Entrepreneurs Need Angels Too
Although only $720.7 million venture backed IPO's were recorded this first quarter 2005 (lowest in two years as per NVCA) entrepreneurs today have more options than ever. Private equity peaked in 2000 with over $106 billion raised for start-ups. But don't fret, todayÂ’s start ups are still tomorrows Dells, Microsofts, Coca-Colas or Starbucks. (ItÂ’s estimated that there is $70-100 billion in available capital from accredited private equity investors worldwide. American venture capitalists invest in approximately 70% of the worldÂ’s ventures.)
(PRWEB) April 8, 2005
Although only $720.7 million venture backed IPO's were recorded this first quarter 2005 (lowest in two years as per NVCA) entrepreneurs today have more options than ever. Private equity peaked in 2000 with over $106 billion raised for start-ups. But don't fret, todayÂ’s start ups are still tomorrows Dells, Microsofts, Coca-Colas or Starbucks.
ItÂ’s estimated that there is $70-100 billion in available capital from accredited private equity investors worldwide. American venture capitalists invest in approximately 70% of the worldÂ’s ventures. (ITFacts. biz)
The top industries invested by venture capitalists and angel investors in 2004 were software, biotech, and telecom according to studies. However, the health care services industry is ever growing and its alter ego the health and wellness industry is projected to be the next trillion dollar industry according to economist Paul Zane Pilzer.
Of the estimated $21 billion spent on private venture deals in the USA in 2004, approximately half of that went to IT companies and 11% to health services. German private equity VCÂ’s spent 3.76 billion euros in 2004. The UK and Ireland invested 464 million pounds.
Venture capital firms and angel investors are often successful entrepreneurs who singly (angels) or a as a group (vc's)give back to other potential rising stars. What do they look for?
An ideal package would include 1) at least two or more other senior executives or advisors with experience building successful companies 2) a patented technology in a sector currently considered hot or on the rise by the venture capital industry 3) a top-quality technical team 4) a target market at least one billion dollars in size 5) a minimum of two years of increasing sales to loyal customers (see http://www. startupjunkies. org (http://www. startupjunkies. org))
Investors usually like to be within an hour of their investment and retain a percentage of ownership. That doesnÂ’t mean entrepreneurs should relinquish the driverÂ’s seat. No one is more committed than you. Maintain fifty one percent or more of your company. DonÂ’t rush. Be flexible. Be realistic. Be prepared.
Angel investors often invest in industries that they have had previous success so they often want to be on the advisory board. They want to be there when the plane takes off or when the ship is about to sink. Perhaps their experience can offer a lifesaver in ways you may not have anticipated. ItÂ’s also a dance. There should be harmony between the investor and entrepreneur. This promotes communication and avoids costly errors.
Use your resources. There are plenty of free government resources (i. e. SCORE) that support and encourage entrepreneurs. Use them.
My personal advice is to read the classic book, "The Law of Success" in Sixteen Lessons by Napolean Hill. By the time you finish, you'll think you can start a company with sweat, focus, and ambition alone.
So if you are one of those people with a great idea, and saving for a rainy day, consider investing a portion in those dreams. If it turns out to be anything like Alexander Graham BellÂ’s telephone, Thomas EdisonÂ’s light bulb, or Bill GateÂ’s and Steve JobÂ’s personal computers and technologies, you may never have to worry about saving for a rainy day again.
LeTicia Lee is an entrepreneur, inventor and filmmaker with a Bachelor of Science degree in Marketing from Hampton University. She is author of the book "The Filmmaker's Guide to Film Financing" (ThereÂ’s An Angel In Your Corner)(http://www. lulu. com/content/62990 (http://www. lulu. com/content/62990)) and President & CEO of the start-up venture, Lip Scents, Inc.
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