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Don’t take money from me!

Every year 600,000 – 700,000 companies form.  An estimated 90% of them will seek some form of financing.  Only 10% of those get angel funding.  Only 20% of those funded will likely return capital and only 10% of them will get venture capital funding.  So, why are the successful ones so few?  The deck is […]

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Every year 600,000 – 700,000 companies form.  An estimated 90% of them will seek some form of financing.  Only 10% of those get angel funding.  Only 20% of those funded will likely return capital and only 10% of them will get venture capital funding.  So, why are the successful ones so few?  The deck is already stacked against the startup company.  For a startup company to be successful, it must have timing and luck on its side AND the vast majority of decisions be sound.  That is a tall order.

There are numerous avenues of failure: team (leading vector for crashing and burning), IP (rarely the true cause of failure), market acceptance, business planning, etc.  Few people think of INVESTORS as a mode of failure.  I am here to tell you taking the wrong money is a fast path to destruction of an otherwise great company.  Friction with your investor wastes time, expends unnecessary energy, and erodes the morale of the team.  So, chose wisely and make sure your investor has a track record of success!  You are going to need it.

First, if you don’t need investment capital, don’t take it.  Investors require a LOT of work and come with a LOT of strings!  I know.  I have been on both sides of the table.  As an entrepreneur, I knew that getting a round of capital would take six months of full-time work.  So, I had to know my financial outlook for at least six  months with certainty, which is a very difficult proposition for a startup under the best of circumstances.  I knew I would be neglecting my leadership role for that period of time because there are only so many hours in the day (if you wish to stay married and have a relationship with your children) and investors demand your full time and attention to reach an investment decision.  Most importantly, I had to expect a vast amount of redundant effort to create a ”syndicate” investment for my company amongst angel groups and venture capital firms.  I learned to pick a strong operations lead in addition to the me, the CEO, because my job quickly became capital, investor relations, and sales.  The numbers work out over time to a 1 in 15 close-to-angel-investor-pitch ratio in my experience (one in five angels will show interest and one in three interested angels will close).  That is why angel groups and funds have largely replaced the lone angel for organized capital investment.  You can meet with 10 – 20 angels at a time greatly improving your odds of closing…..assuming you have an investable deal!  So, if you can bootstrap, do so.  Avoid this effort and the strings that come attached needlessly.

Second, once you sell shares in your company, it is no longer your company.  You have signed an implied agreement that you work for your investors.  They now own your company even if they don’t  own controlling interest.  This is why selecting the right investor is so critical.  They exert control over you by how they put money into your company, bring others to invest in your company alongside them, and influence your operations through executive/leadership participation.  So, you better know and love the investors you bring into the family.  You better do as much diligence on them as they do on you.

The strings that come with professional investors:

  1. Board of Directors Seat(s) with monthly BOD meetings
  2. Quarterly reporting
  3. Annual reporting
  4. Tax reporting
  5. Investors have preferential rights meaning they are paid back first
  6. Investors rights including covenants on management actions requiring investor approval
  7. Rights to future investing
  8. Voting rights
  9. If your plan doesn’t go as planned, expect investors will force additional reporting requirements and possibly human resources upon you
  10. If your plan does continues not to succeed, investors will act to replace the leadership team

Why is this the case?  Why can’t investors just trust an entrepreneur knows what he/she is doing and give them room to prove their mettle?  The short version is we all know entrepreneurs are consummate optimists.  They rarely comprehend the jeopardy they are in and find pride in eking out ways to live-to-fight-another-day on an ongoing basis.  Truth be told, you can’t be an entrepreneur without it this type of psychosis.  No one would willing submit to this kind of financial and personal liability and exertion (torture!) unless they live a “reality distortion field” (RDF).  So, angels have to be intimately involved in the business to understand the positive and negative effects of the RDF, which varies with each leadership team.

The positive parts are an entrepreneur will willingly tackle a problem others would not dare….and frequently succeed!  An entrepreneur will work 80 hours per week to avoid a 40 hour a week job (credit Lori Greener).  An entrepreneur is willing to take extreme personal and financial risk to create something important and lasting.  Another popular analogy is entrepreneurs are willing to jump out of a perfectly good airplane and build a parachute on the way down.  And, finally, entrepreneur is word derived from the French meaning “lousy employee.”  They are not right in the head, but we love and NEED these people.  They are the bedrock of our economic system.

The negative parts of the RDF are they don’t perceive catastrophes nearly early enough and are loath to admit when there is a problem, or God forbid they make a mistake.  They walk a fine-line between confidence and arrogance making them difficult to coach.  Entrepreneurs will always expect a favorable outcome for any action by default.  They will expect that they can find and utilize resources at unrealistic efficiency rates.  They will expect people around them to work as hard as they do with the same selfless dedication.  So, we must have “canaries in the coal mine” to catch problems before an entrepreneur runs down the “rabbit hole” so far we can’t save them.  They are so busy building a “buzz” and brand that they avoid showing any weakness, which if left unchecked can be their undoing.  Thus, we ALWAYS take a Board of Directors seat, and sometimes seats.  On rare occasions, we will accept a Board Observer seat instead, but even more rarely for startups.  We want to know what is NOT working so we can help in non-intrusive ways, but are willing to be intrusive if need be.

Entrepreneurs must be exceptional nonessentialists.  They must create a work environment that is the very antithesis of McKeown’s Essentialism doctrine  and be great at managing that chaos to the point they use it to their advantage.  The entrepreneur that can successfully transition from a exceptional nonessentialist to an exceptional essentialist as the company grows is truly a rare critter.  Most “starters” become painfully bored with the drudgery of actually running a business!  Entrepreneurs find it hard to let go, but also feel constrained in the roles required of a high growth company when the proverbial ship-comes-in.  Most transition to some other position on the management team or are eventually forced out (sadly for both parties).  Managing that transition is a delicate issue because entrepreneurs rarely understand their own limitations.  Within the RDF, there are no limitations, just opportunities for growth and most ultimately want to be remembered for disrupting some industry, which is hard to do from the “cheap seats.”

People invest in people in markets they like and understand.  Investors demand detailed regular reporting.  And, that is non-negotiable.  We write it into all our term sheets and closing documents.  We demand to see your detailed quarterly and annual financials, tax filings, metrics, milestones (achieved and projected on a quarterly basis), and failures in detail.  We want to know what you learned from these failures because it defines the true potential of you as an entrepreneur.  We expect a written update quarterly and a meaningful annual narrative on your past year and future year every January.  That is how we judge your ability to adapt, overcome, and learn from your mistakes.  How you execute this requirement figures heavily into how we decide if additional capital is to be made available to you!  If you are communicative, own your mistakes, demonstrate learning and growth, and are coachable, then we have a vastly easier time deciding to invest in you again. In short, we are inside your company always and we expect that information will flow regularly to us showing an honest assessment of the business at each of these points in time.  We will hold you accountable.

Once upon a time angels followed a spray-and-pray strategy as largely passive investors.  They invested money in a large number of companies and then waited for them to mature without heavy handed participation.  That model failed miserably and has largely died for professional investors.  The market has continually shown “active” investors in the angel market are more successful in reaping rewards.  Entrepreneurs are fundamentally hardworking, well-meaning, dedicated folks.  But, unfortunately, we can’t simply trust them to avoid making big mistakes that become catastrophes and take our cash with them despite the entrepreneur’s best intentions.

Professional angels are active investors.  They have to be!  We still make a lot of investments, but we monitor and get involved when we decide it is needed.  That is why it is challenging to become a great, successful angel.  It takes time, resources, and dedication.  That is why most angels live on the spectrum from wanting to “give back” to their community to making better-than-market returns.  In my experience, most are squarely in the middle.  They love the game.  They want to help other entrepreneurs achieve the success they have enjoyed (largely through hard work and the grace of mentors and investors!), but they justify the time spent because they can make meaningful returns above the market.  Angels want you to succeed and to create live changing wealth for you and your team!

What should an investor take away from this?  Entrepreneurs are optimist, and must be so.  You need to allot time in your weekly schedule to be active in the process of investing in and counseling / mentoring startups.  The good news is this is big game of legal insider trading and it is fun to work with great people on building great companies.

What should an entrepreneur take away?

  1. If you don’t need my money don’t take it.
  2. A strong operations lead is critical in a startup if you want to continue to grow the company while the CEO is on-the-road begging for capital.  No one can do both at the same time.
  3. Be diligent in selecting your investors based on your chemistry and alignment with them and their track record of success.
  4. If you do take investment capital, you better understand the obligations you are assuming!
  5. Understand your own RDF, what problems it presents, and how to use it to your advantage.
  6. We want to help in ways that do not constrain or distract you.  You have to help us do that.
  7. We expect that we will be included in the decision making process for big decisions.  You are wise to embrace that.

If you don’t like the level of intimacy that comes with a professional angel investment, don’t take our capital.  If you do, we can build great things together.

Copyright Angel Capital Group 2018
@angelcapitalgr | @appalachianinvestors | www.appalachianinvestors.com | www.theangelcapitalgroup.com | www.facebook/angelcapitalgroup

Source: https://theangelcapitalgroup.com/2018/04/07/dont-take-money-from-me/

Private Equity

Ordermark Funded $120M to Expand its Virtual Business

Virtual

Ordermark is based in Los Angeles, CA, one of the leading online ordering management solutions for restaurants and virtual restaurant concepts.

Ordermark was funded $120 million series C round funding. The funding was led by prominent technology investor SoftBank Vision Fund and joined by returning investor Act One Ventures. The grant will use to help more restaurants transition to online ordering during the pandemic and beyond.

The company’s software consolidates incoming orders from multiple platforms and sends them to a single printer. Ordermark also operates a company

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The post Ordermark Funded $120M to Expand its Virtual Business appeared first on Funded.com.

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Ordermark is based in Los Angeles, CA, one of the leading online ordering management solutions for restaurants and virtual restaurant concepts.

Ordermark was funded $120 million series C round funding. The funding was led by prominent technology investor SoftBank Vision Fund and joined by returning investor Act One Ventures. The grant will use to help more restaurants transition to online ordering during the pandemic and beyond.

The company’s software consolidates incoming orders from multiple platforms and sends them to a single printer. Ordermark also operates a company called Nextbite, a portfolio of 15 readymade virtual brands such as CraveBurger, Firebelly Wings, and HotBox by Wiz, a collaboration with rapper Wiz Khalifa. Restaurants can offer these delivery-only brands out of existing kitchens, opening up additional revenue streams.

Jeff Housenbold, the Managing Partner at SoftBank Investment Advisers, said. They believe Ordermark is a leading technology platform and innovative virtual restaurant concepts transform the restaurant industry. And they are excited to support their mission to help independent restaurants optimize online ordering and generate incremental revenue from under-utilized kitchens.

The rise of ghost kitchens and virtual restaurants, often referred to as the 3rd wave of food delivery, have paved the way for a broader addressable market for online food delivery.

The statement of Alex Canter, the chief executive officer behind Ordermark 2020, has been a tough year for restaurants. That’s why they are focus on providing products and services to help keep their doors open. This funding allows them to offer more restaurants with innovative ways to reach more consumers.

By: K. Tagura

Author statement:

Funded.com is the leading platform for accredited investors network worldwide. We monitor and provide updates on important funding events. Angel Investors and Venture Funding can be a key growth for a startup or existing business. Whether it is a first, second or third round financing having a strategic alliance with an Angel Investor or Venture Capital financing can propel a business to the next level and give the competitive edge.

Source: https://www.funded.com/blog/2020/10/ordermark-funded-120m-to-expand-its-virtual-business/

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Private Equity

Alternative Investments/ESG: Amundi Launches Sustainable ETF With Exposure To Japanese Stocks

The Amundi Index MSCI Japan SRI UCITS ETF offers exposure to large and mid-cap companies with outstanding Environmental, Social, and Governance (ESG) ratings in the Japanese market. The new ETF is an extension of Amundi’s range of sustainable ETFs.

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Alternative Investments/ESG: Amundi Launches Sustainable ETF With Exposure To Japanese Stocks

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Amundi’s new ESG ETF invests in large and mid-cap Japanese stocks.

The Amundi Index MSCI Japan SRI UCITS ETF offers exposure to large and mid-cap companies with outstanding Environmental, Social, and Governance (ESG) ratings in the Japanese market.

The new ETF is an extension of Amundi’s range of sustainable ETFs. (ETF Stream)

Amundi Index MSCI Japan SRI UCITS ETF

The ETF tracks the performance of the MSCI Japan SRI Filtered ex Fossil Fuels Index, which in turn is an equity index based on the MSCI Japan Index (the parent index). The index is representative of the large and midcap stocks of the Japanese market.

It excludes issuers involved in Nuclear, Tobacco, Thermal Coal, Alcohol, Gambling, Controversial Weapons, Conventional Weapons, Civilian Firearms, Oil & Gas, Fossil Fuels, Genetically Modified Organisms (GMO), and Adult Entertainment.

Its total expense ratio is 0.18%. No performance fees apply.

It is an accumulation fund and will be managed by Amundi Luxembourg SA, an entity that is part of the Amundi group.

The ETF is market-cap weighted and includes a 5% capping on issuer weights. It comprises 68 stocks, compared to 320 names in its parent index.

The fund’s largest holding is Nintendo with 5.6% weighting ahead of Daikin Industries with 5% and Sony with 4.7%.

It is listed on the Deutsche Boerse and Euronext Paris.

ESG ETFs continue record run

European ESG ETFs continued their strong trend and set a record for assets gathered in a month (€3.9 billion), according to the latest Money Monitor report from Lyxor ETF for September.

Related Story:  Amundi Expands ESG Range With Two New ETFs

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Source: https://dailyalts.com/alternative-investments-esg-amundi-launches-sustainable-etf-with-exposure-to-japanese-stocks/

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Private Equity

Artificial Intelligence: Intel First To Deploy AI “On Edge” In Space

Intel (NASDAQ: INTC) has the distinction of launching the first onboard AI processing chip into space. Earlier this month, the European Space Agency and Intel announced the successful deployment in space of PhiSat-1, the first-ever satellite with onboard AI-processing capabilities. Launched from a rocket dispenser on September 2, the PhiSat-1 is positioned about 530 km above our heads, moving at a speed of 27,500 km per hour in a sun-synchronous orbit.

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Artificial Intelligence: Intel First To Deploy AI “On Edge” In Space

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A satellite the size of a cereal box, carrying a camera and an AI chip, is now in orbit.

Intel (NASDAQ: INTC) has the distinction of launching the first onboard AI processing chip into space. Earlier this month, the European Space Agency and Intel announced the successful deployment in space of PhiSat-1, the first-ever satellite with onboard AI-processing capabilities. (Business Insider)

Launched from a rocket dispenser on September 2, the PhiSat-1 is positioned about 530 km above our heads. It is moving at a speed of 27,500 km per hour in a sun-synchronous orbit.

PhiSat-1

The satellite’s objective is to monitor polar ice and soil moisture, as well as to test inter-satellite communication systems.

The satellite carries a hyperspectral-thermal camera and an Intel Movidius™ Myriad™ 2 Vision Processing Unit (VPU). The latter is responsible for the AI heavy lifting operations onboard the spacecraft.

Myriad’s immediate function is to curate the huge mass of data captured by the camera.

AI at the ultimate edge – space

The big problem facing the scientists was the sheer volume of data generated by the hi-fidelity camera onboard the PhiSat-1. The camera unfortunately does not know how to differentiate between a cloudy and clear environment.

It, therefore, takes a large number of photographs that are useless because, at any given time, clouds envelop two-thirds of the earth’s surface.

The junk photos consume precious internet bandwidth to send down to earth. After all that, scientists would likely delete the unclear photos.

The scientists decided to use onboard AI (also known as “on edge” processing) to curate the photos. Myriad-2 would examine the images, trash the useless ones, and send only the good ones to earth.

By discarding the cloudy images at the source, they saved nearly 30% of bandwidth.

“Artificial intelligence at the edge came to rescue us, the cavalry in the Western movie,” says Gianluca Furano, data systems and onboard computing lead at the European Space Agency.

“Space is the ultimate edge,” says Aubrey Dunne, chief technology officer of Ubotica, the Irish startup that built and tested PhiSat-1’s AI technology. “The Myriad was absolutely designed from the ground up to have an impressive compute capability but in a very low power envelope, and that really suits space applications.”

Ubotica worked with cosine, the maker of the camera, in addition to the University of Pisa and Sinergise.

After three weeks of testing, the team could establish that Intel’s Myriad AI onboard the PhiSat-1 was working fine.

ESA then announced “the first-ever hardware-accelerated AI inference of Earth observation images on an in-orbit satellite.”

Satellite-as-a-service!

Scientists can now visualize multiple applications of AI on satellites.

For example, the satellite, during one orbit, could switch from spotting wildfires on land to rogue ships or environmental accidents at sea such as oil spills.

It could measure crops and soil moisture over farms and forests, and assess the ill effect of climate change on melting ice caps.

Related Story:   Satellites and AI Could Together Predict Wildfires Accurately

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Source: https://dailyalts.com/intel-first-to-deploy-ai-on-edge-in-space/

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