Start-Ups

Help Alegria Technolgies Build a Platform To Reduce Sexual Violence

Our 2017 nominee to the National InnovatHER Competition has started a crowdfunding campaign.  The company’s inaugural product is Keys to Coping – a campus sexual assault reporting tool.  The goal is to raise $20,000 that will be used for exhibiting at conferences, software hosting services and new reporting software capabilities. Cool prizes will be available for the first supporters who give.

The WHY! – Violence Against Women – One in 4 women are sexually assaulted in college. Less than 20% report to the police or seek medical attention. Keys to Coping™ is a secure web application that allows college students to report a sexual or physical assault from the privacy of their own device—or in cooperation with the appropriate staff—can complete an anatomical health report, a police report, request class schedule changes, and access online exercises to cope with the trauma.

More about the Founder/CEO – Dr. Penny R. Smith, Alegria founder and CEO, is a 17 year government and higher education administrator, professor and former board member of non-profit organizations that address violence against women. She is also a published author on the topic and date rape survivor. Currently, she is an Assistant Professor of Family and Community Medicine in the College of Medicine at NEOMED.

Crowdfunding website – https://ifundwomen.com/projects/alegria-technologies

Company website – www.alegriatek.com

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Things to Consider Before Applying for a Small Business Loan in Ohio

I If you need a business startup loan or a small loan to grow an operating business, applying for one at the bank is the most common avenue of acquiring it. Make sure your business can secure the capital it needs by taking these measures, guaranteeing that the underwriter won’t discard your application before giving it full consideration.

Credit scores 

Assess the current condition of your personal credit score to get an idea of where you stand in the eyes of financial institutions. If your business is already operational make sure to consider the state of your business credit score as well. By being aware of your credit scores, you eliminate the risk of walking blindly into an obstacle like sub-par credit. Typically, banks will find out your FICO SBSS score and use that to determine if you qualify. The minimum score threshold for approval is usually set at 160. 

Available funds 

Whether you are seeking a loan through a private investor or bank, evidence that you are financially secure will help them confidently determine that their money will not be at risk. If you are currently employed full time, the benefactor of the loan can be sure that you have some means to pay back the loan; but if you are fully invested in your business this security may not exist in their eyes. With a relatively proportionate amount of cash or collateral on hand, a business startup loan will be easier to get approved.

Just as effectively, a business that is already generating revenue but doesn’t have much liquid cash can be granted revenue-based financing. As long as a company can realistically demonstrate its capacity for growth and the numbers all work out, revenue based financing may be an option.

Available institutions 

The institution that you choose to ask to fund your loan is important as well. If your company doesn’t seem to fit in with the standard recipient of funding from that institution, reconsider them as an option. In the Midwest, larger banks are even more likely to decline smaller loans as they are less profitable. With that in mind, find the investor that is most suited to your operation.

Prepare a business plan 

It is vital to have a business plan that accurately defines how any funds received will be spent. An exact timeline for how your business will handle repayment is key to winning loan approval.

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How Do You Put a Pre-Revenue Valuation on Your Startup?

Startups that have long-term potential for growth and profitability frequently leverage funding from investors to reach their stride.  A high probability of getting the highest return on their investment dollars is the only objective for many investors. So, how can you accommodate this need when determining a valuation for a startup that isn’t yet generating revenue?

Understanding important financial terms

Free cash flow is an accounting metric used to define financial performance, it is calculated as operating cash flow minus capital expenditures.

Post-revenue value is the value of a company after it has received financing or outside capital.

Pre-revenue value is a term widely used in the investment industry to describe, the valuation of a company that has not received outside investment or financing.

Net present value is the sum of all future cash flows.

Do the math

First, calculate your margins. Be transparent and use the most accurate iterations of your expected revenue and your expenses to get a clear representation of potential free cash flow. This is the first step to making sure your financials are in order. If they aren’t, there are not very many underwriters who will want to touch your startup (you may even consider having an accounting professional model a 409a model if your situation is exceedingly complex).

Pre-Money Valuation Formula

Pre-Money Valuation Formula

Use this data to determine your projected terminal value and return on investment (ROI) for a period between 3 and 7 years in the future. Now take the newly defined terminal value of your startup in that period and divide it by the expected (ROI) for that year. The quotient is a valid representation of the post-revenue valuation. Your pre-revenue valuation will be an amount approximately equal to the difference between your post-revenue valuation and any capital you have invested into the company. This process is far from simple, so make sure you are ready to commit a lot of time and resources to getting the most accurate numbers.

Be Realistic

Unrealistic expectations may turn an investor off to your idea entirely and you might not get another audition. This doesn’t mean that you should let investors take advantage of you. If your startup shows signs of growth, positive engagement, traction and exceptional projected revenue, never allow negotiations to remain at a stalemate.

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Your Checklist Before Approaching Investors for Your Startup

If you want to raise some investor money to build traction for your startup. That’s a good decision, but there are some factors to consider before you go looking for investors.

1.  Have An Impressive Story

You should have a great story regarding how your startup came to be and the problem that you are seeking to solve. A beautiful example is the story of the founding of Dropbox.  Drew Houston founded Dropbox after realizing he forgot to carry his memory stick while traveling from Boston to New York City and could, therefore, not work on his computer during the journey.

2.  Have A Minimum Viable Product

The MVP is a first working version of your product with limited features, and which you can show to customers and investors and therefore collect feedback.

3.  Have Users or Customers

Investors rarely put in money for untested solutions. You, therefore, need to demonstrate that there are people who want to use your product to solve the problem that you are seeking to resolve and actually pay you for the solution. Investor money shall, therefore, help you to grow.

4.  Have a Focus on profitability

For startups in the Midwest, one key thing to note is that you should show a focus on profitability the earliest as possible. This situation is unlike in the coasts where plenty of investors are willing to hold out longer before a business becomes profitable.

Checking the above four items on this fundraising checklist will help ensure that you will be on your way to raising the required capital from an ideal investor to scale your company.

Happy hunting!

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SunDown Group Partners with The Ohio State University College of Engineering To Help Ohio Manufacturers

SunDown Group has partnered with The Ohio State University College of Engineering’s Center for Design and Manufacturing Excellence (CDME) Manufacturing Extension Program (MEP) to Help Ohio Manufacturers Get the Resources They Need

MEP@OSU supports Ohio’s small and medium-sized manufacturers by providing the products, services and assistance that are dedicated to the productivity, growth and global competitiveness of Ohio manufacturers. Small and medium-sized manufacturing companies are critical to Ohio, representing 90% of job growth for high-paying jobs. This growth means for every new manufacturing job created or retained, there are 3 to 5 supporting jobs also created. From automotive to advanced materials, Ohio’s manufacturing landscape is more diverse than ever before.

MEP Ecosystem DiagramMEP@OSU, managed by the Ohio Development Services Agency’s Office of Small Business and Entrepreneurship, is a State and Federal initiative to develop and deploy technology, management and technical expertise for improving the competitiveness of manufacturing through services offered by six carefully selected regional affiliates. Within these six regions are 11 different county regions with programs such as the CDME which are responsible for industry and manufacturing development. MEP@OSU provides the CDME with funding, which in turn uses that funding to create workforce development, industry innovation, lean manufacturing, and supply chain interactions between small businesses and manufacturers.

As a statewide Industry Partner, SunDown Group provides access to our expert network, business building classes, workshops, speaker series, capital programs, and business pitch events to help small and medium-sized manufacturing companies connect with investors, mentors, and talent that they need to help take their companies to the next step. SunDown also works to help introduce qualified manufacturing companies to CDME and our other North American partners.

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Some Helpful Info for Title III Equity Crowdfunding

Its getting close to the launch of Equity Crowdfunding for non-accredited investors.  The official launch is May 16th and there are still tons of questions out there.

Fortunately, the SEC has put together a helpful Investor Builtin on how this all works for investors.  The info is here.

For startups looking to get into this and solicit for investment.   The SEC, through FINRA, has rules for these funding portals that you would list your campaign through.  It is recommended that if you are going to launch your equity crowdfunding campaign under Title III, you should be on an officially registered funding portal.  The info on funding portals is here.

Also after May 16th, FINRA will provide a searchable list of all of the registered and in good standing equity funding portals.  We’ll provide a link to that list once it becomes available.

 

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Small Business Majority Bringing 11 Ohio Small Business Owners to D.C. to Tackle Issues Facing Entrepreneurs

The Small Business Majority will host in Washtington, D.C. its second annual Small Business Leadership Summit May 8-11, 2016, where it will bring 11 Ohio small business owners to join 150 entrepreneurs from across the country to our nation’s capital to interact with policymakers, members of the media, issue experts and senior members of the Obama Administration to put the small business voice at the center of public policy conversations. Attendees will hear from speakers including U.S. Senator Jeff Merkley (Ore.), Dr. Karen B. DeSalvo, Assistant Secretary for Health at U.S. Department of Health and Human Services, Jessica Milano, Deputy Assistant Secretary for Small Business, Community Development, and Housing at the U.S. Department of the Treasury, Dr. Sam Clovis, National Co-Chair and Chief Policy Advisor for the Donald J. Trump for President campaign, Ann O’Leary, Senior Policy Advisor for the Hillary Clinton for President campaign, Valerie Jarrett, Senior Advisor to President Barack Obama and Jeff Zients, Director of the National Economic Council and Assistant to the President for Economic Policy.

“I’m proud to be representing Ohio at this event,” said Victoria Calderón Nunes, Co-founder & CEO of AVANZA Business Solutions in Columbus, Ohio. “In many ways, Ohio is an influential state that can impact national politics. It’s extra important for Ohio’s small businesses to have a seat at the table in policy conversations, and that’s why I’m traveling to D.C. to make sure the small business voice is heard.”

With its theme “Recognizing the Power of the Small Business Economy,” the Summit will discuss the ways in which the small business case is misunderstood and too-often misrepresented by special interests and policymakers. Small business owners will participate in interactive panels and meet with small business leaders from across the country to explore how small business owners can be better heard in the legislature, in the media and at the ballot box. Leading small businesses will also receive awards at the event.

“This Summit will allow small business owners to engage directly with policymakers and industry leaders to discuss the high-profile issues impacting small businesses, ” said Rhett Buttle, President & Managing Director of Small Business Majority. “At this event, we’ll hear from a diverse group of entrepreneurs about what matters to them and what our leaders can do to help small businesses grow and thrive.”

The Summit will focus on top issues of importance to small business, including but not limited to access to capital and alternative lending, asset building and entrepreneurship, the growing freelance economy, critical workforce issues and more.

Attendees from Ohio include:

  • Michael Minnix of Good Land Sustainability Consultants in Columbus
  • Michelle Tomallo of FIT Technologies in Cleveland
  • Anne Zimmerman of Zimmerman & Co CPAs Inc. in Cincinnati
  • Kathleen Norris of Urban Fast Forward in Cincinnati
  • Letha Pugh of Bake Me Happy in Columbus
  • Dominiq Dudley of Ready Publication in Columbus
  • Gail Dudley of Ready Publication in Columbus
  • Linda Matthews of Millennium Energy in Cincinnati
  • Victoria Calderón Nunes of AVANZA Business Solutions in Columbus
  • Jill Bacon Madden of JBM Holdings, LLC in Akron
  • Andre Bryan of APB & Associates, Inc. in Cleveland

For more information about the Summit, please visit: http://www.sbmleadershipsummit.com/.

 

 

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Columbus Artists – Grants from Greater Columbus Arts Council to Enhance your Business Skills

The Greater Columbus Arts Council (GCAC) has a great grant program for artists to take professional development courses that can help them enhance their business skills. The grants that can be awarded are up to $1,000 for your use as an artist. Our business building courses taught at the Columbus Idea Foundry can be used to fulfill your professional development for enhancing your business.  Learn how to take your idea to market, find out what kind of business structure you need, and how to market your products to attract customers and supporters.  We cover non-profits, for-profits, and everything in between.

SunDown is a great resource to help take your idea to the next step.

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Ohio Startups: Don’t Worry if You Get Rejected from an Ohio Third Frontier Backed Incubator or Fund

Ohio startups that approach an Ohio Third Frontier backed incubator or fund and get turned away shouldn’t feel discouraged in their endeavor to start a new business or think about leaving Ohio to find the startup capital that they need.  The Ohio Third Frontier backed organizations have very narrow and specific goals when making investments into companies.  These organizations are measured on engagement and the success of the investments – not to mention only investing in tech-based companies.  This ends up creating two competing goals.  They want to make safe investments with grant dollars, but they also want to talk with as many startups at they can and keep them in their sphere of contacts.  Sometimes this creates false hope for the entrepreneur.  They might be talking to you, but they might not actually want to invest in you.

Most of the Third Frontier backed incubators get up to 800 companies reaching out to them over a given calendar year, 200 being engaged with, 100 being taken into their various shaking-out programs, and 20 or so actually getting some kind of investment.  That is a 2.5% chance that you will get an investment from one of these programs.  Not the best odds and maybe that investment isn’t the full amount that you need to be fully capitalized.

However, a lot of the cash that many entrepreneurs think they need might actually be too much.  If you need to hire a web developer as a contractor or employee, you need cash to do it.  What if you brought in a web developer as a partner and give them an equity stake in the company and maybe a bit of cash?  This idea of bartering, trading, and sharing resources is nothing new in the realm of starting up a business, but it has been eclipsed by the idea that everyone needs venture capital or some kind of investor class money – when in reality you just need the venture resources of connections and talent.

That’s where SunDown comes in.  We help make connections to investors, mentors, and talent to be able to help take your idea to the next step.  We don’t charge you to come make a pitch at one of our events and we don’t create long, drawn out programs.  Our goal is to help you make connections and get out of the way as fast as we can.  Its your company, its your dream, we are here to help.

Don’t be discouraged, keep going.  SunDown is a friendly rest stop in your journey.  Come check us out.

 

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2015 Angel Capital Association Summit Recap

This year, I made the trek out to San Diego to attend my first Angel Capital Association (ACA) Summit.  Here is a brief recap of some of the main themes of events, workshops, and keynotes I was able to attend.

First some background on ACA and the Angel Investor Class:
The ACA is an industry trade group of individual angel investors, angel funds, and family offices that help promote angel investing through education, best practices, certification, and public policy.  They have been around for about 10 years and are one of the most influential groups around early stage and seed stage investing in startups.

One of the things that angels strive to do is to better their local economy by helping to create sustainable business by providing very early stage investment into companies.  Through their backing of entrepreneurs in starting companies, angels are one of the primary sources for creating new job creation in the country.

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