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Dot-Com Startups Norristown PA

A list of rules on how to effectively start a dot-com industry.

Local Companies

B Tm Associates Inc
(610) 279-6920
2500 Dekalb Pike
Norristown, PA

Family Life Education Counseling Services
(610) 272-1899
1211 Dekalb St
Norristown, PA

Rcn
(610) 650-3160
Norristown, PA

Assests Montco
(610) 275-3520
325 Swede St
Norristown, PA

Early Childhood Project
(610) 272-1899
1211 Dekalb St
Norristown, PA

Robinson Consulting Inc
(610) 272-6000
Norristown, PA

Montgomery Professional Building
(610) 278-7611
1330 Powell St
Norristown, PA

Management Systems & Support Services
(610) 370-0460
Reading, PA

Flinchbaugh James Consultant
(717) 843-0246
1310 Niles Ln
York, PA

Springbridge Development Inc
(610) 388-2005
Chadds Ford, PA

The hypergrowth needs of fast-growth startups have turned the old rules of
venture financing on their ear. Five-year exit plans, 20 percent annual ROI,
and 12-month negotiations are no longer the norm. Today’s venture capitalists
have more money to invest, but they expect more in return. Raising capital is
an intense process, which can be made easier by taking into consideration the
ten rules outlined below.

Ask for the right amount of money

Believe it or not, you can actually lowball your company out of the running
for financing. Venture capitalists know how much money it takes a typical
fast-growth company to get started, and they want to be sure you have a clear idea of
what will be needed. VCs also often have a minimum investment, and can’t be
bothered with companies whose funding needs fall below that threshold.
So how much do you ask for? That depends on the investor, your industry,
and the stage of your development. To gauge ongoing trends, research recent
deals through trade publications such as Red Herring and VentureWire,
and through news release sections of VC Web sites.
Know the different development stages

Plan your fundraising strategy through several rounds by presenting a realistic
timeline for subsequent financing stages. This shows the investor that you’ve
carefully planned your financing needs, and have a pragmatic outlook for your
business’ future. The basic VC development stages are:
- Seed financing – This is the initial investment used to get a company started and registered,
  hone the business plan, and begin development of a sample Web site.
  These funds often come from the business owners themselves, or through independent investors.
  Typical amount: $100,000 - $500,000
- First stage/startup financing – Once the business idea is fully formed,
  these funds are used to build a management team, get the site ready for launch,
  and support the first few months of commercialization. Typical amount: $3 million - $5 million.
- Second stage financing – Once the site is up and running, these funds are
  used for advertising, marketing support, building the customer base, and ensuring there’s
  enough money for fast growth. Typical amount: $10+ million.
- Third stage/bridge financing – This round is used to bring a company to an IPO. These funds
  are usually paid off with the proceeds from the offering.
  Typical amount: $20+ million.
Build your management team

Talent is the number one thing VCs look at, especially for fast-growth companies where an idea’s
execution often spells the difference between success and failure. Investors
want to see a management team with previous startup success and expertise in
areas related to the line of business. If your team is light on relevant
business experience, consider hiring consultants and other outsiders who can
fill this gap. For instance, if you’re building an Internet retailing business, bring in a
consultant who can give you inventory management skills. In addition, VCs want
to see plans for how your management team will evolve in relation to your
company’s growth. When will you need to bring in a seasoned CEO, for example.
Finally, consider creating a board of advisors consisting of people who
influence your industry and know how to build businesses. Investors will
appreciate the insight they can bring, and their participation demonstrates
an ongoing commitment to your firm by a respected entity.
Watch your financials…but they don’t really matter

A venture capitalist is not going to invest in your business based on its numbers.
The reason is that nobody can accurately predict how a new business will
turn out, especially in emerging business markets where growth patterns are still undefined.
That said, VCs will examine your numbers closely, and use them to gauge how
seriously you’ve considered the size of your opportunity and the costs of
bringing your product or service to market. Avoid making grand growth
claims – while you may believe you are capable of becoming a $500 million
business within 5 years, this kind of wild projection may turn off investors.
Build your projections from the ground up, based on customer segment data,
spending habits, and the success of other fast-growth businesses with
similar models.
Demonstrate multiple revenue streams

Be sure your business plan shows a number of ways your company will seek revenue.
Many fast-growth startups make the mistake of basing financial projections on a
single revenue source, yet investors often want to see multiple revenue
streams. This is because having more than one revenue source will
provide a fallback position should your initial revenue stream not develop
as planned, which is a distinct possibility for an unproven business model.
Show high-profile partners

You can build credibility by aligning your company with well-regarded,
established firms, both offline and online. Internet startup success is
often based on networking – the ability of a business to leverage other
people’s assets to build its own. Strategic alliances that improve your
talent pool, provide channels of distribution, or increase your visibility
will demonstrate that respected companies are willing to work with you,
reducing the amount of due diligence a VC has to undertake.
Sign some customers

Nothing impresses funders as much as signed contracts. These demonstrate
to investors that clients support your product and company. Short of current
customers, establishing prospect references – ones that are willing to work
with your business if certain criteria are met – work well. Have a list of
these references available for potential investors to contact.
Snowball your funding opportunities

The hottest VC deals are often those that appear to be the most urgent.
Few things appear more urgent to VCs than funding offers that are on their
way from other investors. The momentum these opportunities present can help
you sway fence-sitters and give you greater leverage to get the best deal
possible. Be careful, however. This tactic is only effective if genuine
term sheets are in the works, and you can be sure a VC will call around
to confirm your claims.
Be prepared to vest

Since a fast-growth startup’s management experience is crucial, VC’s want assurances that
you and your team will be with the company for the long haul – or
at least until they’re able to cash out. As a result, you can expect them
to make vestment requests that require you and your key managers to stay
with the business for a set amount of time before your shares take effect.
Basically, the VC is hedging its bet. By addressing the vestment issue in
your plan or presentation, you’ll demonstrate your ongoing commitment to
the venture, and possibly ease concerns that may otherwise arise.
State the exit strategy clearly

Venture capitalists don’t make investments out of kindness. While your
business plan and presentation may get them excited about investing in
your project, you will need to show them how they can get out of it.
VCs used to expect their exits to come four to five years down the road.
For Internet ventures, they expect more rapid paybacks, often in as little
as two years. Be explicit about where you expect your company to be at that
time. Will it be a stand-alone firm? Will it be bought? Will you file an IPO?
Be sure to provide a rationale for this vision.

Featured Local Company

Carbon County Chamber Of Commerce

(610) 379-5000
110 North 3Rd St., Suite 216
Lehighton, PA
http://www.carboncountychamber.org

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Advertising	Family	Home Services	Real Estate Resources
Business Services	Fashion	Industrial Goods & Services	Retail & Consumer Services
Career	Financial Services	Insurance	Software
Cars	Food & Beverage	Internet	Technology
Computer Hardware	Franchise	Legal	Telecommunications
Construction	Health	Miscellaneous	Trade Shows
Education	Holidays	Nightlife	Travel
Entertainment	Home Appliances	Online Database	Weddings
Environmental	Home Electronics	Pets	World History