A big problem with young companies is that aside from some very rough financial guidelines it is often very difficult to gauge whether the venture will or won’t be successful. Many investment houses have employed multi-metric project valuation and assessment approaches and at present there is ample work being done at top business universities in order to augment the early stage venture valuation process. One such a methodology is the Bell- Mason Framework.

Developed over the past 20 years, the Bell-Mason framework has been fine tuned to do just that, assess ventures utilizing 12 dimensions and 5 stages of company growth.

Fundamentally, the five stages of company growth are time oriented are consist of the following. Concept, Seed, Alpha, Beta, and Market Calibration, and are meant to chronicle the evolution of a venture over time.

Each one of these five stages is then applied to a specific dimension that is in itself grouped into four areas, Product, Market, Finance, People.

What allows you then to assess each dimension individually is a series of yes no questions, for example let’s look at team.

Is the team comprised of people knowledgable to their sector? Yes/No
Does the team work efficiently and do the team members compliment one another? Yes / No

By asking yourself a series of these types of questions, and the more the merrier, you’ll effectively be able to gauge your readiness, and stage where your company is and what you should apply resources to in order to fix / strengthen your business as a whole.

Ideally, what you can also do is map a process utilizing this framework – it will tell you in addition to any holes you may have in your business model whether or not it’s a good idea to continue with the project or to kill it. For a much more in depth explanation of this framework – be sure to grab the PDF by Ben Livson.

For more info on Bell Mason, and to access an academic PDF by Ben Livson on Startup valuation, click here

There is good news for start-ups this Monday. Index Ventures, a EU based firm has launched a new fund focusing on early stage deals, and plans to invest in twenty companies over the coming 24 months. Aside from the positive indicator that money is being raised in order to invest in new companies and that we’re seeing signs of life from the VC sector, what really differentiates this move by Index Ventures is its strong focus on the startup, and it’s approach to investment in them.

What this means is that the partners of the firm will take an active stake in the start-ups by joining their boards, this is a shift away from the status-quo of larger firms whose partners typically don’t engage the startup team due to time constraints or otherwise.

Index Ventures new seed fund is exactly what needs to happen in the VC industry. VC’s need to take a more hands on approach in their invested firms to ensure a greater success to failure ratio, and at the same time, they need to fill the gap in early stage capital that is lacking in many European markets. Some of Index Ventures prior investments are MySQL, Skype, Playfish and RightScale.

In more financing news, the Guaridan has reported that Luke Johnson, the man who brought Pizza Express to market in the 1990’s has acquired a 27% stake in the Beer & Partners angel investment network.

As a whole, good indicators, and again it seems that those who will lead the world out of its current slump will once again be entrepreneurs.

BY F3FUNDIT

Part 1 of 2

You’ve been working for days on end, the business plan is more or less finished, you’ve started developing your product, and still putting some polish onto the conceptual side of things. You figure you can get the basics up and running, or simply put you’re at a wall, and the best way, and only way to get over it is cash.

Every business hits a lack of funding wall, and while small business loans are great for a number of SME’s and start ups alike, certain companies need an injection of capital to materialize and start seeing those revenues that are slated for years 3+ on the estimated cash flows of the business plan.
But the question then presents itself – how do I manage to do this?

First, is the three F’s – like in property – Location, Location, Location, is key, so in start ups Friends, Family and Fools are just as important. When you’re starting up, your personal network is key to sustaining your business – talk to family, talk to friends about investing – if need be sell shares, or bonds, you need little else than a piece of plain white paper, and a notary to make it legit. If you’re looking for a formal doc, a Google Search will provide you with the documentation you need.

But FFF’s can only take you so far – and depending if your business is capital investment heavy or not, you most likely WILL need investment capital.

So how do you go about getting it? First thing is first. Find out if you’re ready. Venture Navigator has online assessments that you can take to gage the state of your idea, online surveys such as the “General Business Viability” and “Investment Readiness” among others will give you a good insight into whether or not approaching investors is a good idea.

If your results are favorable, or even if you’re determined the next step is identifying those individuals who want to invest. The best way of doing this is to network, see if you know someone who knows someone. If this isn’t on your plate – check for any Business Incubators in your area, they are often associated with universities, and are private, your local government office will probably know of ones in your area. If they don’t call up the local universities, business schools and asks to talk to entrepreneurship professors. The whole thing about the entrepreneurship community is that entrepreneurs are very keen on spreading best practices, and helping each other out. Also try looking for groups of people who are interested in start up activity – the OpenCoffee Club is great for this and they’re very international and pretty much all over the place. This is a GOOD Idea – your network is key!

Once you’ve been networking, got some good contacts, and ins into individuals at seed funds, and incubators, the next step is presenting your idea to people who will in all likelihood be your first real investors. They will inject anywhere from $, €, £20-500k depending on your location, and your idea. They will also take your hand and provide advice, help you source individuals whose skills will help you grow your idea and company, and put you in touch with someone who will most likely be a mentor (more on mentors in future articles) and help provide you with the type of knowledge only an industry specialist can provide. Like everything in life, this isn’t free and expect to give up anywhere from 8-50% of your company. Nonetheless, should you get funding you’ll be well on your way to building that business you’ve always dreamt about.

In the next article in the series – we’ll be covering Angel and Venture Capital sourcing, funding, presenting do’s and dont’s as well as what you should expect. As an added bonus, I’ll also provide you with some useful links to Angel, VC, and Seed networks in the U.S., U.K., and Spain