Overview

 

 

 

 

 

BUSINESS PLANS

 

 

 Introduction

 

 

 Maximizing Valuation

 

 

 

 

 

VALUATIONS

 

 

 Sample Reports

 

 

 Rule 409A

 

 

 

 

 

GROWTH CAPITAL

 

 Venture Capital

 

 

 IPOs

 

 

 

 

 

SELL YOUR BUSINESS

 

 

 M&A

 

 

 Divestiture

 

 

 

 

 

USEFUL TOOLBOX

 

 

 Useful Links

 

 

 Capital Sources

 

 

 

 

 

ABOUT US

 

 

 Management

     Journal Articles
     Contact Us

 

 

How to Pursue...

Venture Capital and Private Placements

 

How to Find the Right Investor

How to Write the "Black Book"

How to Target Investors

Our Target Client Profile

How to Get Started

 

 

 

 

 

The Harvard Capital Group funds deals both directly and indirectly.  Here, the Harvard Capital Group, unveils his secrets for raising venture capital and private placements.  The key is getting the highest valuation, least dilution and the right investors.  This will not happen if it is not carefully planned from the start.  

 

Whether you are seeking $3 million or $100 million, the target investors will change, but the core process is the same...

 


The Right Investor

 

Entrepreneur:  I’ve heard that the Harvard Capital Group helps guys like me raise money.  We need several million dollars to get ready to go public.

 

HCG:  You’ve come to the right place, particularly if you’re a high tech company.  But it’s not just how much money you get, but whose money, and how much of the company you have to give up.

 

Entrepreneur:   You’re right; I do want to hold on to control.  But why do I care where the money comes from?

 

HCG:  Finding the right investors is key.  You want investors who have deep pockets, are sympathetic when you fall short of projections and can introduce key contacts as you grow.  For most companies, the best investors are strategic partners.

 

Entrepreneur:  What’s a “strategic partner”?

 

HCG:  A strategic partner has a vested interest in your success that goes beyond a cold cash return on his investment.  Generally these take two forms:  The corporate partner and the venture capitalists.

 

The corporate partner is typically in a related industry, but not a direct competitor.  Perhaps you have a technology or ideas that complement theirs.  If you succeed, they succeed.  They can give you lots of help beyond money.  Best of all, they are often more concerned with broad strategic issues than return on investment, which may leave more on the table for you.

 

Entrepreneur:  How about venture capitalists?

 

HCG:  Like corporate partners, “VCs” have deep pockets, and offer guidance to help you grow.  Whereas the corporate partner generally wants to develop your product, the VC wants to develop your company.  Either way, you’ll get lots of quality help, and the possibility to go public later.

 

Entrepreneur:  I heard that VCs are ruthless.

 

HCG:  Times have changed.  If you look at all the IPOs coming out on the market today, the founders are almost always there, and the VCs have a minority stake.  Today talent is valued higher than capital.

 

Entrepreneur:  What else do VCs or corporate partners bring to the table?

 

HCG:  Credibility.  Having the right partner puts a “Good Housekeeping Seal of Approval” on your company.  Customers and suppliers notice, and your IPO will be that much easier.

 

Entrepreneur:  So which is better, the corporate partner or the venture capitalists?

 

HCG:  We don’t have to decide right now, the best fit will naturally fall out when we work on your Black Book.

[back to the top]


The Black Book

 

Entrepreneur:  What’s a “Black Book”?

 

HCG:  A “Black Book” goes beyond a business plan.  It explains the business and its potential, and spells out the terms of the deal.  No two Black Books are alike.  In dealing with strategic partners, it has to pass muster from several viewpoints.  As a marketing document, it must be concisely written, interesting, and with thematic focus.  As a business document, it must be logically consistent so that marketing, production, organizational and financial policies hang together in a focused strategy.  As a legal document, it must contain full disclosures and an appropriate financial structure.  As a financial document, the numbers have to work out for the investor.  It’s a Rubric’s Cube that has to yield full color from whatever angle you look at it.

 

Entrepreneur:  Can we use the business plan we’ve already prepared?

 

HCG:  We certainly will use that as a starting point, but it’s seldom the endpoint.  Usually, business plans are lacking in specifics on deal structure, for instance.  And even in those rare cases when the strategy is well thought through, the genius is so obscured by jargon or acronyms that only another rocket scientist can gauge its merit.  The strategy has to be bullet proof, and articulated with razor sharp clarity to an audience often from another industry.  Our goal is to get the highest possible valuation.

 

Entrepreneur:  Why do I care about valuation?

 

HCG:    A high valuation means that you give up less of the company for the same $5 million investment.  That gives you a bigger piece of pie, and keeps you in control longer.

 

Entrepreneur:   How do you increase valuation?

 

HCG:  There are 99 ways, but one key way is to eliminate “anomalies.”  An anomaly is any aspect of a deal that causes a potential investor to raise a brow.  It can be deal presentation (misspellings, sloppy thinking, contradictory financials).  Most often, it is deal substance (capital structure, patent protection, management).  We need to identify them, and reduce their impact.  Every business plan has them, and most are pretty easy to offset.

 

Entrepreneur:  What if we can’t eliminate the anomalies?

 

HCG:  If you can’t eliminate an anomaly, find a way to turn a disadvantage into an advantage.  For example, many start-up companies have great technology, but score a zero in sales and marketing.  Generally, we deal with that by acknowledging the problem, and adding that some of the proceeds will be used to get a marketing person, and look here in Appendix C for three hot-shot resumes of people we’ve been talking to.  I’ve never seen a problem that did not have a solution.

[back to the top]


HCG's Expertise

 

Entrepreneur:  How do I know you will be insightful about my company?

 

HCG:  I have seldom been in a meeting with a high tech entrepreneur where I wasn’t told afterwards that I was the first person to quickly zero in on the two or three variables that were relevant to their success.  I’ve gotten some good tools at Stanford University (where I earned a BA in Economics cum laude) and Harvard Business School (where I have an MBA).

 

But my real education came from being an entrepreneur myself, having been a key officer in a high-tech company that the Wall Street Journal listed as one of the top ten performers in the U.S.  I’ve also known what it’s like to be undercapitalized and have to struggle to meet payroll.  I’ve been in your shoes.

 

As an investment banker, I’ve also worked a number of “Wall Street” deals, and in many industries.  I particularly enjoy high technology because at the cutting edge, the unknown answers are more complex, and the potential for creative solutions is limitless.

 

[back to the top]


Finding the Investor

 

Entrepreneur:  How do you target the investors?

 

HCG:   By the time we finish the Black Book, we also have a crystal clear idea of the investor profile.  How much money do we want?  How important is control?  Who can help us grow the best?  Who will give us the highest valuation?

 

We then prepare a long list of potential marriage partners.  We have a pretty good network of contacts, and supplement this with our proprietary database of corporations and institutional investors.  For corporate partners, we usually go straight to the CEO.  We also have a pretty effective methodology to get to the CEO if we did not already have a relationship.

 

Entrepreneur:  What happens when the VC or corporation expresses interest?

 

HCG:  Usually, there are multiple meetings.  They want to meet your management team and understand the special magic of your ideas.  This is where a well-written Black Book pays off.  Any deal has to pass several hurdles:  product, technology, marketplace, finance and strategic fit.  If somebody gets through a well-crafted Black Book, they are coming to see you for the right reasons.  We can quickly focus on specific hot-button issues toward closing a deal.

 

Entrepreneur:  What do you do once we are funded?

 

HCG:  We hope to maintain a relationship with you to help with your IPO, and to transact your first merger or acquisition.

[back to the top]


Our Target Client Profile (for venture capital)

 

Entrepreneur:  What kinds of clients are you looking for?

 

HCG:  We do not accept all companies as clients.  Our ideal profile is defined below:

 

Product /Service

Is the product/service sufficiently differentiated from others to dominate its own niche?  Is there broad patent protection already in place or a first-mover advantage?

Sales Growth

Is there potential for rapid sales growth once the product is launched?  Here we are looking for a minimum of $1 million in annualized revenue within a year after product launch or funding.

Management

Is there already a strong management team in place, or else the potential to put one together quickly that can work together?

Financial Solvency

Does the Company have sufficient resources to stay in business without funding for the next six months (with a minimum of $20,000 in cash)?

Initial Public Offering

The willingness to engage in an initial public offering (or acquisition) within five to seven years to allow incoming investors to “exit.”

Location

Company located in Western U.S.

Growth Industry

We can look at any industry, but prefer one of those below.

Communications

Computers

Electronics

Genetic Engineering

Internet

Medical Devices

Software

[back to the top]

Getting Started

 

Entrepreneur:   How do we get started?

 

HCG:   If you want to take the next step, click here

 

 
 

Contact Us | Home | Business Plans | Valuations | Raising Capital | Toolbox | About Us

(c) 2010, 2011, 2012, 2013 Harvard Capital Group