Money Magnet E-Book

J. B. Loewen

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 364

Veröffentlichungsjahr: 2010

Beschreibung

The number-one issue for every entrepreneur is Money—getting money, raising money, convincing investors to give you money. Whether you are a start up, a small to mid-sized enterprise, or a $100-million company, your biggest problem is always money. There is currently a mad rush towards private equity—the new, hot way to get financing—but it remains a mystery to most entrepreneurs and owners/managers of SMEs. Money Magnet unlocks the puzzle of private equity financing and shows how understanding private equity is the first step to growing wealth in your business.

Historically, the most common ways to raise financing for SMEs was through bank loans or through the stock markets. But banks are notoriously risk-averse and conservative in lending to small businesses, and the great bull market is over. For most small and medium sized companies, the small cap public issue market is no longer a viable source of financing. Enter private equity. There are billions of dollars of private equity funds available in Canada and millions of SMEs looking for money, but the two don’t always know how to find one another and, when they do, usually don’t speak the same language. This is the book that explains to business people what private equity financing is, how it works, how and where to find it, how to be successful in attracting it, and all the advantages and disadvantages of raising financing in this way.

Money Magnet is for entrepreneurs in emerging growth companies who are seeking financing and want to explore the benefits of the private equity option. In language that entrepreneurs understand, Jacoline Loewen demystifies the world of private equity in this simple yet comprehensive guide. Money Magnet explains what private equity is and how it works; compares it with traditional sources of financing, such as banks and stock markets; explains the different types of private equity investors (e.g., angels, venture capitalists, fund managers and institutional investors); outlines the benefits and pitfalls; describes how to meet venture capitalists and fund managers; shows how to make a convincing pitch to an investor; reveals what makes investors cringe and what makes them open up their cheque book; provides strategies to deal with the four brutal questions all investors ask; explains in detail the deal process and the deal sheet; gives advice on common conflicts between investors and entrepreneurs and how to manage them; includes a detailed checklist of what an investor wants to know about you and your business; and much more.

Leseprobe

Table of Contents

Praise

Title Page

Copyright Page

Dedication

Acknowledgements

PART I - WHY YOUR COMPANY NEEDS PRIVATE EQUITY

CHAPTER 1 - WHAT YOU SHOULD KNOW ABOUT ATTRACTING MONEY

Outsiders with Talent

What Is Private Equity?

Money for All Sizes

Private Equity Is One Arrow in Your Bow

Traditional Finance May Follow the Record Industry

Challenges Facing CEOs and Owners

New Ways to Add Value

The Big Difference Private Equity Brings

Lender and Owner

The Benefits of Private Equity

Your Competitors Will Get Private Money

It’s the Baby Boomers Again

Your Business is More Attractive Than You Think

CHAPTER 2 - THE BIG DIFFERENCE: OTHER PEOPLE’S MONEY

Other People’s Money Gets You Moving

Time to Take Your Business Further

What Will Make or Break You

New Rules for Your Leadership Style

Can You Attract First-Round Money?

The New Competitive Advantage: Skills

Face Up to Your Financial Reality

Make the Two Most Important Decisions

Decrease Ownership but Gain Growth

CHAPTER 3 - TAKING ON A PRIVATE EQUITY PARTNER: HOW IT WORKS

A Case Study: Sassy Seeds

Are You Ready for Private Equity?

The Right Partner Adds Vision

What Investors Want

Financing Mistakes Made by Rookies

What to Do If You Hit a Brick Wall

Accept That It’s Oil and Water

Summary Points: Achieving Mutual Understanding

PART II - BUILDING BLOCKS OF MONEY MAGNET

CHAPTER 4 - THE FOOD CHAIN: MATCH YOUR BUSINESS WITH THE RIGHT INVESTORS

Spot Investors Who Fit Your Business

Accessing Private Equity

If You Are an Early Operating Company . . .

If You Are a High-Growth Company . . .

First-Stage Financing: Expansion

If You Want to Consolidate . . .

If You Are Established with Revenues . . .

Four Differences Between Private Equity and Conventional Banks

Know Your Way Around the Funds

If You Want the Public Market . . .

Why Private Equity Takes Public to Private

Buy-Out Financing

Choose Your Type of Investment and Investor

CHAPTER 5 - WHAT ANGELS AND SEED FUNDS NEED

Use Other People’s Money for Early Investing

Types of Seed Stage Investors

CHAPTER 6 - WHAT YOU SHOULD KNOW ABOUT VENTURE CAPITALISTS

What You Need to Know about Venture Capitalists

It Always Goes Back to the Relationship

What Do Professional Investors Expect?

What Venture Capitalists Need to See Before They Trust You

VCs Like Repeat Teams

What Companies Do VCs Like?

How to Get the VC to Call

Plan Well

The VC Screening Process

Where Does Your Deal Fit?

Risks to Watch For

Common Mistakes by Entrepreneurs

A Word for Women

Do Your Homework

You Understand Controlled Greed

CHAPTER 7 - THE VALUATION: CREATE THE FRAMEWORK FOR FUND MANAGERS

So, What Should Every CEO Know?

Value Defined

Do You Set Clear Objectives?

Begin with the Exit

Make Your Own Plans

See It, Own It, Do It

Your Communication Ability

Your Management Style: Delegation, Co-ordination, and Control

How Do Funds Add Value?

Summary Points: Achieving Mutual Understanding

PART III - GETTING“INVESTOR READY”

CHAPTER 8 - FOUR BRUTAL QUESTIONS AND WHY YOU NEED TO ANSWER THEM

Getting “Investor Ready”

1. Are You the Right People to Make This Happen?

2. What Is the Business Opportunity?

3. Is It Sustainable?

4. What Is the Return on Investment for Investors?

How to Value Your Business

The Exit

What Exactly Is “Investor Ready?”

CHAPTER 9 - CREATING PLANS THAT GET YOU FUNDED

Getting to Your Coke Bottle Plan

Why the Investment Proposal Is Important

First Decide How Much Money You Need

What Is Important in the Investment Proposal?

The Four Steps to Growth

Finance Numbers Tell an Exciting Story

Summary of Financials

Why You Need Projections for Five Years

Make It Tie Up

The Meeting

CHAPTER 10 - THE SMART PRESENTATION: RAISING CAPITAL FACE TO FACE

Looking for Capital

The Mothership PowerPoint

First Impressions

How VC Rick Will Judge You

What the Investor Will Be Asking

First Up: Front Slide

Executive Team

The Need

The Proposition

The Product

The Revenue Model

The Market

The Competition

Barriers or Risks

Go-to-Market Strategy

Milestones Met

Target Milestones

Financial Information

Investment Highlights

Three Presentation No-Nos

Biggest Mistakes by Owners and CEOs

CHAPTER 11 - THE WIN/WIN DEAL

The Home Stretch!

How the Investor Values Your Business

What Is the Term Sheet?

Due Diligence

The Laws to Know

Five Negotiation Tips for a Win/Win Outcome

Top Ways to Get the Relationship Off to a Great Start

Make the Canadian Dream Come True

APPENDIX - SELECTED WEB LINKS TO GOVERNMENT-FUNDED PROGRAMS

GLOSSARY OF COMMONLY USED TERMS

INDEX

Praise forMoney Magnet

“Every ambitious private business owner should understand the role of investors and how to attract them. Money Magnet is an indispensible guide to the process.”

—Austen Beutel, Chairman and CEO, Oakwest Corporation Ltd.

“Money Magnet begins with a startling proposition: some businesses succeed more than others simply because they know how to raise money. By sharing these processes, tools and secrets, Jacoline Loewen is daring Canadian entrepreneurs to dream bigger than they’ve ever dreamed before.”

—Rick Spence, Entrepreneurship Columnist for the National Post and PROFIT Magazine

“Don’t put another nickel into your business until you have read this book. Money Magnet is Financing 101 for entrepreneurs and owners who want to grow their business. How to get the money you need at the price and terms you deserve in eleven easy chapters filled with war stories from the success stories and train wrecks of financing history and those who lived them.”

—Greig Clark, Entrepreneur (College Pro Painters and ARxx Building Products) and Venture Capitalist (Horatio Enterprise Fund)

“Business owners attracted to Money Magnet will be treated to a wise, comprehensive and readable book. Jacoline Loewen’s dandy advice-filled guide shows you how to bring in the money you need to build your business.”

—Michael de Pencier, Founder and FormerPublisher, Toronto Life; Chairman,Investeco Private Equity Fund

“Knowing how much you need to start a business is one thing; knowing where and how to look for those funds is quite another. There are many books on ‘how much’ but Money Magnet shines in its straightforward, honest advice on ‘where to find it.’ It’s the ‘rainbow’ that can lead you to your ‘pot of gold.’ ”

—Ken Wong, Business and Marketing Strategy, Queen’s School of Business

Copyright © 2008 by Jacoline Loewen

All rights reserved. No part of this work covered by the copyright herein may be reproduced or used in any form or by any means—graphic, electronic or mechanical without the prior written permission of the publisher. Any request for photocopying, recording, taping or information storage and retrieval systems of any part of this book shall be directed in writing to The Canadian Copyright Licensing Agency (Access Copyright). For an Access Copyright license, visit www.accesscopyright.ca or call toll free 1-800-893-5777.

Care has been taken to trace ownership of copyright material contained in this book. The publisher will gladly receive any information that will enable them to rectify any reference or credit line in subsequent editions.

Library and Archives Canada Cataloguing in Publication Data

Loewen, Jacoline, 1960- Money magnet : how to attract investors to your business / Jacoline Loewen.

Includes index.

eISBN : 978-0-470-73880-1

1. Small business—Canada—Finance. 2. Private equity—Canada. I. Title.

HG4027.7.L64 2008

658.15’224

C2008-902204-1

Production CreditsCover design: Jason Vandenberg Interior text design: Tegan Wallace Typesetting: Thomson Digital Printer: Quebecor-Fairfield All figures sourced from Jacoline Loewen, unless otherwise noted.

John Wiley & Sons Canada, Ltd. 6045 Freemont Blvd. Mississauga, Ontario L5R 4J3

QW

To my loving sons, Ross and Craig

ACKNOWLEDGEMENTS

Money Magnet is rooted in a journey through the world of private equity and the conversations with a network of top investors about which entrepreneurs succeed in raising money and why. First and foremost, thank you to all of those experts quoted throughout the book who took the time to share their philosophy on business and their best experiences as investment partners. The most rewarding part of this book is meeting the people behind the money who do deserve respect for the enormous risks they take. This book is also to help their public relations in the marketplace. Many of these experts donated their time to participate in our workshops and CEO roundtables to open up their business knowledge to business owners.

Thank you to Karen Milner for her enthusiasm and editing skills as well as the impressive team at Wiley. Since this is my third book, I often get asked about how a publishing company can assist. Many comment that surely it would be better to self publish or go with an e-book on the Internet. Simply put, Wiley is firmly rooted in the wired 21st century with a hard-working team to get Money Magnet out to the readership that will benefit from its contents.

How could I not thank the hard working, cheerful team at Loewen & Partners: Anastassia Kobeleva, Phil Loewen, Chuck Loewen, Theva Naidoo, Jeffrey Watson, and Jacky Xie. You all carried the ball forward when most needed.

Finally, there are a few personal acknowledgements. I would like to thank my mother, Alainnah Robertson, who always fires up my entrepreneurial spirit and encourages me.

Thank you to life-long friends Susanna Nankivell, Angela Fairbank, Amy Cross, Ingrid Mida, and Tom Deans who gave support and good cheer. Finally, thank you, John, for putting up with all the time spent on my book and to my two sons who gave their unconditional support.

PART I

WHY YOUR COMPANY NEEDS PRIVATE EQUITY

CHAPTER 1

WHAT YOU SHOULD KNOW ABOUT ATTRACTING MONEY

You see things; and you say, “Why?”But I dream things that never were; and I say, “Why not?”

George Bernard Shaw

It’s a strange phenomenon that people who have the courage to run business often do not realize that they also have the power to attract a whole range of financial options. And I don’t mean the soul-crushing bank loans from yesteryear.

If you are the owner or CEO of a business, congratulations. I am thrilled to have your attention. Using the information in this book will guide you to the money you deserve for having the gumption (some might say craziness) to take your kernel of an idea and grow it. Perhaps right now your business is a little sapling or maybe you’ve got yourself a fine, mature oak. However large or small the plant, wouldn’t you agree that it needs a reassuringly continuous flow of water to survive? Every business, similarly, needs a continuous flow of cash to keep growing. Did you know that today attracting investors is astonishingly within reach of all but a few businesses?

My own interest in the subject of private equity came with the surprising realization that some businesses grow simply because they know where to get money—not because they have a better strategy, more motivated staff, or leaner business processes. It comes down to knowing how and where to get capital.