My client, Innovic, is running a free event, Let’s Talk IP, event on Thursday, 12 August 2010 5:45 pm to 7:30pm in Melbourne. Register here.

I just registered for the 27 JULY 2010 – 11 am (AEST) webinar on Expanding into the US: Funding Your Business: Options and Opportunities, run by the passionate and super-productive Vikki Forrest, CEO of ANZA Technology Networks. About the webinar:

When Australian companies consider the US market they automatically think venture capital – and why not? There are 1000’s of VCs in America. Yet, less than one percent of companies – Australian or otherwise – meet the mark for VC investment. For the rest, other options and opportunities need to be pursued.

This webinar will feature experts in angel investing, bootstrapping, grants and combinations of funding sources that will get you thinking “outside the VC box” and into a can-do mode for serious US market exploration.

Other webinar events from the series:

13 JULY 2010 – 11 am (AEST) – Expanding Your Business to the US: Myths and Realities. You’ve got a great innovation and know it will play well in the US market, or your success in the Australian market has reached its apex. Now what? Why not pack the suitcases and spend 6 weeks visiting the major US tech hubs? You’ve heard Americans are friendly and love a good investment opportunity. So, now that you’re here, why won’t they take your calls?

This webinar will feature an Australian entrepreneur with a patent-pending technology who will share his experiences about living and working in the US and an American “Networker-in-Chief” who will discuss the intricacies involved in networking “American-style”. Hosted by ANZA CEO Viki Forrest, who has worked with 100’s of Australian companies exploring the US market and who will share her own experiences of coming to the US with an Australian startup and how she built a formidable US network.

21 JULY 2010 – 11 am (AEST) - Sizing Up the US Market: Facts and Fears. Fact: The US market is 15 times the size of Australia’s – and growing. Fear: It’s too big of a risk trying to scale a market of this size and you could lose everything you’ve worked for. The US and Australia are two entirely different markets – not only in size, but in depth and scope. What works in Australia does not always work in the US just by ramping up the team, the technology and the dollars.

This webinar will feature a VC with keen insight into investing in Australian companies in the US market and an Australian CEO who launched a successful US-based business who will share their fact and fear lists with you. Moderated by ANZA CEO Viki Forrest who has worked with 100’s of Australian companies scaling the US market and seeking US funding.

I have been assisting a company raise capital and we have been exploring Angel Investment networks. I have found that investors use the following metrics to pre-screen (from a financial perspective) your company:

1. Capital sought
2. Equity stake
3. Pre-Money valuation
4. Exit

1. Capital Sought

This is fairly straight forward, this is the total amount of capital you are looking for. For our example, let’s assume $15 million.

2. Equity stake

How much are the original investors and founders willing to give up in return to securing the capital? Some investors may want control (ie. greater than 50%) – although this is rare. Let’s assume, our company will sell 30% share for $15 million.

3. Pre-money valuation

This is the valuation of your company before the capital flows into the company. It is important to define this with the potential investor, as some may assume post-money valuation, which affects the way the equity stake is calculated. A great introduction to pre-money vs post-money valuation can be found at Investopedia. Valuing a company is a difficult process (especially for startups) but not impossible – working closely with a reputable 3rd party finance company will help convince investors of your valuation.

Let’s assume our company’s pre-money valuation is $20 million. So our valuation after investment will be $45 million ($20 million pre-money valuation + $15 million capital)

4. Exit

You will need to know the how, when and the target valuation of your exit strategy. An exit for an investor can mean different things over different timeframes. An investor may want to have their shares “liquid” on a stock exchange to moneytise all or part of their investments. Some will want a quick turnaround, some want to wait years to build up the value of the company and cash in. Some have different levels of the expected return on investment. The point of this is to provide a forecast of the valuation of the company at the time you decide to exit. In our example, we forecast that our company will be worth $211 million after 7 years.

(For simplicity, I have left out discount rates for the Return on Investment calculations)

So, the investor can now make a “quick call” on whether to take the discussion further. Obviously, there are other considerations that an investor will look at (management team, market potential etc.) but it is nevertheless important to have these figures at your fingertips.

Part of every startup’s life is raising capital. This will typically involve Angel Investors – high net worth individuals. However, Robert Litan has discovered a potential unintended consequence in Senator Dodd’s Financial Reform Bill:

Under existing law, startup companies can raise money easily and quickly from “accredited investors” — individuals with substantial wealth or income. There is no need for the companies or the investors to gain approval from any state or regulatory official.

All of this would change if Section 926 of the Dodd bill is included in any final reform legislation. That section would require, for the first time, companies seeking angel investment to make a filing with the Securities and Exchange Commission, which would have 120 days to review it. This would both raise the cost of seeking angels and delay the ability of companies to benefit from their funding.

The negative impact of the SEC filing requirement would be aggravated by the proposed doubling of the net worth or income thresholds required for investors to be “accredited.”

It is difficult to know why these provisions are in a much larger bill whose primary aim is to address the fundamental causes of the recent financial crisis. Those causes are now well known and much commented on: excessive subprime mortgage lending combined with excessive leverage throughout the financial system. There is no evidence that angel investment in startup companies played any role whatsoever in events leading up to the financial crisis.

America became prosperous by its risk-taking and by backing their abilities and talents. It is such a shame that politicians should want to get in the way of two parties voluntarily agreeing on a deal. If this bill gets up it will only mean less deals, less wealth-creation, less innovation and more startup failure rates. Timothy Lee from Cato sums it up well:

It’s hard to overstate how important a favorable regulatory climate is to the success of startups. Some of the most important startups have been founded by 20-somethings without the resources to hire lawyers or navigate regulatory bureaucracies. And startups frequently find themselves within weeks of insolvency before they have a big breakthrough. Having a crucial round of funding delayed by four months can be the difference between success and failure. If this description of the bill is accurate (and I have no reason to doubt that it is), this provision would be very bad for the future of high-tech innovation in the United States.

UPDATE: Senate amends bill:

The changes included removing a 120-day waiting period for state regulators to review an investment after a deal has been made and allowing federal regulations to govern angel investments, as opposed to a hodgepodge of state regulations.

Although the amendment preserved annual income and net-worth requirements for angel investors to be accredited, it removed requirements that the levels rise with inflation. Instead, the Securities and Exchange Commission would review the requirements every four years to see if they needed to be changed.

Globalisation requires startups to be global from day one. This does not mean that you need to have sales offices, distribution networks and advertising to all corners of the earth. It means that your startup’s culture must pursue a global market, which means that your startup must continually think about scale. Being able to scale from a small to a large business is one of the most important aspects of entrepreneurship. By thinking big, you can start developing your sales systems, your operations, your human resources to ensure that as you grow, the administrative burden does not grow faster than your business.

The obvious advantage of thinking global is that you are not limited to your immediate local market. Many people, especially in Australia, bemoan the fact that we have a relatively small and low-density population – and ideas do not succeed because of this fact. I do not buy this argument and neither do the hundreds of entrepreneurs who have taken their business globally after starting in small market. We are a lucky country with great entrepreneurs trying to make a difference. Going global also increases the perceived (I say perceived because real value comes from successfully building a business, not PR spin) valuation, which can help attract investors, licensees and potential suitors to your company.

Going global from day one is hard. It requires a lot of planning, research, foresight, risk and, most importantly, excellent execution. My investments, judging business plan competitions, and my own work in startups have always evaluated business opportunities whether it can efficiently serve a global market.

It’s great to see entrepreneurs follow their dreams and start their own businesses. It is even better to see them succeed. I am proud to have been a part of the initial formation of Shock and Oar, founded by Brendon and Deirdre Westerhout. They have established their Nautical and Leisure Wear company a couple of years ago and has an excellent online store and a flagship store in Fremantle, Western Australia.

Here is their latest news release:

Shock & Oar, the Australian Nautical & Leisure Wear Brand, has celebrated six months of trading in its flagship store in Fremantle, Western Australia. Yet another milestone for the Aussie Brand as it establishes itself in the international clothing and lifestyle market.
Shock & Oar Managing Director Brendon Westerhout says the brand has touched-down in almost every continent in the world.
“So far our customer base has stemmed from six of the seven continents, with overseas visitors keen to take home a piece of Aussie nautical style,” he said. “We are yet to greet customers from Antarctica, but given our proximity to the southern-most continent, it’s just a matter of time!”
In spite of opening its door amid the global economic downturn, Shock & Oar has been well received by locals, national and international visitors alike.
“Our customers have likened our store’s look and feel to a Polo Ralph Lauren store,” said Brendon. “This is a great complement that captures our mix of classic style and casual elegance.”
“We consider Shock & Oar as the unique Australian equivalent of overseas brands such as Nautica, Crew Clothing Company and Paul & Shark. And where better to start than Fremantle, a beautiful and vibrant port city renowned world-wide as home of the successful 1983 America’s Cup team and ’97 Cup defense,” he said.
With an enthusiastic and loyal customer base, Shock & Oar is well on its way to becoming the iconic Australian Nautical & Leisure Wear Brand.
The Shock & Oar store is open 7 days at 9 William St Fremantle, Western Australia. International customers can see the range and purchase online at www.shockandoar.com or contact us at info@shockandoar.com

Giving us more Time. That’s the goal of technology. As CEO’s, we are time poor and are expected to perform miracles across many disciplines, and as such, we look for any tool that helps us save time while continuing to perform at our peak level.Over the years, I have tried and tested many software programs and am ruthless about hitting that “uninstall” button if it doesn’t fit my needs. So I have come up with my Top 10 list of software tools which have stood the test of time on my PC.

1. Microsoft Office (including Outlook)

Part of any IT setup is the ubiquitous Microsoft Office. Due to the shear scale of usage, this is a no brainer. Excel is my favourite for doing financial modelling, simple databases and charts. I use Microsoft Outlook as my personal information manager to organise email from my 11 email accounts, my tasks and calendar. Make sure you archive often to improve Outlook’s performance.

2. Firefox

The fastest growing web browser, Firefox, is easy to use, fairly light and fast. Good security and regular updates. 3^rd party plugins such as FireFTP, Google Toolbar and Roboform (see later) further enhance this product.

3. Roboform

How many passwords do you have to remember? I have nearly 600. Roboform is a program that manages your passwords securely on your computer. One master password gives you access to all of your passwords. Web browser plugins (Roboform Toolbar) allows you to easily fill-out and submit login codes into websites. This has saved me countless hours of frustration. Well worth the investment.

4. Google Desktop

So much time is devoted towards searching for relevant documents and emails. Google has a neat program that indexes your computer and your servers for files, emails, chat logs etc. It has saved me a lot of time searching for those elusive documents and emails. While it does take quite a bit of processing power from your machine, it is well worth it in the end. And it’s free.

5. Maxtor BackUp

When you purchase a Maxtor external hard disk you get a neat backup program. You can schedule an automatic backup of your important folders on your PC. I set mine to run at 3am every day. It also has a “Safety Drill” Copy which takes an entire image of your hard drive. So if your PC hard drive fails you can recover it (including your installed software) on a new hard drive. I run the “SafetyDrill” every week.

6. Evernote

Have you ever been working on a project and wanted one area to collect your notes (handwritten and electronic), emails, websites into one area? I discovered Evernote a couple of months ago and have been a heavy user since. I use it to store my current projects I am working on. It even has rudimentary handwriting detection, which makes searching fairly easy. It also has a feature (which I do not use yet) to synchornise with other computers, servers and your colleagues. Plus it’s free.

7. MYOB

Having a snapshot of your finances at an instant is vitally important for a CEO. For startups, you can’t go past MYOB. It is fairly intuitive to use, although you may need your accountant to run through the basics with you.

8. Avast!

Avast! is an excellent and low-cost virus protection. It automatically downloads and installs updates so you don’t have to worry about checking to see if you have the latest version. Be sure to remove your current virus scanner completely before installing Avast as it will conflict with one another.

9. CCleaner

Over time, your PC will accumulate a lot of information in the system registry and in temporary files. If it fills up too much, it can have a detrimental effect on your PC’s performance and stability. CCleaner is a free software package that runs a diagnostic check over your system and automatically clean up any unnecessary files and settings that you no longer need. I run it every fortnight.

10. SpyBot

With the open nature of the Internet, there comes the threat of spyware, adware and malicious programs can infiltrate your computer via the websites. Note that these may not be picked up by your normal virus scanners, so I recommend that you install this and run it regularly. I run SpyBot automatically every night to keep my PC clean.

So that’s my Top 10 Software Tools on my PC. Stay tuned for next month’s article: Top 10 Online Web 2.0 Services for StartUp CEO’s