AboutKevin Bousquet Expertise I am risk consultant in the field of venture capital. I can answer questions on business start up, dealing with Venture Capital Consultants and the risks involved, due diligence and the due diligence check list, corporate research, reorganizing bad debt, dealing with creditors, raising private capital, factoring and collection issues.
If you are concerned about the risks of dealing with a Venture Capital firm or a Venture Capital Broker feel free to contact me.
I have a large cleint list of Venture Capital firms who retain me to consult on assessing the risks in investing in individuals or private companies seeking capital.
Experience
Education/Credentials Law Enf Grad (honours)1986, Law/Legal Admin 1991, Certified Fraud Examiner (CFE), English, French, Japanese. Owner Corpa Investigation www.corpa.com since 1991. Advisory Member - Canadian Venture Capital Association.
During the Internet "dot com boom" my venture capital company, "Capital Unlimited" consulted with VC firms and those seeking capital across the globe. I assisted companies (primarly new start ups) in ways to raise capital safely when the banks had turned them down.
I assisted with business plans, incorporations, press releases, financing
proposals, private placement memos, invoice factoring, collection issues, trademark issues, asset Protection/restructuring & reorganization of bad debt.
During the dot.com internet boom, my Venture Capital company Capital-Unlimited and website was purchased by Andrew J. Filipowski of DivineInterventures the previous owner of Platinum Ventures.
Platinum Ventures was well documented as being famous for the purchase by Computer Associates for 3.6 Billion the largest software transaction in history at the time of the begining of the Internet dot.com boom.
My investigation company was under a consulting contract for due diligence and with the Divine Interventures team.
My 17 year old company, The Corpa Group continues to work in the field of Venture Capital. We get in the middle of business deals to ensure the deal is safe with no surprises. We use the term "investigate before you invest" which can be seen on our site and blog.
The Corpa Group continues to lessen the risk of any business transactions in the field of Venture Captial.
I do not broker capital, invest in companies, nor do I offer investment advice so please don't ask questions in this area.
Expert: Kevin Bousquet Date: 6/3/2008 Subject: VC or go it alone
Question QUESTION: I am in the initial phase of a start up environmental consulting firm. I have
developed a business plan geared toward getting funding from VC or angel
investors. I also have a website. My initial plan was to get the business
going by hiring independent contractors - since I have no $$ to hire full time
employees, and I am not in a financial position to take out a loan and add
debt to my life. My theory was that by getting the business up and running, I
could show a VC that the business model works, and they would be more
likely to invest. I have also heard the advice of "its all about the team" when
looking for VC's, so I wanted to get the best team possible. Unfortunately, I
couldn't find the quality people that I needed to work as an independent
contractor (I am currently an advertising photographer, and freelance is a way
of life for all involved.) So now I am unsure how to proceed. Is it wise to go
after funding with only my name listed in the business plan? The only track
record I have is in photography. I am actually very proud of my record, I have
simultaneously run 2 successful businesses that are very profitable, even
now, in this economy. I also feel that I have a very good business sense,
although I don't know if it will come across that way since I don't have what
most would consider a direct business experience, and the degree I have is a
BFA. The other options for me would be to partner with people that have the
experience, and then go get funding. However, since I have a partner in one
of my photography businesses, I am not anxious to go into business with
another one. Partners can be hard to deal with sometimes. Also, I have
thought about getting a low interest loan and starting the business on my
own. This would be very risky, as I have a family of 4 and I am currently the
sole $$ maker.
Since my business is dealing with climate change, I feel a sense of urgency to
get it going - in order to be first to the market. however, my photography
business is making me $$, and even though I am burnt out of photography,
maybe that can hold me through this economy and then I can start a new
business later, when things turn around.
What do you think would be the prudent thing to do?
Also, do you have any suggestions for VC's or angels that deal with start ups.
Thank you very much for your time.
ANSWER:
Can I ask how much money you think you need for your start up?
---------- FOLLOW-UP ----------
QUESTION: Not much since I don't need offices or office infrastructure - my existing
photography business has a large studio with ample office space, and I have
structured my corporation to pay for the new business.
I am estimating total costs for one year to be $385,000. This includes
salaries for 5 employees. If I were to get funding I would like to get enough
for 2 years.
In my research I have found VC's who only fund to companies that project $5
million in profit after 5 years. I can adjust my business plan projections to
reach that number, but only by adding more staff. So if I decide to go that
route, my start up costs would double, if not more.
Thank you for the quick response.
ted
ANSWER:
This is too small for a VC type of investment.
The other thing that VC's may not like is the fact that it's "consulting" and you are pretty much the main focus of the business. What happens if you get sick or injured? it might be hard to change the management and keep the company going. VCs are going to want the possibility that the company could go public or be acquired as part of a list of requirements.
I know you may not want to hear this, but I really think you should stick to traditional or creative financing.
I would start thinking towards the ideas of obtaining a line of credit from a major bank or trust company. Trying to find a trusted individual who has equity in their home who could guarantee a line of credit for you. In exchange for that guarantee you could provide that person with shares in your company and set up an agreement with respect to repayment and ownership. Just set the agreement up in such away that you can buy back your shares to buy that investor out once the business starts to make money.
Banks normally don't like to lend to consulting firms as they do not normally have have assets like equipment, stock, vehicles that they can register security against. This is why I am thinking co-signer/line of credit/stock for you.
You will have to incorporate if you want to sell shares as it sounds like you may be a sole prop.
---------- FOLLOW-UP ----------
QUESTION: I have heard that angels and some VC's that are geared toward social causes
will invest in smaller companies. Do you think that the investment is too
small, and they'll be uninterested? My current projections have 1million $
profit after 5 years, but depending on the amount of staff that I hire, I could
turn that projection into at least 3million, maybe 5. Still too small? Does
that even matter, or is it just the size of the company/investment.
Answer I guess it would depend on the VC firm or perhaps you might find an individual angel investor who has an interest in your concept.
I agree you may be able to find some firms that do smaller investments and my wish to invest in social causes. I can only comment on VC "firms" "in general". I have given you an general idea to help you be prepared for the Hard Road To Hoe pushing a new start up business plan to VC's.
I only have a small picture of the consulting firm you are trying to build and I haven't seen the business plan, I know nothing of the management, the concept, the people, or the possible ROI you could offer a VC.
If the concept is really attractive I am sure you might be able to get it financed privately.
I just think that those VC firms that manage VC Funds pooled by private investors would not want to finance something so small, unless the concept is almost guaranteed to climb into the millions in a few years. This is what you are going to have to push when you do your pitch !!
