When you seek venture capital, depending on the size of the round and the appetite for risk of the investor, you may end up with an investment group rather than a single VC.
During the course of your talks with various VC firms, ask if they would consider being part of an investor group. The conversation that follows will give you a variety of information. They will probably tell you if they always, sometimes or never co-invest with other groups. If they do, ask them who else they normally invest with. If they are interested enough to have you in for a presentation, they may be willing to make an introduction to another firm.
Also, let's say you get a 'no' from the VC you are talking to, but you get the feeling it's a soft no. If you find another company that is willing to lead your round of financing, you may come back to firms that normally co-invest with others, even if they have already turned you down. Upon occasion, once an investment is blessed by another firm, the first firm may reconsider their position.
The VC should have let you know ahead of time that his firm is interested in being part of an investor group. Finding out on the term sheet that the firm only intends to invest in part of the round indicates either that the VC is a rookie or that there were some last minute qualms about the investment that caused the partners to back-peddle at the last minute.
A rookie VC may or may not be a bad thing, but if one or more of the partners is skiddish about the deal, there could be trouble through the term-sheet negotiations. Try to pinpoint what is making the partners take a lower risk position, so you can reassure them.
In general, having several well-known firms as part of your investor group is a positive. For one, you get twice the resources for the same investment, including twice the industry and future investment contacts. Additionally, if you need a second round, the investors may not be able to continue investing, but if you have two firms, your chances of receiving additional investment double.
Thursday, May 8, 2008
Chance For Venture Capitals
IT, including computer, software, internet, dot com boom etc, has made hundreds of millionaires in Silicon Valley over night since 1980s. Till now, this fairy tale still continues, but the source is drying up. Although, venture capitalists are trying digging in biologics, nano science etc, but they have to confess: it is really hard to find a real chance, which will be successful like the Apple, Microsoft, Yahoo, Ebay, Google, and Youtube again.
So, where is the next chance for Venture Capitals?
Let's see how a Venture Capitalist picking a project firstly.
Venture capital is one kind of private equity capital typically provided by professional, outside investors to new, growth businesses. A venture capitalist (VC) is a person who makes such investments.
When a new company is built up, it always needs money to grow. For many companies (especially for those new companies based on high-technology), seeking venture capital firms is always the first option. The founders of the company generally will write a business plan that shows what they will do and what they think will happen to the company in the future (such as how fast it will grow, how much money it will make, etc.). The VCs read the plan, and if they like what they see, they will consider investing money in the company. The first round of money is called a seed round. And the VC who invests seed capital is so-called "Angel". Normally, a company will receive 3 or 4 rounds of funding typically, before it is going public or getting acquired.
The NASDAQ crash and technology slump that started in March 2000 shook some VC funds significantly by the resulting disastrous losses from overvalued and non-performing startups. Since 2005, the revival of a dot com-driven environment has helped to revive the VC environment. Today, the VC environment is still hot, but bubble is bigger and bigger in dot com boom. For seeking new profitable and safe investing target, VCs start to withdraw from dot com boom and focus at a new industry: FOREX Automated Trading Software.
FOREX - The Foreign currency Exchange market is by far the largest financial market in the world. The average daily trade in the global FOREX markets exceeds US$1.9 trillion (Source: the Triennial Central Bank Survey of Foreign Exchange and Derivatives Market Activity conducted by the Bank for International Settlements (BIS) in April 2004, and published in March 2005). For comparison, the biggest stock market on the Earth - NYSE Group (The New York Stock Exchange), has a daily trading volume of approximately $86.8 billion (Source: NYSE Group, Inc. 2006). FOREX has a 18.4% average growth rate per year since 1989. It offers trading 24 hours a day, five days a week, non-stop over Internet.
But, in this huge market, as the story goes, at least 90% of new FOREX traders lose all their money within their first 3 months of trading. Why? Most losing traders who inquire about FOREX trading are quite intelligent, they just lack the right tools, the "Secret Weapons" to win. They are not beaten by other traders, they simply are beaten by themselves, by humans' weaknesses.
To overcome these terrible weaknesses of humans, people have developed many methods. One of them is called "Automated Trading". Automated (or Automatic) Forex Trading means to trade Forex (Foreign Currencies) using some trading systems, programs, software or robots (on Metatrader MT4 platform it is called as Expert Advisors - EA), without needing a human to physically trade. An automated trading system is a group of specific rules and parameters, governing entry and exit points, having the ability to both generate signals and execute trades automatically. An EA is an automated trading "robot". Robots can beat human beings' world champion at chess games, likewise, EA robots can triumph over human traders at FOREX trading.
The practical experience shows that a high quality automated trading system always guaranties some kind of financial success for its owner working on Forex market. The latest fact is: in the Automated Trading Championship 2007, a world competition, all participants use EA robots, the champion won 1204.75% profit, the runner-up won 450.42%, and the third place won 299.45%, just within 12 weeks.
Isn't that amazing?
For Venture Capital firms, FOREX Automated Trading Software is still an undeveloped gold mine. Look at these:
# 1. It combines Software, Internet Technology, and Finance together. There are three "golden elements" in one project. This concept is rare.
# 2. In dot com boom, many VCs just burn money and get nothing but meaningless so-called "eyeball rate". FOREX Automated Trading Software industry is quite different. It makes money by itself!
# 3. Many venture projects are just a kind of "concept" or "idea", no real products at all. Company founders just try to sell this empty "idea" to VCs, and VCs try to sell this story to stock buyers in stock market. But FOREX Automated Trading Software industry is real and ripe. VCs even can confirm these software's results, records and performances in real time, for example, via RSS Feed, before they decide to put money in the company.
Who can invest in this area first, who will be the king of VC in next decade.
So, where is the next chance for Venture Capitals?
Let's see how a Venture Capitalist picking a project firstly.
Venture capital is one kind of private equity capital typically provided by professional, outside investors to new, growth businesses. A venture capitalist (VC) is a person who makes such investments.
When a new company is built up, it always needs money to grow. For many companies (especially for those new companies based on high-technology), seeking venture capital firms is always the first option. The founders of the company generally will write a business plan that shows what they will do and what they think will happen to the company in the future (such as how fast it will grow, how much money it will make, etc.). The VCs read the plan, and if they like what they see, they will consider investing money in the company. The first round of money is called a seed round. And the VC who invests seed capital is so-called "Angel". Normally, a company will receive 3 or 4 rounds of funding typically, before it is going public or getting acquired.
The NASDAQ crash and technology slump that started in March 2000 shook some VC funds significantly by the resulting disastrous losses from overvalued and non-performing startups. Since 2005, the revival of a dot com-driven environment has helped to revive the VC environment. Today, the VC environment is still hot, but bubble is bigger and bigger in dot com boom. For seeking new profitable and safe investing target, VCs start to withdraw from dot com boom and focus at a new industry: FOREX Automated Trading Software.
FOREX - The Foreign currency Exchange market is by far the largest financial market in the world. The average daily trade in the global FOREX markets exceeds US$1.9 trillion (Source: the Triennial Central Bank Survey of Foreign Exchange and Derivatives Market Activity conducted by the Bank for International Settlements (BIS) in April 2004, and published in March 2005). For comparison, the biggest stock market on the Earth - NYSE Group (The New York Stock Exchange), has a daily trading volume of approximately $86.8 billion (Source: NYSE Group, Inc. 2006). FOREX has a 18.4% average growth rate per year since 1989. It offers trading 24 hours a day, five days a week, non-stop over Internet.
But, in this huge market, as the story goes, at least 90% of new FOREX traders lose all their money within their first 3 months of trading. Why? Most losing traders who inquire about FOREX trading are quite intelligent, they just lack the right tools, the "Secret Weapons" to win. They are not beaten by other traders, they simply are beaten by themselves, by humans' weaknesses.
To overcome these terrible weaknesses of humans, people have developed many methods. One of them is called "Automated Trading". Automated (or Automatic) Forex Trading means to trade Forex (Foreign Currencies) using some trading systems, programs, software or robots (on Metatrader MT4 platform it is called as Expert Advisors - EA), without needing a human to physically trade. An automated trading system is a group of specific rules and parameters, governing entry and exit points, having the ability to both generate signals and execute trades automatically. An EA is an automated trading "robot". Robots can beat human beings' world champion at chess games, likewise, EA robots can triumph over human traders at FOREX trading.
The practical experience shows that a high quality automated trading system always guaranties some kind of financial success for its owner working on Forex market. The latest fact is: in the Automated Trading Championship 2007, a world competition, all participants use EA robots, the champion won 1204.75% profit, the runner-up won 450.42%, and the third place won 299.45%, just within 12 weeks.
Isn't that amazing?
For Venture Capital firms, FOREX Automated Trading Software is still an undeveloped gold mine. Look at these:
# 1. It combines Software, Internet Technology, and Finance together. There are three "golden elements" in one project. This concept is rare.
# 2. In dot com boom, many VCs just burn money and get nothing but meaningless so-called "eyeball rate". FOREX Automated Trading Software industry is quite different. It makes money by itself!
# 3. Many venture projects are just a kind of "concept" or "idea", no real products at all. Company founders just try to sell this empty "idea" to VCs, and VCs try to sell this story to stock buyers in stock market. But FOREX Automated Trading Software industry is real and ripe. VCs even can confirm these software's results, records and performances in real time, for example, via RSS Feed, before they decide to put money in the company.
Who can invest in this area first, who will be the king of VC in next decade.
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