A common question is, “What type of capital structure is best for my company?” The answer to that question is individually dependent upon your company, its stage of development and its needs. In the broadest sense there a two types of financing, debt financing and equity financing. Let’s take just a minute to consider the broad implications of both.
Debt financing is the infusion of capital by an investor in exchange for an agreement or repayment and interest over a specified period of time. Debt is usually backed by collateral and subject to other restrictions the investor may impose to secure their position. Common examples of debt capital are loans and the issuance of bonds. Debt may be an attractive means of securing capital for your company because you are not required to give up equity in exchange for the infusion.
However, carrying debt on your balance sheet requires that you have sufficient cash flow to make periodic interest payments, projected resources to pay off principal at the time of maturity and collateral necessary for securitization. Debt financing is many times not an option for early stage companies because of lack of positive cash flow. An exception could be debt put in place alongside owner’s cash for the purchase price of hard assets, such as plant equipment or real estate, that’s liquidation price would be sufficient to cover the amount of the loan
Equity financing is the infusion of capital by an investor in exchange for stock in the company. Equity issued to investors in exchange for cash can take many forms such as common stock, preferred stock or warrants. Common equity investments are those made by venture capital funds, angel funds and hedge funds. Whatever the agreement structure, equity investors expect a return in the form of dividends and appreciated stock value at the time of a company sale or public offering.
Equity financing may be attractive because it allows for an infusion of capital into your company without the immediate cash obligations associated with debt service. Additionally, bringing in equity investors means that you’re bringing in new owners and possibly new board members which may a change in the corporate culture. Many times these new owners are experienced businesspeople in their own right and can offer management valuable insight and perspective as your company grows and changes.
While equity financing does not make significant demands on cash flow, except when dividends are paid, it can come at a high price. Equity investors take on a lot of risk when investing in your company at an early state but generally reap handsome returns on their investment at the time of company sale or public offerings.
For more info on this subject as well as more info on getting funding for your start-up go to http://www.capitalmatchpoint.com
Monday, April 9, 2012
Sunday, April 8, 2012
The Jobs Act - passed by the Senate and the House.
The JOBS Act was signed into law by President Obama on April 5th, 2012. The House originally passed the Act, and then it was amended by the Senate on March 22, 2012. This Act makes changes to a lot of different laws to attempt to make it much easier to raise private capital. This applies to a lot of emerging companies that want private capital and they wish to stay private longer. In addition, it reduces the regulatory burdens on certain public companies that are new.
If securities are held by 500 people or more issuers are required to register that class of securities with the SEC. This makes these securities extremely burdensome with regard to reporting obligations. They have to file very detailed quarterly and annual reports with the SEC.
With the passing of the Act, the threshold has now risen to 2,000 holders of record. One of the provisions is that no more than 499 of those investors qualify as an “accredited investor” under SEC rules. One of the positive aspects is that persons who purchase securities pursuant to crowdfunding are exempt. This will open the door for entrepreneurs to receive a new method of funding and this is something that is extremely positive for start-ups.
The enactment of the JOBS Act is effective immediately. The regulatory agency (SEC) is going to have to adopt rules and revise what they call “held of record”. The rulemaking for the SEC revisions should take place within the next 270 days. It passed Congress last week through a 73-26 Senate vote and a 380-41 House vote, including an amendment designed to protect crowdfund investors in order to make it easier for start-ups to access capital.
What this means for entrepreneurs:
1. More Control over the Timing of Going Public.
2. Less Impacted by Potential Reporting Requirements.
3. Potential Impact on Secondary Markets.
4. Eliminates the Prohibition Against General Solicitation and Advertising
5. Reach a Wider Pool of Investors
“Simply, the JOBS Act will make funding more accessible for startups by allowing non-accredited investors to participate in the funding rounds, and this alone, I believe will be the main factor driving the increase in new companies being founded. And with new companies comes the need to hire staff. Without a doubt, this will help the current unemployment rate,” said Tanya Prive, founder of Rock The Post, a social networking platform for entrepreneurs to fund and swap resources.
Rory Eakin, founder of CircleUp, an equity-based crowdfunding platform focused on established high-growth consumer and retail companies, added: “Currently, less than one percent of U.S. small businesses receive Angel investments. By opening up restrictions around general solicitation and introducing crowdfunding…these investments create up to six jobs per investment.”
The Capital Matchpoint founder and President, Ken Honeyman and Vice President, Dave Dambro have been watching the bill as it progressed through the House and the Senate. The Capital Matchpoint is a premier online destination “where business meets capital.” They have carefully crafted an online community where entrepreneurs can develop a profile which then has a sophisticated method of using the information to match them up with the investors in the network. The website has all types of resources including an entire library of helpful videos, free e-book download and more.
If you are looking for capital: visit www.capitalmatchpoint.com
Written by Edward Cambas – Capital Matchpoint Business Desk.
If securities are held by 500 people or more issuers are required to register that class of securities with the SEC. This makes these securities extremely burdensome with regard to reporting obligations. They have to file very detailed quarterly and annual reports with the SEC.
With the passing of the Act, the threshold has now risen to 2,000 holders of record. One of the provisions is that no more than 499 of those investors qualify as an “accredited investor” under SEC rules. One of the positive aspects is that persons who purchase securities pursuant to crowdfunding are exempt. This will open the door for entrepreneurs to receive a new method of funding and this is something that is extremely positive for start-ups.
The enactment of the JOBS Act is effective immediately. The regulatory agency (SEC) is going to have to adopt rules and revise what they call “held of record”. The rulemaking for the SEC revisions should take place within the next 270 days. It passed Congress last week through a 73-26 Senate vote and a 380-41 House vote, including an amendment designed to protect crowdfund investors in order to make it easier for start-ups to access capital.
What this means for entrepreneurs:
1. More Control over the Timing of Going Public.
2. Less Impacted by Potential Reporting Requirements.
3. Potential Impact on Secondary Markets.
4. Eliminates the Prohibition Against General Solicitation and Advertising
5. Reach a Wider Pool of Investors
“Simply, the JOBS Act will make funding more accessible for startups by allowing non-accredited investors to participate in the funding rounds, and this alone, I believe will be the main factor driving the increase in new companies being founded. And with new companies comes the need to hire staff. Without a doubt, this will help the current unemployment rate,” said Tanya Prive, founder of Rock The Post, a social networking platform for entrepreneurs to fund and swap resources.
Rory Eakin, founder of CircleUp, an equity-based crowdfunding platform focused on established high-growth consumer and retail companies, added: “Currently, less than one percent of U.S. small businesses receive Angel investments. By opening up restrictions around general solicitation and introducing crowdfunding…these investments create up to six jobs per investment.”
The Capital Matchpoint founder and President, Ken Honeyman and Vice President, Dave Dambro have been watching the bill as it progressed through the House and the Senate. The Capital Matchpoint is a premier online destination “where business meets capital.” They have carefully crafted an online community where entrepreneurs can develop a profile which then has a sophisticated method of using the information to match them up with the investors in the network. The website has all types of resources including an entire library of helpful videos, free e-book download and more.
If you are looking for capital: visit www.capitalmatchpoint.com
Written by Edward Cambas – Capital Matchpoint Business Desk.
Sunday, March 18, 2012
Wednesday, February 29, 2012
from the marketing desk of edward e. cambas.
Are you trying to start your own business? If you are you may wish to keep the paycheck that you have while planning your next moves. Of course you want to fire your boss, but there are some things you should consider while you plan and execute your entrepreneurial launch. If you take these important steps you will be much more likely to succeed.
After being in business and working in various organizations for over 25 years, I preach the slow go approach to start-up business organizations. I like to think positive and be aggressive don’t get me wrong, I just learned from experience that it pays to pursue your dreams cautiously. My preference is that first-time entrepreneurs consider keeping their salaried jobs as long as possible to preserve personal savings. If your company is properly funded and the concept is very sound that may not apply. Most entrepreneurs have a fantastic idea or concept and little capital if any at all. This is why making all the right moves with regards to getting funding is important before going all in.
All too often entrepreneurs leave their jobs with a dream of becoming successful in their own business and have not properly planned to sustain themselves during the initial phases. A lot of business people crash before getting the chance to begin. I have personally seen a lot of people who have to get part time jobs or who have to take low level earnings to supplement themselves while trying to climb the ladder to success. In many cases these entrepreneurs begin to lose confidence and savings as their dreams and hopes start to fade. This is actually why so many businesses fail early. It is not good to start from a point of weakness rather than strength. Lack of capital is the number one cause of business failure.
The smart way to go about this is to make sure you do all the time consuming research and planning prior to launching the company and prior to leaving your steady paycheck.
Follow these steps to ensure viability and sustainability of your new business:
Get organized. Start completing all of your domain registrations, websites, and logos. In addition, have all of your marketing materials in place. Make sure that your business and brand names do not conflict with any trademarks. Start by visiting the U.S. trademark electronic search system (TESS) at http://www.uspto.gov/. All of the searches are free.
Get all of your financials in order. The best time to apply for credit is when you don’t need it. Entrepreneurs always get a better deal if they tap their equity or increase credit card spending limits before leaving their salaried positions. Pre-startup is the best time for a person to work on their credit scores. Your personal credit score can dictate what you might pay for equipment leasing, credit processing, and anything that requires a credit check. You can get one free credit report per year to check your report at http://www.annualcreditreport.com/ .
Set up the company and choose the structure. You need to decide whether you benefit most from sole proprietorship, s-corporation, corporation, or LLC. It might be good to investigate the benefits and pitfalls of each of these choices before making your selection. It might be good to ask an attorney or accountant to define which selection is best for you. It can and will determine the taxes and how they will be assessed. A great place to finalize and register you corporation is http://www.amerilawyer.com/ . Prices start at only $99. I can personally say that this is the best service and the least expensive company I know of. My recent total paid was $117 after they add for shipping and that was a corporation.
Make sure you experiment before starting. If you are setting up a restaurant you would want to have worked in a similar style business before starting your own. Learn everything you can. It makes the job seem more meaningful when you have to go to work for somebody else, and you know that it is just learning for the future.
Health Insurance – make sure that you look into all of the aspects which may affect your health. The Federal law mandates Cobra which would allow you to stay on the company health plan after you leave in some cases. Getting new health insurance is often very costly and this is one of the major considerations in planning ahead. A lot of people who have an illness might be very cautious as to how they decide to leave their current coverage.
There are all types of things to consider before starting your own company. The most important thing is to “plan your work and work your plan.” One of the traits of strong entrepreneurs is their level of persistence. In addition, most entrepreneurs are not easy to knock down. Remember, it is not how you fall down, but how you rebound which makes a person successful.
Written by Edward Cambas – Capital Matchpoint http://www.capitalmatchpointmedia.com/
After being in business and working in various organizations for over 25 years, I preach the slow go approach to start-up business organizations. I like to think positive and be aggressive don’t get me wrong, I just learned from experience that it pays to pursue your dreams cautiously. My preference is that first-time entrepreneurs consider keeping their salaried jobs as long as possible to preserve personal savings. If your company is properly funded and the concept is very sound that may not apply. Most entrepreneurs have a fantastic idea or concept and little capital if any at all. This is why making all the right moves with regards to getting funding is important before going all in.
All too often entrepreneurs leave their jobs with a dream of becoming successful in their own business and have not properly planned to sustain themselves during the initial phases. A lot of business people crash before getting the chance to begin. I have personally seen a lot of people who have to get part time jobs or who have to take low level earnings to supplement themselves while trying to climb the ladder to success. In many cases these entrepreneurs begin to lose confidence and savings as their dreams and hopes start to fade. This is actually why so many businesses fail early. It is not good to start from a point of weakness rather than strength. Lack of capital is the number one cause of business failure.
The smart way to go about this is to make sure you do all the time consuming research and planning prior to launching the company and prior to leaving your steady paycheck.
Follow these steps to ensure viability and sustainability of your new business:
Get organized. Start completing all of your domain registrations, websites, and logos. In addition, have all of your marketing materials in place. Make sure that your business and brand names do not conflict with any trademarks. Start by visiting the U.S. trademark electronic search system (TESS) at http://www.uspto.gov/. All of the searches are free.
Get all of your financials in order. The best time to apply for credit is when you don’t need it. Entrepreneurs always get a better deal if they tap their equity or increase credit card spending limits before leaving their salaried positions. Pre-startup is the best time for a person to work on their credit scores. Your personal credit score can dictate what you might pay for equipment leasing, credit processing, and anything that requires a credit check. You can get one free credit report per year to check your report at http://www.annualcreditreport.com/ .
Set up the company and choose the structure. You need to decide whether you benefit most from sole proprietorship, s-corporation, corporation, or LLC. It might be good to investigate the benefits and pitfalls of each of these choices before making your selection. It might be good to ask an attorney or accountant to define which selection is best for you. It can and will determine the taxes and how they will be assessed. A great place to finalize and register you corporation is http://www.amerilawyer.com/ . Prices start at only $99. I can personally say that this is the best service and the least expensive company I know of. My recent total paid was $117 after they add for shipping and that was a corporation.
Make sure you experiment before starting. If you are setting up a restaurant you would want to have worked in a similar style business before starting your own. Learn everything you can. It makes the job seem more meaningful when you have to go to work for somebody else, and you know that it is just learning for the future.
Health Insurance – make sure that you look into all of the aspects which may affect your health. The Federal law mandates Cobra which would allow you to stay on the company health plan after you leave in some cases. Getting new health insurance is often very costly and this is one of the major considerations in planning ahead. A lot of people who have an illness might be very cautious as to how they decide to leave their current coverage.
There are all types of things to consider before starting your own company. The most important thing is to “plan your work and work your plan.” One of the traits of strong entrepreneurs is their level of persistence. In addition, most entrepreneurs are not easy to knock down. Remember, it is not how you fall down, but how you rebound which makes a person successful.
Written by Edward Cambas – Capital Matchpoint http://www.capitalmatchpointmedia.com/
Sunday, February 26, 2012
Sunday, February 12, 2012
Do you need Capital?
NuQuest, Inc. is The Capital MatchPoint, the world's premier online community for entrepreneurs and capital seekers to get connected with investors that are standing ready to provide funding at all sizes, disciplines and geographic location.
How are we different? We take social networking to the next level through a series of complex algorithms designed to provide automated "intelligent" matching of interests. No other system employs as sophisticated a mechanism as The Capital MatchPoint. To our competitor's disadvantage, their matches are made by a chance meeting in the social network or by paying for "extras" such as events and presentations. Finally, most fee-based commercial websites for entrepreneurs and investors are run by commercial website entrepreneurs with no depth of knowledge in the process by which capital funding takes place. At The Capital MatchPoint, real industry pros with a history of successful capital raising built and utilize the site themselves. We can assist you with any aspect of the funding process but if you are "Investor-Ready" we promise you that there are no surprises or hidden agendas. We are only interested in connecting you with the Investors interested in funding your success.
http://www.capitalmatchpoint.com
How are we different? We take social networking to the next level through a series of complex algorithms designed to provide automated "intelligent" matching of interests. No other system employs as sophisticated a mechanism as The Capital MatchPoint. To our competitor's disadvantage, their matches are made by a chance meeting in the social network or by paying for "extras" such as events and presentations. Finally, most fee-based commercial websites for entrepreneurs and investors are run by commercial website entrepreneurs with no depth of knowledge in the process by which capital funding takes place. At The Capital MatchPoint, real industry pros with a history of successful capital raising built and utilize the site themselves. We can assist you with any aspect of the funding process but if you are "Investor-Ready" we promise you that there are no surprises or hidden agendas. We are only interested in connecting you with the Investors interested in funding your success.
http://www.capitalmatchpoint.com
Wednesday, January 11, 2012
Friday, January 6, 2012
You have to have a website to do Social Media the right way.
From the Social Media desk of Eddie Cambas.
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