All net new jobs in the US, since 2006, are the result of startup companies less than five years old.

They created 44 million US jobs over the past 30 years.

Thanks to all the business angels, entrepreneurs, and venture capitalists that made this possible.

Some secrets on Super-angel investing. Click here to read.

Fabrice Grinda discusses his strategy – a few percentgage points in a large number of deals, with very little time spent on picking winners.

He also recommends that there is no formal reporting structure, but, when needed will respond to the entrepreneur.

Fabrice, with his partner, Jose, invest between $10 – $250k, but are always a small part of the overall investment. So far, they have made 23 investments in 2011.

A great micky take of jargon congested investment proposals. Click to watch it here.

The video raises a key point – do investors really want this jargon? Actually, according to some, they do. They just want it to be true!

Well, okay. What they are saying is that you do have to hit the hot buttons for VCs and business angels – so, speaking their language counts. Just make sure that what you say can be backed with facts and examples.

What should be in a startup business plan? Click to read.

Nic Brisbourne is runnig a series of 50 Questions for Enterpreneurs looking to raise finance.

This one is particularly useful, not least, because so much startup time is often spent on a plan that no one reads (or perhaps they do?). Hence, working out both the purpose and level of detail required is essential.

For instance, if a business spent as much time developing its market, it might find that the business plan would write itself!

Customer development guru Steve Blank recently wrote a couple of good posts (part 1 here and part 2 here) on what is good and bad about board meetings in the twenty first century and how we might change them.  As he says, board meetings haven’t changed much…

The study by Investec Growth & Acquisition Finance found that a quarter of those entrepreneurs who participated in the study will be looking to raise funds via private equity and venture capitalists this year.

There are three questions that every business angel (or Venture Capitalist, for that matter) will ask, and hence, these are the three questions that every entrepreneur and investment proposal needs to answer.

That is, assuming the entreprenuer wants to get funding.

Question 1. What will you spend my money on?

Business Angels want to know why you need the money in the first place.

And, they expect a specific and clear answer such as

to further product development

and / or

to commercialise the product or service/ take the product to market

Be warned, spending on anything is a waste of money and shows that the entrepreneur and his or her team may be developing bad or expensive habits.

A rule of thumb is that no more than 10% of the money invested should be spent outside of these two key areas.

Peter Drucker said that ‘money should be spent on marketing (and sales) and R&D (or product development/ innovation), everything else is a waste’.

Hence, Business Angels should expect a clear answer to this question.

Question 2. Are you a pay packet in search of funding?

If the entrepreneur / shareholder is using the new funding to pay himself or herself a big salary then as an angel investor you should reject the project.

For a business angel or VC firm to have confidence in the project, they want to know that the interests of the shareholders are all aligned.

Therefore, the scenario in which some shareholders earn large salaries (or siphon off the cash before it gets to dividends or before it can be reinvested) and others do not, will lead to disputes and disagreements.

Hence, it is fair and reasonable to expect that the entreprenuer’ pay-off will be in the sale of the business – a capital gain – not a big salary along the way.

Of course, entrepreneurs and their team need to eat during the business build and it is fair to pay some salary, but the rate needs to be set below market rate – by anything between 20 and 80%.

In general, a proposal that is still raising cash to develop the product might offer an entreprenur 20% of his or her market rate salary, whereas a developed product which is looking to commercialise and take the service to new markets (having already been proven) would look to pay upto 80% of fair market rate.

This discount to market rate salary should also apply to any commissions earned by the shareholder entreprenuers.

Question 3. When (and how) will I get my money back?

This is, of course, the most important question because investors want their money back.

Most entrepreneurs don’t realise that this is really important for the Business Angels and VCs and hence, don’t give sufficient thought to how or when this might occur.

Equally, as a Business Angel, you are wise to recognise that entrepreneurs are emotionally attached to their idea – as you’d expect and hence, they may be reluctant to sell the business or create lower quality but higher profit products and services.

A key part of your Business Angel due diligence will focus on whether or not you believe this team of entrepreneurs will be able to do the deal and sell the business when the opportunity arises.

As an investor, it is worth spelling out to entreprenurs and potential investees at the outset that you are just as emotionally attached to your money as they are to their idea or product/ service.

If the entrepreneur / investor relationship is going to work, then you both need to spell out this point early on and reach an agreement.

All 3 Questions Answered?

Okay, let’s say that this proposal and this team answer these three critical questions satisfactorarily.

Only then will the investor ask – do I have a reasonable chance to make a x3 (for low risk, highly developed business) or a x10 (for early stage or seed investment) return on my money within 3 years?

This question may become a reflective question as many entrepreneurs’ teams will lack the experience to accurately forecast the exit timing and method?

In which case, this will be the opportunity for the Business Angel to add value to the business proposal.

Without a credible exit plan, it may be difficult for the entrepreneurs to raise further funds. If you, the business angel, through experience and credibillity can help provide that clear plan, then you can negotiate a lower share price for the benefit of your experience and build an exit plan that you can believe in.

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Want to know if your business plan is suitable for funding? Easy, click here to take our free investment readiness survey and see if you can answer these key Business Angel questions….
http://goo.gl/2VJLX

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Office buildings in the real Silicon Valley. London hopes to have its own version soon.

The East End of London is perhaps more famous for long-running soap opera Eastenders than it is for tech innovation but according to news out today, it is about to be transformed into Britain’s answer to Silicon Valley.

What with the Olympics in 2012 and a proposed technology centre to rival Silicon Valley according to Prime Minister David Cameron, the East End might well be filled with tycoons with the vision and ambition to rival Ian Beale’s catering empire.

So will this new centre for tech innovation be a great opportunity for Britain’s business angels and tech entrepreneurs?

David Cameron wants Britain to punch above its weight in the Internet  tech arena and by all accounts this marks a major step in his vision to make Britain a world leader in the hi-tech business arena . These are lofty ambitions, the real Silicon Valley has been churning out high growth Internet companies for years with far more resources at their disposal.

Before we see the likes of Facebook and Google beating down the door to set up shop in the East End it is worth remembering that other mini Silicon Valleys have already been set up in Britain including ‘Silicon Fen’ and ‘Silicon Glen’ up in Scotland, fortunately Ken Livingston is no longer Mayor of London, otherwise we’d be calling this latest innovation park ‘Silicon Ken’.

Elsewhere, Russia and more recently Dubai have also set up their own versions of Silicon Valley as they scramble to encourage the innovation that will help them keep up with the Internet revolution .

Of course such tech innovation hubs require the right talent to make them successful and some of this may come from abroad – with tightening immigration rules this could be a problem. But Mr Cameron also has this covered with the introduction of a new entrepreneur visa that will help those with a promising business idea set up in the UK.

Along with this, the Prime Minister is also planning a review of intellectual property laws to bring the UK more into line with the US and help the country keep up with the “Internet Age”. On the face of it this can only be good news for those business angels and entrepreneurs looking to surf the wave of investment pouring into the Olympics. The UK’s Internet economy is also well placed to make the most of such hi-tech hubs with the sector said to be worth £100 billion a year to the UK economy.

There are some drawbacks. As we have seen in other countries, hosting a major world sporting event doesn’t necessarily translate into lasting prosperity. Take a look at the examples of Greece and South Africa. There is also a very different business culture in the US where entrepreneurs and investors are more willing to take the big risks.

There are also well-established groups of business angels, super angels and venture capitalists in the US experienced at transforming fast growing businesses into dominant world beaters. In Europe the climate is a little more risk averse and time will tell whether this new pet project will transform the fortunes of Britain’s promising tech start-ups and produce the same kind of conveyor belt of world beating Internet companies we see coming out of the real Silicon Valley.

Dubai Silicon Oasis, a government run integrated free zone technology park, today launched the ‘DSO Technology Incubator’, a first-of-its-kind technology initiative in the UAE. The incubator will support new start-ups and encourage entrepreneurs in the field of technology by stimulating the development of successful companies.

The unique technology incubator will aim to chart a new avenue for investment in technology in the Arab region. The Technology Incubator comes as part of a hi-tech ecosystem that incorporates six technology sectors that remain the focus of the technology free zone. It will provide services such as assistance with business basics, networking activities, marketing, accounting and financial management, as well as presentation skills. It will also offer links to higher education resources, strategic partners, comprehensive business training programs and access to business angel investors or venture capitalists.

In addition, the Technology Incubator will offer assistance with advisory boards and mentors, business etiquette, commercializing technology, and identifying management teams. Dubai Silicon Oasis is wholly owned by the government of Dubai and operates as a free zone for semiconductor, microelectronics and other high-technology based companies that seek to establish regional headquarters and research and development facilities in the Middle East and North Africa region.

Where Business Angels Fear to Tread?

Investors in early stage and start-up businesses are known as angel investors. The tag ‘angel’ coming from their tendency to operate in the margins where venture capitalists, banks and other backers choose not to go.

They also help plug a major funding gap to get such ventures off the ground and they happen to be the kind of investors who are prepared to take a risk, rely on their instincts and invest large sums without too many hard questions asked.

At least this is the accepted view.

But we may well be seeing a new breed of business angel emerge, one that takes a more conservative approach in these risk averse times.

Times, as Bob Dylan once sang, are a-changing as we see a trend emerging both in the UK and the US for a more cautious approach to investing in embryonic stage businesses. With many investors’ fingers burnt by the financial crisis it is hardly surprising that the appetite for risk remains limited – which in turn is making it increasingly harder for start-up businesses to attract funding.

According to the latest NESTA report on business angel activity in the UK, 83 per cent of angel investments were made with co-investors and a significant proportion (28 per cent) were made within just 50 kilometres of home. Working close to home and in the company of fellow investors shows that most business angels need security like anyone else and are careful where they put their money. The figures debunk any myths suggesting otherwise.

This is further borne out by statistics released in the US where an article this month in BusinessWeek suggests angel investors are getting pickier based on their analysis of data supplied by Angelsoft, an internet based company supplying online tools to angel investors.

The study looks at the share of companies seeking angel funds passing through each stage of the ‘deal funnel’ between 2007-2009. Not surprisingly, given the economic climate in the past two years, a glance at the chart reveals a dramatic decline in the number of businesses getting even as far as the screening process between 2007 and 2009. The statistics make worrying reading for anyone hoping for an easy ride when they approach potential investors for their start-up if the pattern is repeated her in the UK. .

More worrying still, just 2.8% of businesses made it as far as the due diligence stage, a fall of more than 50% on 2007/08 figures. This would indicate that angel investors in the US have become, as the article suggests, more ‘picky’.

But is it simply a case of angel investors becoming more picky? The figures reveal that just under half of businesses make it through screening to the due diligence phase, which is a pattern that has been broadly repeated since 2007.

However even though there were around 50% less businesses making it through the deal funnel, when we reach the end of the funnel and to what those business are striving to achieve i.e. investment, the proportion of those businesses making it through the final stages, is shown to be higher in 2009 than in 2007 or 2008, with 2.8% making it to due diligence and 2.1% securing investment.

Herein lies the good news for those businesses who sought funding. The proportion of businesses receiving funding in 2009 compared to 2008 suggests that if a business made it to the due diligence stage, there was a significantly better chance of securing investment.

The small percentage of businesses that made it through screening and the presentation phase also stood a greater chance of making it to the end of the deal funnel. This may suggest that angel investors are indeed becoming more choosy, but it could well be more a case of less money in the angel investor’s pot making it tougher to get past this initial screening process.

We know that more than half of investments fail; therefore it doesn’t take a great leap of the imagination to conclude that angel investors are willing to take fewer risks than they once were. This will be bad news for many start-ups and there will be many innovative businesses that fail to get a vital injection of capital. The number of businesses that have slipped through the net since 2007 is anyone’s guess.

It isn’t all bad news, according to the figures in the US business angels are choosing to invest in a greater proportion of those businesses that make it through screening. But we may be seeing that even business angels have their limits.