1st half of 2013, and more than 50% increase over the 2nd half of 2013.

2014 marks a tipping point for San Diego, a notable time of reshaping the technology startup scene both locally and globally.
San Diego is no longer simply a vacation destination. It is a destination for dynamic startup businesses, which are invested in assembling and transforming a community of entrepreneurs and the innovation economy.

The Startup Garage team is committed to serving our Startup Community of San Diego. We are dedicated to helping make the world a better place to live, work, and play.

If you have a question about your Startup or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

Artificial Intelligence: The Trend For Tech Startups

Artificial Intelligence From The Startup Garage

Artificial Intelligence: The Trend For Tech Startups

Looking to get funded in 2015?

Why not add some elements of the “The Terminator” & “The Matrix” to your Startup Business model.

Funding increased 302% for Artificial Intelligence (AI) Startups in 2014. Pouring in over $309.2 million in over 40 deals. That’s more than 20-fold in just 4 years from $14.9 million in 2010.

Artificial Intelligence Startups are those that work in NLP, machine learning, deep learning and predictive APIs among other core applications.

The rebirth and mini-boom of an Artificial Intelligence industry can give thanks to iconic tech entrepreneurs and investors like Microsoft, Facebook, Google, and Amazon. Google set the funding stage in January 2014 with $400M acquisition of Deep Mind Technologies.

Deep Minds Technology’s recent achievement includes a computer that learns how to play video games similar to humans, while possibly mimicking short-term memory of the brain.

It’s examples like these, which mesh together science fiction and startup innovation, that has investor interest in A1 so hot. “Many AI companies have raised significant money without any product plans.” Said Scaled Inference Inc. Founder Olcan Sercinoglu.

Falling technology costs have also helped catapult AI startups. Processing large amounts of data, the core of AI work, is now cheaper as computer chips have gotten faster and the costs associated with storing and accessing data have dropped.

The backbone of any great startup is “What Problem Inspired Your Business? And What is your Solution.” AI Startups ultimately provide clever tools to solve both corporate and consumer problems. “Solving Intelligence,” by building learning algorithms to better understand and predict human behavior, among other uses.

Consumers and investors alike are witnessing and investing in, computer brains or AI tools, resulting in an increasingly powerful edge to the information age.

The evolution of human super intelligence is at a noticeable tipping point, set to have a massive impact at both an individual and global scale. As a Startup Entrepreneur the questions remains will you be part of the problem? or part of the solution?

If you have a question about your Startup or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

The Startup Garage’s Top 10 Best Blogs of 2014

The Startup Garage’s Top 10 Best Blogs of 2014

2014 was a momentous year for entrepreneurs and startup companies around the globe. Through out the year The Startup Garage has shared our knowledge, resources, and insights with you in efforts to skyrocket your success.

Below our Top 10 Best Blogs of 2014, we hope you find them invaluable and worth referencing time and time again.

How To Evaluate Your Startups Business Model

The business model is the means by which your company makes money for the value that you deliver to your customers. Learn how to create a strategy to monetize your product or service. Find out more here: How To Evaluate your Startup Business Model

What Type of Funding is Best for My Company?

There are three main sources of funding, family, friends, and founders.
Learn to how determine which funding source is right for you.
Find out more here: What Type of Funding Is Best For My Company

How To Raise Startup Capital In 120 Seconds

A quick pitch should serve as a teaser of what’s exciting and noteworthy to come next. The intention of a 2-minute pitch is to deliver a heavy dose of substance, content, and sizzle regarding your Startup’s investment potential.
Find out more here: How To Raise Startup Capital in 120 Seconds

Infographic What’s Your Entrepreneurial Vision?

Behind every entrepreneur or startup founder there is vision, mission, and purpose on how to serve the world at large.
What’s your vision?
To Make the World More…
Beautiful? Smart? Fun?
Find out here: Infographic What’s Your Entrepreneurial Vision

How To Determine Market Traction For Your Startup

Market traction is proof that somebody wants your product; it communicated momentum in market adoption. The more market traction you can demonstrate the less risk there is in the investment.
Find out more here: How To Determine Market Traction For Your Startup

Social Media A Startup Must-Have

5 Reasons why Social Media is no longer optional for your Startup Business. Find out more here: Social Media A Startup Must-Have

How To Define a Small Business Vs. A High-Growth Startup

A startup company, also referred to as a high-growth startup, is a company with a business model that is designed to be repeatable and scalable. This is directly opposed to a small business,
Find out more here: How to Define a Small Business Vs. A High-Growth

How To Write a Term Sheet For Your Startup

Technically speaking, a term sheet is a non-binding agreement that demonstrates a basic set of terms and conditions under which an investment is made, typically by either an angel or venture capital investor.
Find out more here: How To Write a Term Sheet For Your Startup

How Long Does It Take to Raise Capital?

The average time is somewhere between three to six months for both you Angel round and your Series A round. It really breaks down into three major steps.
Find out more here: How Long Does It Take to Raise Capital

Why A Business Plan Is Essential When Crowdfunding Your Startup

Letting the crowd fund your startup doesn’t mean allowing your business plan to go unwritten. In the business world, approximately 543,000 new businesses get started each month and funding those businesses comes from a variety of sources. Find more here: Why a Business Plan is Essential When Crowdfunding Your Startup

If you have a question about your Startup or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

Startup Business Funding Report 2014

Startup Business Funding Report 2014

The past year has been an eventful one for Startup Businesses in their quest to raise capital.

Venture Capitalists, Angel Investors, and Peer-to-Peer Crowdfunding soared in 2014, breathing new life into uncertain economy.

    Venture Capital Roundup

According to the PitchBook Platform 88 billion dollars in venture capital was infused into the global economy in 2014. Beating out any other single year ever, including the dot.com era.

Silicon Valley continues to reign supreme as the most competitive market to raise VC funding in, while hometown hero Uber took the largest 2 VC deals at 1.2 billion each.

On the east coast, the city that never sleeps, NYC is also thriving in the innovation economy, coming in 2nd in United States venture capital hubs. With the biggest VC backed deal going to coworking space, WeWork, with $355million dollars in funding.

It’s fair to say the venture capital ecosystem had an incredible run in 2014, transforming software startups into “unicorns” and providing hope and opportunity in the face of aversion. Whether or not all the risk will bring sustainable long-term rewards will become more evident in years to come.

    Angel Investment Roundup

2014 found Angel investors and groups becoming more prominent on and offline for early stage startups. At this time the Halo Reports Q4 report for 2014 is still being compiled, however we anticipate a steady increase in investments similar to previous quarters.

In Q2 alone 206 deals were funded totally $594million.
Pre-money valuation continued to rise jumping to $3 million in Q2, while Healthcare and Internet funding continues to be the most heavily funded industries.

Across the board opportunities to #GetFunded are abundant amongst individual Angels and Angel Groups globally. While with in the US, California, New England, and Texas have the most active investment networks.

    Crowdfunding Roundup

Crowdfunding is rapidly changing the landscape of Startup funding, and doesn’t appear to be slowing down. At the close of 2014, crowdfunding is estimated to add at least 270,000 jobs and inject more than $65 billion into the global economy, according to estimates from crowdfunding platform Fundable. 2014 turned platforms like Kickstarter and IndieGogo into household names. On Kickstarter alone 3.3 million people globally pledged more than ½ billion dollars last year, which is equivalent to $1,000 per minute. The funding brought to life 22,252 creative projects, exploding the alternative-funding platform.

Its clear Crowdfunding is disrupting how investors find opportunity and where entrepreneurs fuel their startup ideas. For the first time in history anyone can be an entrepreneur, investor, or both and the trend has yet to reach its tipping point.

    2015 & The Future of Capital Raising

2015 is sure to be a year of that will go down in history for innovative Startups and investment opportunities. The Startup Garage anticipates the following achievements in the next year: more women in the tech and the venture capital spotlight, emphasis on entrepreneurship and education with in academic institutions, and a rapidly expanding Startup Ecosystem.

If you have a question about your Startup Funding or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

The Unsung Heroes of Startup Funding – The Large Corporation

Large Corporations Investing in Startups from The Startup Garage

The Unsung Heroes of Startup Funding – The Large Corporation

Sunne Justice sat across from me, explaining her company mission, and her interest in creating a conscious cloud technology business.

She had a startup business that had successfully raised 1.5 millions dollars for a cloud technology venture.

Listening, I was amazed, “How could a business, 5 years in the making; one that still had their product in beta (a type of tech trial basis), managed to raise so much venture capital?” “Of course,” I thought. “As an experienced corporate CEO, it must be easy for Sunne, to raise the money. She had the contacts.”

But after a lot of research, some digging and a few interviews, I realized that many startups have found the venture capital they needed, and without too much of an effort; even without having too many corporate contacts or finance experience.

They just knew where to look.

If you have a great idea or an existing start-up that needs money to grow, you can borrow from friends and family but a better and more lucrative option, may be to find venture capital in the corporate world.
 

Where Do I Find The Kind of Capital I Need?

A new resource, just recently on the rise is the corporate world. More and more large corporations seem to be opening up venture capital funding departments.

“Wait a minute! Wasn’t that something they tried in the late 1990s?”

It is true. Many financial institutions and corporations tried their hand at venture capital investments and lost their hats in the process. But that was a time when corporations where only looking at the bottom line of a start-up. Now their vision is more global. They see start-ups as an opportunity for innovation.

Venture capital funding has decreased since the late 1990s. But if you have a solid business plan, a good product or idea you can still find venture capital investors. They are everywhere and continually increasing. In fact, now multinational companies are venturing into the startup world.
 

The Big Guns

Yes, that’s right. Companies like General Motors, American Express, Verizon, Google and PepsiCo, are just a few of the blue chip companies that have fully functional venture capital departments.

What’s The Deal? Why are large corporations implementing venture capital funding departments?

There are several reasons for this. Some multinational corporations are looking to get a piece of the startup action… but more likely, many of these corporations see startups as a viable research and development solution.

According to the New York Times, companies like General Motors, have investors based in their research labs. Large corporations across the globe are investing more than $20 billion in startups – and that’s no small chunk of change.
 

The Startup Advantage

Where other types of investors could be put off by certain startup investments because of a lack of real profit, large corporations see the same start-up venture as an opportunity. Blue-chip companies turned venture capitalists seem to be less concerned with profits, than they are with future innovative ideas.

Corporations are often restricted by regulations and by internal policy. This impedes their ability to be innovative. So instead their idea is to share with small, innovative businesses that are outside their own corporate enterprise.

For the large corporation, a promising startup could be a way to stay ahead of the competition; a way of innovating their existing products and of delivering superior value to their stakeholders.
 

The Result

The growth of successful startups is making established corporations reconsider new business opportunities and the way they search for innovation. Today, this means offering corporate venture capital, alliances, licenses and joint development. For them, venture capital departments have become a useful tool which they use to stimulate innovation.

For startups, this new interest from large corporations is great news. It means more resources for their ideas, products and inventions. It means access to funds they couldn’t otherwise find, even if they find funding from friends and family. When looking for funds larger than a few thousand dollars, this is certainly a funding option worth considering.
 

Finding These Venture Capitalists

Before looking for corporate venture capitalists, you must make sure everything is in order. You need a highly-detailed business plan. You need guidance from experts in business plan development; experienced consultants who know what corporate venture capital departments look for; those who know what corporate investors to point you toward.
 

If you have a question about your Startup or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!