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Registering Your Venture
With The Connecticut Venture Group
Because
sources of capital typically specialize in either early or
late stage funding, we have categorized our services and
programs into these classifications. Please click on the
appropriate link below to register your
funding proposal. Your
responses will generate an electronic Executive Summary of
your business plan. Registrants will receive professional
feedback on funding proposals and
will be considered by our review committee of investors for
the following programs and opportunities:
Early Stage Companies
·
Exhibiting at
the annual Crossroads Venture Fair
(MAY), the largest business financing event in the
Northeast. Past
participants have raised over $2 billion in new capital.
www.Crossroads-CVG.org.
A participation fee is required.
·
Participation in the annual
Angel Fair
(OCTOBER)
·
Invitation to exhibit at
annual Technology
Commercialization Fair (DECEMBER)
·
Referral to the Angel Guild
(the association of Angel Clubs and Private Investors)
·
Referral to VC firms
(by matching capital requirement, industry and location)
·
Referral to participating commercial bank for debt
capital
·
Recommendation to Public Investors and Lenders
o
Connecticut Innovations
o
CDA
o
DECD
·
Referral to SBIR Office for
development grant assistance
·
Referral to Organizers of Industry-focused Financing
Conferences and Trade Shows (Previous CVG industry
events have featured Fuel Cells, Nanotech, Bioscience, Food
Products, Entertainment and RFID)
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Caveat:
do not divulge trade secrets, formulas, or other specific
information that could be useful to a potential competitor.
Investor members of CVG will have access to your proposal.
They do not need to know the soft drink formula, only that
it has no calories and sales are doubling every six months...
2008
Connecticut Venture Group Funding Applications
PRE-SEED and SEED STAGE Funding
Application
(R&D or Proof-of-Concept Phase)
Apply here
if your product, technology or service requires funding for
further development or testing, patent protection, or you
require assistance to complete a comprehensive business
plan, or other resources before you are ready to start up.
START-UP Funding Application
(Ready to Launch)
Apply here
if you have a business plan, a proven concept or product, a
management team identified, and are ready to start up.
EARLY STAGE and EXPANSION STAGE
Application
(Sales < $5,000,000)
Apply here
if you have started up and have annual sales under
$500,000 [EARLY STAGE], or sales are over $500,000 but
lest than $5,000,000 [EXPANSION STAGE].
LATE STAGE Companies
(Sales > $5,000,000)
Apply here
if you have annual sales of at least $5,000,000.
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Financing Basics By SBA
(a
primer on financing from the SBA and
Inc.
Magazine)
While
poor management is cited most frequently as the reason
businesses fail, inadequate or ill-timed financing is
a close second. Whether you're starting a business or
expanding one, sufficient ready capital is essential. But it
is not enough to simply have sufficient financing; knowledge
and planning are required to manage it well. These qualities
ensure that entrepreneurs avoid common mistakes like
securing the wrong type of financing, miscalculating the
amount required, or underestimating the cost of borrowing
money.
Before inquiring about financing, ask yourself the
following:
-
Do
you need more capital or can you manage existing cash
flow more effectively?
-
How
do you define your need? Do you need money to expand or
as a cushion against risk?
-
How
urgent is your need? You can obtain the best terms when
you anticipate your needs rather than looking for money
under pressure.
-
How
great are your risks? All businesses carry risks, and
the degree of risk will affect cost and available
financing alternatives.
-
In
what state of development is the business? Needs are
most critical during transitional stages.
-
For
what purposes will the capital be used? Any lender will
require that capital be requested for very specific
needs.
-
What
is the state of your industry? Depressed, stable, or
growth conditions require different approaches to money
needs and sources. Businesses that prosper while others
are in decline will often receive better funding terms.
-
Is
your business seasonal or cyclical? Seasonal needs for
financing generally are short term. Loans advanced for
cyclical industries such as construction are designed to
support a business through depressed periods.
-
How
strong is your management team? Management is the most
important element assessed by money sources.
-
Perhaps most importantly, how does your need for
financing mesh with your business plan? If you don't
have a business plan, make writing one your first
priority. All capital sources will want to see your for
the start-up and growth of your business.
Not All
Money Is the Same There are two types of financing: equity
and debt financing. When looking for money, you must
consider your company's debt-to-equity ratio - the relation
between dollars you've borrowed and dollars you've invested
in your business. The more money owners have invested in
their business, the easier it is to attract financing.
If your
firm has a high ratio of equity to debt, you should probably
seek debt financing. However, if your company has a high
proportion of debt to equity, experts advise that you should
increase your ownership capital (equity investment) for
additional funds. That way you won't be over-leveraged to
the point of jeopardizing your company's survival.
Equity Financing
Most
small or growth-stage businesses use limited equity
financing. As with debt financing, additional equity often
comes from non-professional investors such as friends,
relatives, employees, customers, or industry colleagues.
However, the most common source of professional equity
funding comes from venture capitalists. These are
institutional risk takers and may be groups of wealthy
individuals, government-assisted sources, or major financial
institutions. Most specialize in one or a few closely
related industries.
Venture
capitalists are often seen as deep-pocketed financial gurus
looking for start-ups in which to invest their money, but
they most often prefer three-to-five-year old companies with
the potential to become major regional or national concerns
and return higher-than-average profits to their
shareholders. Venture capitalists may scrutinize thousands
of potential investments annually, but only invest in a
handful. The possibility of a public stock offering is
critical to venture capitalists. Quality management, a
competitive or innovative advantage, and industry growth are
also major concerns.
Different
venture capitalists have different approaches to management
of the business in which they invest. They generally prefer
to influence a business passively, but will react when a
business does not perform as expected and may insist on
changes in management or strategy. Relinquishing some of the
decision-making and some of the potential for profits are
the main disadvantages of equity financing.
You may contact these investors directly, although they
typically make their investments through referrals. The SBA
also licenses Small Business Investment Companies (SBICs)
and Minority Enterprise Small Business Investment companies
(MSBIs), which offer equity financing. Apple Computer,
Federal Express and Nike Shoes received financing from SBICs
at critical stages of their growth.
Additional Reading
Raising Money through Equity Investments
- Inc. Magazine
Debt Financing
There are
many sources for debt financing: banks, savings and loans,
commercial finance companies, and the U.S. Small Business
Administration (SBA) are the most common. State and local
governments have developed many programs in recent years to
encourage the growth of small businesses in recognition of
their positive effects on the economy. Family members,
friends, and former associates are all potential sources,
especially when capital requirements are smaller.
Traditionally, banks have been the major source of small
business funding. Their principal role has been as a
short-term lender offering demand loans, seasonal lines of
credit, and single-purpose loans for machinery and
equipment. Banks generally have been reluctant to offer
long-term loans to small firms.
In
addition to equity considerations, lenders commonly require
the borrower's personal guarantees in case of default. This
ensures that the borrower has a sufficient personal interest
at stake to give paramount attention to the business. For
most borrowers this is a burden, but also a necessity.
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