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Book
Review: High Tech Start Up: How can the new entrepreneur go about the process of getting a high technology company started, funded and launched? The best way is to have a close relative, who respects you, as a partner at one of the top VC firms. Failing that, Nesheim's book is valuable for the new entrepreneur and a good organizer even for the experienced start up CEO. Although it's a fairly pricey book at $50, it can save you many times that amount in professional fees and allow you to focus your resources (scant money and even more precious time) on the business of starting and building your business. I like to start clients with an overview of what's going to happen from start to accomplishment of their exit strategy. Neisheim has an excellent table in Chapter 3 that summarizes the key stages from idea to IPO. It's laid out logically so that even a new entrepreneur can see the logical steps that must occur before they are able to complete a stage. It details what you will need to focus on at each stage, how long it's going to take, who needs to be involved at that stage, costs in time and resources, risks and results. An area of concern for investors is whether the entrepreneur has the rights to their ideas, technology and connections. Merely leaving a previous employer does not mean that you are necessarily free to take ideas, even ones you developed yourself, and start a company. Nesheim leads you through the steps you should take, the counsel you should hire, the information you'll need to give to previous employers and the clearances you should ask of them. Want to know when to incorporate and how to select the attorney that will assist you with this? Suggestions on how to pick a name for your company? How long will it take and how much should it cost to get your company ready to seek investors? Kris and I always pay a lot of attention to business plan information. There are many, many ways to write a business plan. Some of them are better than others. Nesheim's discussion of the business plan preparation goes well beyond the outline of information and organization that needs to be prepared. How do you approach an investor? Do you send them the business plan, or a business plan summary? What about setting up a meeting? How do you protect your ideas in an environment that obviously hosts your potential competitors? How much do you disclose? There are two main thrusts to a business plan. One, of course, is to provide a plan that will guide the company from start up to success. The second, and usually the most important point unless you already have plenty of money for the company's needs, is to find funding. Nesheim tells you how to do it, from finding introductions to investors to negotiating terms. There is advise on setting up barriers to competition, so that you can rapidly build a profitable and protected business. Keep the business plan itself clean, crisp and to the point. Nesheim suggests that you think of a school term paper - fancy packaging is likely to be disregarded or discarded. How do you raise capital? And how much is enough? What can you expect to occur during the hunt for money? And, very importantly, how do you time your hunt for funding? How many rounds will you need before you exit? How can you value your company and what negotiations can you expect? A chapter that I especially liked explains where venture capitalists get their funding. This is a "must read" if you are going to understand their motivations, expectations and needs. What kind of return will they expect? Nesheim also discusses other forms of funding, from bootstrapping to banking and leasing. Excellent, and short case studies, are used to illustrate points throughout the book. Although this book is not a substitute for having a good securities attorney, CPA and other advisors, it will provide you with background and practical information that will enable to use your expensive attorney and top-notch CPA time wisely. Like reading the rules of a game before you begin playing for high stakes, this will clue you in to the essentials that you will need to get your high potential business started on the road to success. $$$$ -C. N-J. ABC's rating system: $ - A few useful items; $$ - Some good content; $$$ - Well balanced and worthwhile; $$$$ - Recommend highly; $$$$$ - Excellent! Buy it now
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