5 Things You Should Never Tell Investors

Are you hoping to raise some capital to get your business off the ground? Are you anxiously waiting for the day when your bank account is flush with newly-injected investor cash? Are you thinking about presenting your business plan to a group of Angel Investors or Venture Capitalists?

If you answered yes to any of these questions, then this is something you need to hear. According to Scott Shane's book The Illusions of Entrepreneurship, not very many startup companies receive funding from formal investors. His research indicates that less than one-tenth of one percent of all start-ups receives VC money, accounting for less than 2 percent of all small business financing. And, only 13.4 percent of the angel investors are actually accredited, meaning most angels are actually informal investors, not high-profile sophisticated investors who mandate fancy presentations, well-coiffed business plans, and attractive 10X returns. (10X refers to a return of at least 10 times the investor's initial investment.)

This data is not meant to scare you away from seeking the funding you need, but it should clarify that a very small minority of new businesses ever find themselves in front of sophisticated investors. In case you ever find yourself trying to convince one or more of them that your business is worthy of their cash, here are five common faux-pas you should never say in your presentation.

1. What do you mean by cap table?

First of all, this refers to your capitalization table. It defines all of the current shareholders/members of your company and projects how that will change with this and future rounds of financing. It was not too long ago that an up-and-coming business received a coveted invitation to present to an angel group. Upon investigation, the company had sold some stock to friends and family in the early days, but had no idea how much stock each investor currently held. To make matters worse, there were no legal documents formalizing these transactions. If a potential investor learns of this, they will most likely turn and run the other direction.

2. If we could just capture 1 percent of the market...

Hopefully you have never heard anyone say this about the potential of their business. If a sophisticated investor hears it, they will shut down any further interest in your business. They may appear to be listening, but they are not. Why? If an entrepreneur has not bothered to do enough research to figure out what a realistic market penetration would be, then investors will draw the conclusion that it is not worth their time or their money. Trying to justify the potential of your business with such a statement is really saying that you are going to short-cut in every other aspect of your business, and that is not an attractive quality to someone who is going to trust you with their money. Know your market, segment it into as much detail as possible, and show them some realistic assumptions and why you think you will achieve them.

3. The first thing we plan to do with your investment is hire a bunch of attorneys and really expensive consultants.

Oh, this will make them cringe. They may even get a little red in the face as they recall the amounts of their money that have been wasted on non-growth-oriented expenditures. Investors want their money to be used to grow the company. They want their money to help develop new products or improve the penetration of your company's current products. Sure, some legal and other professional fees are necessary and value-added, and you may even need to use a little of the investment to handle those things. But ultimately the investors need to see how their money will help the company grow and increase the value of their investment.

4. I'm not planning on hiring a management team. I will do it all myself.

Why would you ever say this? Do you have a big ego? You can't let go of control? Or, perhaps you have so little vision of your company that you cannot even imagine the days when you will need help running your business? This last question is exactly what potential investors think when they hear this statement. Besides being the most common mistake made, I have never seen a company with this attitude get funded. Every company that breaks free from their startup roots gets to a point where it is too much for one person to manage. Show some vision, humility, and savvy by thinking about your company at 10 to 20 times its current size. Then build an organization chart of what experience and talent you will need around you to build that successful business. This is not a sign of weakness – it is actually what the investors need to hear and see from you!

5. I'm not sure what my company is worth.

When you walk into Wal-Mart you don't see price tags that say: "We're not sure how much to charge you for this." So why would you want to say this about your business? You have something to sell: equity in your business. Know what it is worth (implying you do some homework and have some logic behind your number) and ask for that price. Sophisticated investors will always do their due diligence to see if they agree with your asking price (and they never will), but they will lose interest if you haven't put enough thought into your company to try and figure out what it is worth.

Ken Kaufman, Founder & CEO of CFOwise®, serves as the Chief Financial Officer for a dozen startup, emerging and medium-sized businesses। With almost two decades of experience and as an adjunct professor and published author, Ken focuses his professional efforts on helping entrepreneurs maximize cash flow, improve profits, and obtain clarity.


Original: http://www.openforum.com/idea-hub/topics/money/article/5-things-you-should-never-tell-investors-ken-kaufman

Phone Finder ID-ed - Regrets His ‘Mistake’

The person who found and sold an Apple iPhone prototype says he regrets not doing more to return the device to its owner, according to a statement provided by his attorney Thursday in response to queries from Wired.com.

Brian J. Hogan, a 21-year-old resident of Redwood City, California, says although he was paid by tech site Gizmodo, he believed the payment was for allowing the site exclusive access to review the phone. Gizmodo emphasized to him “that there was nothing wrong in sharing the phone with the tech press,” according to his attorney Jeffrey Bornstein.

Wired.com identified Hogan as the finder of the prototype by following clues on social network sites, and then confirmed his identity with a source involved in the iPhone find.

Hogan has been interviewed by law enforcement investigators but has not been charged with a crime. His attorney says he is willing to cooperate with authorities.

It’s generally considered theft under California law if one “finds lost property under circumstances that give him knowledge of or means of inquiry as to the true owner” and yet appropriates the property for his own use “without first making reasonable and just efforts to find the owner and to restore the property to him.”

The person who found the phone “is very definitely one of the people who is being looked at as a suspect in theft,” San Mateo County Chief Deputy District Attorney Stephen Wagstaffe told Wired.com Wednesday. “Assuming there’s ultimately a crime here. That’s what we’re still gauging, is this a crime, is it a theft?”

On April 19, Gizmodo, which is owned by Gawker Media, published a bombshell story about the iPhone prototype, which had apparently been left at the Gourmet Haus Staudt in Redwood City. It was left behind by an Apple engineer named Gray Powell.

According to the statement from his lawyer, Hogan was in the bar with friends when another patron handed him the phone after finding it on a nearby stool. The patron asked Hogan if the phone belonged to him, and then left the bar. Hogan asked others sitting nearby if the phone belonged to them, and when no one claimed it, he and his friends left the bar with the device.

“Brian opened the phone onto a Facebook page but then the phone shut down,” attorney Bornstein writes. “From that time on, the phone was inoperable the entire time Brian had it.”

Hogan didn’t know what he had until he removed a fake cover from the device and realized it must be a prototype of Apple’s upcoming next-generation iPhone, according to Gizmodo’s account of the find.

A friend of Hogan’s then offered to call Apple Care on Hogan’s behalf, according to Hogan’s lawyer. That apparently was the extent of Hogan’s efforts to return the phone.

After the friend’s purported efforts to return the phone failed, several journalists were offered a look at the device. Wired.com received an e-mail March 28 — not from Hogan — offering access to the iPhone, but did not follow up on the exchange after the tipster made a thinly veiled request for money. Gizmodo then paid $5,000 in cash for it.

The owners of the bar told reporters that Hogan didn’t notify anyone who worked at the bar about the phone. They also said Powell returned several times after losing the phone to see if anyone had found it and turned it in. Powell and Apple’s outside counsel contacted the San Mateo County District Attorney’s office last week to report the phone stolen, according to reports.

“He regrets his mistake in not doing more to return the phone,” says Bornstein’s statement. “Even though he did obtain some compensation from Gizmodo, Brian thought that it was so that they could review the phone.”

Shortly after Gizmodo published its story, people identifying themselves as representatives of Apple appeared at Hogan’s home seeking permission to search the premises, according to a source involved with the iPhone find. A roommate turned them away.

Records show a Redwood City address for Hogan about a mile from the bar where he found the phone. Nobody was at home when Wired.com knocked on the door earlier this week. Hogan previously lived in Santa Barbara, where he attended Santa Barbara City College as recently as 2008, according to his Facebook profile, which was deleted last week.

His attorney says he recently transferred schools and will resume his college education in the fall. He has been working part time at a church-run community center giving swimming lessons to children and volunteered at a Chinese orphanage last year while he was enrolled in a study-abroad program.

“He also volunteers to assist his aunt and sister with fundraising for their work to provide medical care to orphans in Kenya,” his attorney says. “Brian is the kind of young man that any parent would be proud to have as their son.”

In addition to Hogan, investigators have targeted Gizmodo editor Jason Chen, who received and reported on the phone. Last Friday, officers from California’s Rapid Enforcement Allied Computer Team raided Chen’s Fremont, California, home and seized computers and other equipment.

Gawker Media and others have said the search warrant violated state and federal shield laws protecting journalists from searches and seizures without a subpoena. The San Mateo County district attorney’s office said this week that investigators will not examine the seized materials until the legality of the warrant has been resolved.

Hogan’s attorney, Jeffrey Bornstein, is a former federal prosecutor, who is now a partner at the San Francisco law firm K & L Gates. As a defense attorney, Bornstein notably represented the captain who steered a container ship into the San Francisco Bay Bridge in 2007.

In an interview at his office Thursday afternoon, the lawyer said Hogan’s family has relocated to an undisclosed location in anticipation of a media frenzy. “This thing has gotten completely, completely out of control,” said Bornstein, referring to the public interest in the story.

“He made a mistake,” Bornstein added. “He should have just immediately turned that phone in.”

Story updated 19:45 to quote Bornstein.

Image: Brian Hogan in a 2008 blog photo.

Additional reporting by Evan Hansen, Kevin Poulsen, Dylan Tweney and Roselyn Roark

Original: http://www.wired.com/threatlevel/2010/04/iphone-finder/

Illegal immigrants plan to leave over Ariz. law

PHOENIX – Many of the cars that once stopped in the Home Depot parking lot to pick up day laborers to hang drywall or do landscaping now just drive on by.

Arizona's sweeping immigration bill allows police to arrest illegal immigrant day laborers seeking work on the street or anyone trying to hire them. It won't take effect until summer but it is already having an effect on the state's underground economy.

"Nobody wants to pick us up," Julio Loyola Diaz says in Spanish as he and dozens of other men wait under the shade of palo verde trees and lean against a low brick wall outside the east Phoenix home improvement store.

Many day laborers like Diaz say they will leave Arizona because of the law, which also makes it a crime to be in the U.S. illegally and directs police to question people about their immigration status if there is reason to suspect they are illegal immigrants.

Supporters of the law hope it creates jobs for thousands of Americans.

"We want to drive day labor away," says Republican Rep. John Kavanagh, one of the law's sponsors.

An estimated 100,000 illegal immigrants have left Arizona in the past two years as it cracked down on illegal immigration and its economy was especially hard hit by the Great Recession. A Department of Homeland Security report on illegal immigrants estimates Arizona's illegal immigrant population peaked in 2008 at 560,000, and a year later dipped to 460,000.

The law's supporters hope the departure of illegal immigrants will help dismantle part of the underground economy here and create jobs for thousands of legal residents in a state with a 9.6 percent unemployment rate.

Kavanagh says day labor is generally off the books, and that deprives the state of much-needed tax dollars. "We'll never eliminate it, just like laws against street prostitution," he says. "But we can greatly reduce the prevalence."

Day laborers do jobs including construction, landscaping and household work for cash paid under the table. Those jobs have been harder to find since the housing industry collapsed here several years ago.

Standing near potted trees and bushes for sale at a Home Depot in east Phoenix, Diaz, 35, says he may follow three families in his neighborhood who moved to New Mexico because of the law. He says a friend is finding plenty of work in Dallas.

Diaz says he has too much to lose by staying — he's supporting a wife and infant son back home in Ciudad Juarez, Mexico, across the border from El Paso, Texas.

"They depend on me to survive," he says. "I'm not going to wait for police to come and arrest me."

Jose Armenta, a 33-year-old illegal immigrant from Mexico's western coast, is already planning to move to Utah within the next 20 days because of a combination of the economy and the new law.

"A lot of people drive by," he says as he watched nearby cars speeding past, "and they yell, 'Hey, go back to Mexico!'"

Analysts say it's too soon to tell what lasting effects the law will have on the state's underground work force, which also includes baby sitters, maids and cooks.

A study of immigrants in Arizona published in 2008 found that non-citizens, mostly in the country illegally, held an estimated 280,000 full-time jobs. The study by researcher Judith Gans at the University of Arizona examined 2004 data, finding that they contributed about 8 percent of the state's economic output, or $29 billion.

Losing hundreds of thousands of unskilled laborers wouldn't hurt the state's economy in the short term, but it could limit the economy's ability to grow once it recovers, says Marshall Vest, director of the Economic and Business Research Center at the University of Arizona's Eller College of Management.

Legal workers who are willing to take any available job now will become more choosy if the unemployment rate falls back to low levels seen before the recession hit.

"That's really the question, as to whether the existing population is willing to work those (low-level) jobs," Vest says. "I think economics provides the answer. If job openings have no applicants, then businesses need to address that by raising the offered wage."

Some illegal immigrants, however, intended to stick around.

Natalia Garcia, 35, from Mexico City, says she and her husband — a day laborer — will stay so their daughters — both born in the U.S. — can get a good education and learn English. The couple have been living in Arizona illegally for the last 10 years.

"Mexico doesn't have a lot of opportunities," she says. "Here, we work honestly, and we have a better life."

Olga Sanchez, 32, from southern Mexico, lives in Phoenix illegally with her two brothers, who are 21 and 17. While the youngest boy is in high school, all three work and send money back home to their parents.

"This law is very bad for us," says Sanchez, who gets about $250 a week cleaning three houses. "I'm afraid of what's going to happen."

She says the family is going to wait and see if the law takes effect and what the fallout will be before deciding whether to leave. The law is certain to be challenged in court; Phoenix, Tucson and Flagstaff already are considering lawsuits.

"All I ask from God is a miracle for us to stay here and work," she says।

Original : http://news.yahoo.com/s/ap/20100428/ap_on_re_us/us_immigration_day_labor

Google Confirms Android 2.2 Will Support Flash

In an interview with The New York Times, Google’s Andy Rubin revealed that the upcoming version of the Android mobile operating system will fully support Flash technology. Code named Froyo, Adobe showed us Android 2.2 with Flash 10.1 on a Nexus One last month.

According to Rubin, Google’s definition of openness “means not being militant about the things consumers are actually enjoying.” This is pointed commentary about Apple’s HTML5-or-bust attitude toward supporting Flash — or even allowing developers to use Flash when making applications –on Apple mobile devices. Google — at least based on our perception of the company’s public face — seems more focused on the interoperability, compatibility and diversity of user experience.

Rubin also commented on Google’s commitment to keeping Android open — open for developers, open for porn, open for API access, simply and completely open.

And as far as “stolen” phones are concerned, Rubin said Google would have been flattered by the attention.

All in all, Rubin’s statement came across as a thinly — and we mean thinly — veiled “screw you” to Apple. As the platform continues to grow, both in end-user adoption and in developer interest, who can blame him? We can’t wait to see what happens when an Android tablet is released to challenge the iPad।

origina: http://mashable।com/2010/04/27/android-flash/

TorrentFreak To Buy Pirate Bay For $11 Million

According to a press release yesterday, Business Marketing Services Inc. has agreed to pay $10 million for the name and assets of BitTorrent monster The Pirate Bay.

CEO Hans Pandeya, who most people know from his Global Gaming Factory fame, will relaunch the the site on June 30th this year as a “paid legal content site”.

“The technology out there to deliver entertainment is from the stone age,” Pandeya said.

Pandeya says that the new site will be just like the old site except that it will only offer content that has been licensed by Business Marketing Services Inc.

In an amazing similarity to last year’s announcement that GGF would buy The Pirate Bay, Pandeya says that the site will run on some new hot file-sharing technology.

Apparently, BMSV have assurances from a party that they will receive $10m to make the purchase, so that means that they absolutely have the money and everything is going legal at The Pirate Bay in 2 months time.

So, to make sure this doesn’t happen, TorrentFreak has spoken to the admins of a few torrent sites who, while assuring us they were absolutely serious and not at all drunk or having fun at our expense, promised they would give us $11 million so we can buy The Pirate Bay instead.

To come up with some cool new technology, the writers on TF have been studying Visual Basic since last night and can now assure our readers that we have some awesome things lined up for the site.

Of course, absolutely nothing you’ve read so far in this article has a single grain of truth in it.

A Pirate Bay insider told TorrentFreak that there is no deal with Pandeya and that the whole thing is a complete fabrication।

Original: http://torrentfreak.com/torrentfreak-to-buy-pirate-bay-for-11-million-100428/

Gizmodo paid $10,000 for “lost” iPhone 4G

The Internet is abuzz today with Gizmodo’s hands on preview of what appears to be Apple’s next-gen iPhone. In case you missed the build-up to the story, someone found a cased iPhone on the floor of a bar in Redwood City. From the outside, the device appeared to be an iPhone 3GS, but upon removing the device from its specially designed case, it was clear that this was no ordinary iPhone. Rather, it appeared to be Apple’s next-gen iPhone. Found. In the wild. A solid two months before anyone expected to see pictures of it.

In other words, this was the motherload of all Apple scoops.

The individual who found the iPhone sent pictures of the device to Engadget, but it was Gizmodo who scored big by actually obtaining the iPhone itself. It’s been reported by in-the-know Apple blogger John Gruber that Apple considered said iPhone “stolen”, and was keen on getting it back.

But with Gizmodo’s report blowing up the Internet today, the cat is out of the bag. At the time of this writing, Gizmodo’s story alone is bordering on 2.5 million page views [Edit: it's now pushing 4 million pageviews as of early Tuesday morning].

Now word is leaking out that Gizmodo paid a cool 10 grand for the iPhone prototype, which all things considered, seems like a bargain given Apple’s typically tight rein on product leaks.

Update: Apple Legal sends letter to Gizmodo asking them to return iPhone 4G

$10,000 has undeniably diverted a ton of eyeballs to Gizmodo’s site, and the surge in web traffic probably has Gizmodo editors jumping for joy. But you have to wonder if Gizmodo, in the grand scheme of things, tarnished their “relationship” with Apple for a short term spike in pageviews.

Think about it - Steve Jobs is probably livid right now, and what are the odds that Gizmodo, going forward, gets invited to Apple’s always popular “special events.” And what are the odds now that Gizmodo will get a review unit of the upcoming iPhone 4G? Though, to be fair, they apparently already have one.

On another note, there has been talk about Apple legal going after Gizmodo, but that doesn’t seem plausible for a number of reasons. First and foremost, the damage has already been done. The pictures and information gleaned from Gizmodo’s hands-on have already been dispersed into the ether of the Internet. If Apple demanded Gimzodo remove its detailed post, it would a) confirm that the device is, in fact, the next-gen iPhone and b) ultimately have no effect whatsoever given that hundreds, if not thousands, of other websites have already copied and pasted the pertinent information.

Second, it’s hard to see how exactly Apple could go after Gizmodo from a legal standpoint. Word is that Gizmodo purchased the device last week, but it’s unclear if Apple was aware of the exchange, and if so, if Apple sent a legal warning to Gizmodo not to publicize the device. But even if Apple did deliver a legal warning, Gizmodo ostensibly didn’t coerce an Apple employee into handing over a top secret prototype. Rather, Giz simply paid top dollar to a guy who found a different looking iPhone on the floor of a bar. From that vantage point, there’s not much illegality involved.

Matt in the comments directs us to this entry on lost/stolen property from Wikipedia:

Property is generally deemed to have been mislaid or misplaced if it is found in a place where the true owner likely did intend to set it, but then simply forgot to pick it up again. For example, a wallet found in a shop lying on a counter near a cash register will likely be deemed misplaced rather than lost. Under common law principles, the finder of a misplaced object has a duty to turn it over to the owner of the premises, on the theory that the true owner is likely to return to that location to search for his misplaced item. If the true owner does not return within a reasonable time (which varies considerably depending on the circumstances), the property becomes that of the owner of the premises

That said, it would seem that Apple’s legal beef lies more so with individual who sold the device than Gizmodo. Either way, going after Giz or the dude who’s now $10,000 richer would attract a wave of bad publicity that Apple would, we would guess, much rather do without.

Update: A comment from Hacker News directs us to this section of the California Penal Code:

One who finds lost property under circumstances which give him knowledge of or means of inquiry as to the true owner, and who appropriates such property to his own use, or to the use of another person not entitled thereto, without first making reasonable and just efforts to find the owner and to restore the property to him, is guilty of theft.

The question, then, is if the legal responsibility of the original “finder” is transferred over to the party who acquires said property. We’re guessing that it does. Also, remember that Gawker was previously served with a cease and desist letter from Apple back in early January for offering $50,000 for pre-release photos or videos of the iPad and $100,000 for actual hands-on time with the device.

And if that weren’t enough to chew on, Gawker managing editor Nick Denton sent out the following tweet earlier this afternoon:

For people who want to know the backstory to Gizmodo’s iPhone exclusive, it’s coming. And it’s a corker.

For people who want to know the backstory to Gizmodo’s iPhone exclusive, it’s coming. And it’s a corker.

Update x2: Gizmodo exposes identity of Apple engineer who lost the iPhone at the bar

Update x3: Gawker editor Nick Denton said that the company paid $5,000 for the device, with some reports claiming that additional fees were to be paid if certain traffic goals were met

Original: http://www.edibleapple.com/gizmodo-paid-10000-for-lost-iphone-4g/