What Are the Typical Stages of Private Investments?
Seed Financing: is the earliest stage of funding. Investment is small (typically low tens of thousands of dollars) to support an entrepreneur's exploration of idea. No formal business plan exists, management team may not yet be formed, no feasibility of the project established. In case of an established technology, seed money is used to finance recruitment of key management and writing business plan. Seed investors provide basic business advice, office facilities etc.
Startup Financing: Commitment of more significant funds to an organization that is prepared to commence operations. The start-up is able to demonstrate a competitive advantage, a prototype product is available in case of a high-tech venture, impressive research staff recruitment in case of a biotech firm, in case of low-tech firms established powerful concept of pre-emption advantages and a superior management.
First-Stage Financing: On-going businesses. Not profitable yet but has an established organization, a working product, and some revenues. First-stage funds are usually used to establish first major marketing efforts, and to hire sales and support staff. Sometimes funds are also applied to product enhancements, customizations etc. First stage investors often monitor the staffing levels to make sure they are in line with projected revenues.
Second-Stage Financing: Typically provided for working capital, fixed asset needs to support the growth of company with active production, sustainable sales and some profits. Mainly aimed at expansion of a tested contender. In most cased capital invested is used to acquire assets, hence more readily recoverable in event of liquidation. Lower risk than earlier rounds.
Bridge Financing: Intended to carry a company until its IPO. IPO is generally expected in short-term (typically within a year from financing event). Main purpose is to satisfy on-going capital needs. Sometimes bridge investors may apply some or all of the funds to buy out early-stage investors who are anxious to liquidate their holding.
Restart Financing: also known as emergency or sustaining financing, is raised for a troubled firm, at a price significantly below that of previous round. Although the venture is performing well below expectations, the round is priced low enough to offer a high expected rate of return, which may result in substantial dilution of previous investors.
Can a Company Create Value From Its Intellectual Property?
Creating value from intellectual capital follows the same business process or cycle like other tangible resources and assets. The business cycle involves identifying resources, processing and utilizing such resources to develop a new product, service or process, and then launching the product with the main goals of competitive positioning and revenue generation. Intellectual capital as a business asset follows the same cycle from being a resource (knowledge) to being processed and developed into a product concept or prototype (innovation) then into becoming a defined asset that can be used for competitive positioning and revenue generation (intellectual property).
Based on this, Lexington Risk Management, LLC works with its Clients to manage the intellectual capital of their businesses through three stages where (i) value is created by assembling and mining knowledge resources (knowledge management); (ii) value is extracted by processing the resources into a marketable product or service (innovation management); and (iii) where value is maximized by leveraging the protected and legally defined intellectual capital through adopting the appropriate competitive and commercialization strategies (intellectual property management).
Each of these stages will support and reinforce the other where our Clients' knowledge management will provide the platform for all operations and processes, their innovation management will provide the processes that perfect and develop their own resources into products, and their intellectual property management will represent the optimal level of value maximization.
What Is a Reverse Merger?
A "reverse merger" is a method by which a small or medium capitalized private company becomes public. In a reverse merger, an operating private company merges with a fully reporting, clean publicly traded shell corporation that typically has no assets or liabilities. (The public company is usually called a "shell" corporation). The publicly traded corporation is called a "shell" since all that exists of the original company is its corporate shell structure and shareholders. By merging into such an entity, a private company transitions into publicly traded status.
The private company is acquired by a public shell company and exchanges its stock for stock in the public company in a tax-free exchange. The private company normally will change the name of the public corporation (often to its own name) and will appoint and elect its management and board directors.
A public shell company that we would use in a reverse merger is fully reporting in its filing with the SEC, has current audited financials, and is trading on the NASDAQ-Bulletin Board exchange. There are other shell companies that are available and in certain situations could be utilized.
What Does It Take to Be an Entrepreneur?
The driving force behind the numerous small- and medium-size businesses that flourish in our economy, is the entrepreneur. For those interested in starting and operating a business, it is useful to understand who this unique individual is and whether they have similar personality traits.
Who Is an Entrepreneur?
Social scientists have conducted numerous studies to determine whether successful entrepreneurs evidence personality traits different from the general population.
They found that the typical entrepreneur is:
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An opportunist capable of recognizing an attractive, potentially profitable venture;
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A risk taker willing to assume the risk of loss in return for the promise of an acceptable level of profit and other personal rewards;
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Goal oriented and a high-achiever who enjoys setting challenging objectives and has the ambition and perseverance to reach them through his or her own efforts;
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A highly motivated, hard working, high energy, self-starter with a strong sense of commitment who is willing to endure the frustrations and demands associated with making a business venture successful in return for the rewards;
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Self confident with enough faith in his or her ability to meet challenges, overcome adversity, solve problems, and make good decisions (It is the strong sense of self confidence that leads entrepreneurs to accept the above average risk associated with a new business venture);
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Independent (The typical entrepreneur wants to be in control, to do things his or her way, to lead rather than follow, and to make decisions without interference from others).
Needed Traits
The following simple assessment questionnaire should give the prospective entrepreneur a general idea of whether he or she possesses personality traits consistent with this entrepreneurial profile. To score your responses, assign one point to each "Yes" answer and a zero to each "No" answer. Add the point values and use the following suggested guidelines for interpreting your score.
A score of 17 or above indicates traits consist with those of the typical entrepreneur.
A score between 13 and 16 suggests only moderately consistent traits.
A score of less than 13 suggests a lack of consistency.
When interpreting your score, realize that the results are only suggestive and not conclusive. There are successful entrepreneurs with scores less than 13 while a score of 17 or greater isn't an automatic guarantee of success. Success also requires a good business concept, organization and managerial skills, the necessary financing, a lot of hard, demanding work, good timing, and a measure of luck.
Entrepreneur Assessment Questionnaire
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Assuming you had the choice and understand the risk and sacrifices involved, would you choose a small business entrepreneur's career over any other? Yes ______ No ______
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Are you willing to take substantial risk, for example investing your life savings, if the potential reward is sufficient? Yes ____ No _____
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Can you make a decision and stick to it even though the decision is unpopular with those that are affected by the outcome? Yes _____ No _____
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Do you enjoy having the responsibility for making decisions even knowing that you will be held accountable for poor results? Yes ______ No ______
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Do you set goals before beginning an important undertaking? Yes ____No _____
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Do you make a detailed action plan before beginning a major undertaking? Yes ____ No____
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Are you able to effectively organize the resources required to complete a major undertaking? Yes ______ No ______
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Do you finish tasks or projects that you start in spite of difficulties or obstacles? Yes ______ No ______
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Are you willing to spend whatever time and effort are required to complete a task? Yes ____ No ____
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Do you enjoy meeting and dealing with people? Yes _____ No _____
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Do the people you deal with trust you? Yes ____ No____
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Do the people you deal with understand the concepts and ideas you attempt to communicate? Yes _____ No ______
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Are you able to motivate the people you deal with to go along with your ideas? Yes _____ No _____
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Are you in good health? Yes _____ No ______
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Are you innovative or creative? Yes _____ No _____
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Do you thoroughly investigate important undertakings before getting involved? Yes _____ No _____
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Have you done a self-analysis to determine your personal strengths and weaknesses? Yes _____ No ______
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Do you have technical experience in the type of business you plan to start? Yes _____ No ______
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Do you have management experience in the type of business you plan to start? Yes _____ No _____
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Are you willing to have people with expertise or talents you lack join you to operate the business you plan? Yes _____ No ______
