Angel Investors and “Super” Angels
Angel investors have long been the backbone of early financing for startup businesses. They have stepped in when money from family and friends runs out. Angel investors have traditionally filled the gap between owner-raised investment money, and venture capital investments.
Now, however, Angels are banding together and forming more “groups” of investors—Super Angels—to raise the limits of their investments, while spreading the risk. This creates a new “grey area” where the Super Angels and Venture Capitalists overlap.
According to a recent study by the National Association of Seed and Venture Funds, the number of Super Angels has grown 40 percent just in the last year. More importantly, 51 percent of association members have indicated that they intend to invest more money in startup companies this year than they did last year.
This is good news for entrepreneurs—as long as you are properly prepared to fast-track the growth of your business. Super Angles want to see a strong management team that can make the most of their investment money. Neither Angels, nor Super Angels will invest in just an “idea”—they want the entrepreneur(s) to be operating and have some skin in the game already.
In addition, your business needs to have the potential for explosive growth to tens of millions of dollars in revenue in just a few years. Also, you will need to convince a Super Angel that you can return three to five times their investment within five years—usually through acquisition.
This is good news for high-potential startups, but you will need to prepare well before you meet with investors. Even though there is investment money available, there is tremendous competition seeking it…so you better bring your “A” game.
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The Dumbing Down of America
In terms of the percentage of young people with college degrees, the U.S. has dropped from number 1 to number 12 among 36 developed nations. We decry the dwindling of the middle class, but ignore the fact that today, education is the foundation of the middle class.
I read recently that in the U.S. a child drops out of high school every 26 seconds. Moreover, a report from the College Board indicates that today’s younger generation will not be as well educated as their parents.
Hard-won excellence is no longer a term being used by younger generations, so I guess it should be no surprise that our cultural heroes of the day are people like Lady Gaga and Snooki.
As the older generations retire and head into the sunset, we have to rely on the younger generations to take over and raise our country’s standing in the world. Of course we have some exceptionally talented young people in America, but they are far too few in number…and becoming the exception instead of the rule.
Unfortunately, we are becoming so inured by an ever-growing army of jobless workers; two exorbitantly expensive wars; a broken public education system; decadent economic inequality; big-money control of government; the deficit; etc.—that our nation is more concerned with the antics of Lindsey Lohan, Tiger Woods, et.al. than we are with the future of our country.
Our society seems to be holding intellectual capabilities in contempt, and is more interested in hip-hop and reality shows than in educating our children.
The U.S. ranks behind Canada, South Korea, Russia, Japan, New Zealand, Iceland, Norway, Israel, France, Belgium, and Australia in the percentage of 25 to 35 year-olds with a college degree. If this trend continues, America will become a lesser and lesser player in the fraternity of industrialized nations.
If the U.S. does not get our educational system fixed, and fixed soon, future generations will be living off the handouts from more advanced countries—which will be almost everyone else.
Washington—are you listening?
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Best Not to Default on Your Loan
I am sure there are many people here in the U.S. who are thankful we do not have a judicial system like the one in Dubai. Dubai bases their judicial system on “sharia”—Islamic law—which is weighted heavily against the defendant…and is highly punitive.
As a result, someone who bounces a bad check in Dubai can spend as long as four years in prison. That also explains why around 40% of the inmates at the Dubai Central Prison are there because they defaulted on bank loans. Under Dubai law, most of the Wall Street movers and shakers would be in prison—indefinitely.
Moreover, some prisoners have to stay in prison beyond their sentence until their debts are paid. With this kind of judicial system it would seem likely that very few people would take on a debt without being absolutely positive they would be able to pay it back…no matter what.
Quite a contrast to the American mantra of “charge, charge, charge,” regardless of our ability to pay the debt…because we can always just walk away from our debt obligation if we can’t (or don’t want to) pay it. Or, if you are big enough, the government will pay it for you.
I wonder what would happen to our economy if there was a little more responsibility—with more dire consequences for defaulting—placed on investors…as well as the U.S. consumer?
Anyone have any thoughts?
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Labor Statistics for July…Surprise!
Well, the labor statistics for July have been released, and there seems to be some surprise in Washington that employment dropped by a net 131,000 people in July. There was also little mention that the newly unemployed number for June was “revised” downward by another 100,000.
However, the “official” unemployment rate of 9.5% remained unchanged. It always amazes me how so many jobs can be lost each month while the unemployment rate improves or remains unchanged. Of course the numbers are “seasonally adjusted.” I doubt that anyone knows what the formula is for seasonally adjusting the numbers, so I always stick with actual numbers.
Which, by the way, are much more representative of reality when we look at the Bureau of Labor Statistics U-6 numbers instead of the U-3 numbers. U-6 includes all unemployed people whether they said they looked for a job in the last 4 weeks or not. The U-6 number puts the unemployment rate at 16.8%.
But, don’t forget, this still does not include those people who did not report that they looked for work during the past 12 months; those who would like to enter the workforce but cannot find a job (new graduates and new immigrants); and those who do not report looking for work because they are in the country illegally. Some studies have put the real number of unemployed closer to 30%. Detroit has reported their actual unemployment rate at around 50%.
The point is; that Washington needs to quit their petty political bickering and get busy working on free enterprise job creation by supporting new businesses, new R&D, new expansions, new capital resources…and stop regulating and taxing businesses—and jobs—into oblivion.
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Profitability’s Hidden Menace
Something is happening in the U.S. that is heavily impacting productivity, driving costs ever higher, and lowering profits. This nemesis to small business is something we are all familiar with, but rarely think of in these terms. What I’m talking about here is…allergies! I guess technically it’s called allergic rhinitis (my family calls it hay fever). During the past 15 years the number of people suffering from allergies has doubled, and related medical expenses has increased 338%.
Here are some interesting statistics that may surprise you:
- In 1995, allergies resulted in 1 million missed workdays.
- In 2010, allergies will result in 6 million missed workdays—up from 4 million just 5 years ago.
- In 1995, there were 7 million doctor visits to treat allergies.
- In 2010, there will be 16 million doctor visits to treat allergies—up from 13.1 million just 5 years ago.
- In 1995, medical expenses to treat allergies was $4 Billion.
- In 2010, medical expenses to treat allergies will be $17.5 Billion—up from $6.1 Billion in 2000.
Apparently, a large contributing factor to these trends is that in North America spring arrives 10 to 14 days earlier than it did 20 years ago, resulting in a longer pollen season. Also, as average temperatures rise, they boost the proliferation of pollen-producing trees like oak and hickory. This is particularly true in the Midwest and eastern U.S. Some experts predict that, due to fossil-fuel emissions, pollen production could double by the year 2100.
Just one more thing for small business owners to deal with, and there doesn’t seem to be any clear solution. It looks like increased absenteeism and higher healthcare costs are going to be a considerable cost of doing business in the coming years. More things to make being a business owner in the U.S. even more difficult.
Any suggestions?
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