Some time ago the idea of outvesting was born out of discussions on Twitter and some Irish blogs. The concept was simple; donors chip in 50 euro each and when a total of 5000 euro has been reached the donors vote on which start-up this money should be given to (on a no strings attached basis). Short, sharp & simple.

Today the results of the first Outvesting round ware announced and while I am delighted that WE CAME SECOND I am even more delighted by the fact that the fantastic KildareStreet won. Go have a look at KildareStreet. It’s a fantastic and extremely worthwhile project giving everyone a direct insight in what and how much (or little) every person in our government is doing. While there are a whole bunch of people involved in the project it is mainly being driven by John Handelaar who is a bit of an enigma. Anyway, go check them out and give them all the help and support you can!

I am constantly on the look-out for experienced, insightfull & innovative people to assist the Greenhouse by sharing their knowledge, experience, opinion and insight.

Some time ago I met an absolute gem in the shape of David Kirk. David is originally from Northern Ireland but moved to the US many years ago. He has build up a very succesful career and has been VP Corporate Information & Business systems for AOL & VP for Cisco systems amongst other positions.

David is now mostly active as business advisor and private investor. He has been very active in stimulating the development of the software industry in Northern Ireland and is a leading member of the “Irish Technology Leadership Group” & NISW.

David’s experience from the cutting edge of business will be an invaluable contribution to the Greenhouse and we hope that it will stimulate others like him to also lend their support.

His decision to support the Greenhouse Incubator is a huge vote of confidence in our venture!

Location is the O’Reilly Building on the Trinity College Dublin campus. Starting time is 10 am and talks will end at 5pm.

I will be putting more details online over the next few days but in the meantine you can register here to attend or here to speak.

You can also contact me if you would like to exhibit at the event or if you are interested in supporting this event.

The event is held in the Absolute Hotel in Limerick starting at 10 am and running until 5 pm.

The Greenhouse Business Camp is an free “unconference” for people who are self-employed, starting their own business or thinking about starting their own business. The current economic circumstances have clearly indicated that there is no such thing as a “job for life”. Even the biggest of companies are failing, the financial institutions are in tatters and the public sector is facing mass redundancies. The result of this is that for a lot of people there is only one logical course of action: to start their own business. Once again the SME sector proves to be the backbone of the economy.

Of course there are a lot of pitfalls & unknowns to starting your own business. Besides the financial risks there are legal & fiscal issues. How & where do you find customers? What is the best way to market your product or service? Who can help me and how do you approach them?

Greenhouse Business Camp will provide you with answers to all these questions and more. Not through boring talks and Life-coaching sessions but by meeting and talking to people who have gone through the process of setting up a business (some several times even).  All this will take place in an informal setting. No long droning lectures, no ties & suits, just lots of good relevant information and helpful people.

What happens at Business Camp

During Greenhouse Business Camp there will be a number of presentations and talks from experts in areas related to starting, promoting and running a business. These people will come from all areas of commerce and have proven their worth. You can wander in and out of these talks & meetings as you please. At the same time there will be a number of so-called “break-out” rooms where people can sit down for impromptu discussions and talks on interesting subject.Lastly there will be stands from relevant bodies and companies there who will give you advice and assistance free of charge.

The Greenhouse Business Camp is an free “unconference” for people who are self-employed, starting their own business or thinking about starting their own business. The current economic circumstances have clearly indicated that there is no such thing as a “job for life”. Even the biggest of companies are failing, the financial institutions are in tatters and the public sector is facing mass redundancies. The result of this is that for a lot of people there is only one logical course of action: to start their own business. Once again the SME sector proves to be the backbone of the economy.

Of course there are a lot of pitfalls & unknowns to starting your own business. Besides the financial risks there are legal & fiscal issues. How & where do you find customers? What is the best way to market your product or service? Who can help me and how do you approach them?

Greenhouse Business Camp will provide you with answers to all these questions and more. Not through boring talks and Life-coaching sessions but by meeting and talking to people who have gone through the process of setting up a business (some several times even).  All this will take place in an informal setting. No long droning lectures, no ties & suits, just lots of good relevant information and helpful people.

What happens at Business Camp

During Greenhouse Business Camp there will be a number of presentations and talks from experts in areas related to starting, promoting and running a business. These people will come from all areas of commerce and have proven their worth. You can wander in and out of these talks & meetings as you please. At the same time there will be a number of so-called “break-out” rooms where people can sit down for impromptu discussions and talks on interesting subject.Lastly there will be stands from relevant bodies and companies there who will give you advice and assistance free of charge.

More details on the website.

• Individual coaching on business plan development.
• Development of a real Operations Plan and Go-To-Market Plan
• Monthly Operations Reviews
• Individual Mentor program
• Virtual help-desk session via video-conferencing
• Access to large network of industry contacts
• Funding preparation
• Participation in start-up bootcamps
• Assistance with international growth & market-entry
• Access to a cloud hosting infra-structure
• Shared web hosting

However we would like to hear from you what other services you would like, do you want a postal address to use? Fax & phone answering/forwarding? Are there certain areas that you would like more advise & support on?

Please leave a comment below if you have suggestions of services we would need to add.

That means that selected start-ups will get dedicated web-hosting, access to cloud infra-structure, a whole range of service, access to our network of top level industry contacts and mentoring. All *free of charge*!

We will be announcing the exact details and application process later this week.

And that is the first 1% of what it takes to get a company funded and make a bucket load of money.

One of the smart people I’ve recently met (through Twitter) is David Kirk. I’ll quote from the NI-tech blog to give you an idea of David’s background:

David Kirk is a successful executive, entrepreneur and investor. During his career – almost four decades of software, networking and telecommunications – he has held executive level positions in engineering, marketing and sales, with start-ups and Fortune 10 companies. He was Vice President at American Online (AOL), where he led the world-wide launch of their online service, and managed the development and operations of their business systems, including billing, eCommerce, Internet advertising and fraud management.

After AOL, David was Senior Vice President at Cisco Systems, where he managed their core software development, and was general manager of their enterprise voice business. Currently David is an active private investor, and has board positions on a number of companies, including Axis Three in Belfast. He is passionate about promoting Northern Ireland as a tech destination.

David was born in Belfast, and now resides in San Francisco, California.”

His main activity is as a business advisor & private investor and he has a very strong interest in developing Irish technology start-ups. In the past 2 months alone he has evaluated 60+ business plans from Irish technology companies.  Based on this experience he has offered to write a 2-part blog-post on how a VC looks at the funding process and how what calculations a start-up looking for funding should use. Below is the first part of his post:

Whether you are an entrepreneur or a VC – I like to think I have a foot in each camp -  we live in interesting times.  Barely a month goes by without a new report showing some “interesting” aspect of investment in 2008/2009, whether it be valuation multiples, return multiples, shift in investment stage focus or just the consolidation of funds out there.

While there is, and always will be, market specific conditions that free or freeze funds, the basics of investing in technology companies, remains somewhat constant, and should always be considered as the backdrop to any specific funding strategy.

When a company seeks funding, they are selling themselves and the investment opportunity that their business represents to the investor.  I’m of the opinion that selling, whether it be ice cream or cars, is always much more effective when you really know your potential “customer” – their needs, their wants, what they look for, hot buttons, turn off’s.  Its no different with VC’s.  It’s a business.  We need to make money, just like you.

So how does it work?

The returns on any investment, is governed by its risk.  The riskier the investment, the higher the returns expected.  Investing in technology startup companies is very risky.  Failure rates of up to 90% are quoted.  VC’s expect and plan for 60-70% of their portfolio companies to fail or limp along.  Similarly, investors in venture funds – the Limited Partners – expect a corresponding higher return than safer investments.  The US ten-year average returns (IRR) on all  venture funds in ~17%.

At this point, the discerning reader has all the information needed to determine every ratio and “rule-of-thumb” that will follow.  But there is need for a great big caveat.  Presented here will be pro forma numbers.  I have never seen, nor heard of any business, investment opportunity or fund that mirrors exactly what is given here.  The exactly numbers and ratios are somewhat interesting, more – much more – importantly are the ideas behind the numbers.  Grasp these, and you’ll be able to apply the principles to any, real-world situation.

Right.  Now that’s out of the way, back to arithmetic.

I’m a fund manager.  I have ten portfolio companies.  Being smart (i.e. I’ve lost money in the past) I’m planning for three of those companies to fail without returning anything, and three or four to “go nowhere”, returning, perhaps, the money that was invested.  That leaves three “winners” in the portfolio to generate all the returns for the limited partners, the “carry” for the General Partners, and to cover the management fees.  That means that each of these “winners” has to return x10 – x15 the investment, to cover the “losers” and the “going nowhere”.

My personal rule of thumb is that an investment needs to return x7 – x10 my investment in 3-5 years.

OK.  Next we need some discussion on how to calculate “return”.  On one hand its very easy to calculate, but the simplicity in calculation, belies an ocean of “art” and “judgment” surrounding it.  If my investment in a company buys me x% of equity, then my return is x% of the exit valuation $y.  At this point, given two variables, it could almost appear that we can plug in whatever values for x and y we like, to come up with our investment multiple.  Not quite.  I look for 20%-25% equity in a company (but, full disclosure here, every investor and VC has there own perspective on this).  Less and you lose “influence”, more and you risk demotivating the founders.  But be very careful here, you’ll hear many times the argument, would you like 80% of $1M business or 20% of a $100M business.

Equity understood.  Check!

What about valuation.  This is where you will need to do your own analysis, based on industry, business model, geography, etc..  In general, the exit valuate is based on a multiple of either revenue or profit.  As an interesting sidebar, in the absence of both – as we experience in 1999 – valuation of those dotcom darlings was $1M per developer.  Science?  Nay, magic eight ball.  Over the past 15 years, predominantly in software, I’ve used smaller and smaller multiples.  In the mid-90’s, x5 revenue seemed to fly with trade sales.  Today I use x2, and even that is appearing to be generous.  Exit or investment valuation is 90% art, 10%science and 100% negotiation.  You need to understand this.

OK.  At this point you should be able t answer the last question a VC asks “is this a good deal for me?”  But there is one big variable that will depend upon whether you are looking for investment from a $1B fund or a $10M fund.  That is scale and bandwidth.  An individual VC can only adequately manage a handful, or two, of portfolio companies.  If there are n VC’s in a $1B fund, then the average deal size is likely ($1B/10n)*.60 (where 60% is ration of funds invested initially).  Calculate that out.  Perhaps their sweet spot if $5M – and likely you can find this on the home page of their website.  So now you have a very simple litmus test.

With a $5M investment (ignoring followon money), a 25% equity position, and an exit value of x2 revenue – the revenue in year 5 should be at least $100M.

Big gulp!!!

Part 2 will go into the first three things a VC looks for in an investment opportunity; a big market, a hot product, and a team that can deliver.

Microsoft, who we partner with through their Bizspark programme, had sent us some software as sponsorship (Office Ultimate 2007, Windows 7 Release Candidate, Windows Vista Ultimate, Halo3 for Xbox 360 & PGR4 for xbox 360).

We also have a few books written by Nora Klaver who recently gave a presentation during the Limerick Open Coffee Club. The book is titled “Mayday, asking for help in times of need“. Nora has given me 2 copies of her book to give away.

So how can you win?

Simple; leave a comment below illustrating a recent business “success story”. Something that happened to you recently or that you have heard about that will show us that it’s not all doom and gloom. This could be from securing a great order to how you using social media has benefited you in your business. No restrictions, no holds barred. Give it to me the way you experienced it!

As I have several prizes I will choose one winning comment every day this week, however I “demand” at least 5 comments per day before I will draw a winner. This so there will be no winner by default.

That’s it, get writing!

I threw the names of all people who attended in a hat this morning and had an independent person pull out one name.

And the winner is: Sian Maloney from Gifts & Vouchers!

Sian, congratulations and the voucher will be posted out to you.