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What's Happening at Venture Architects
who we are talking to
Do you believe that 2009 is a good year to start a new company?
2009 is likely to be a good year to start a company, as long as you don't confuse good with easy. Existing companies are focusing on their core businesses and many are cutting back on investing in new products or services. That creates openings for new startups. Great companies, including GE and FedEx, were started during recessions. But you need to be super scrappy and prepared to tough it out for a while. The spoils will go to those who stay lean and address a real need.

What would you advise an entrepreneur who is trying to raise early stage capital this year?
Capital efficiency and de-risking are more important than ever. Focus on what the major milestones are that will let you and the investors know that you are actually making progress and how you will achieve these milestones with as little capital as possible. Investors' belief in your ability will go up tremendously if you have shown progress with seed financing or bootstrapping. Conversely, if by chance you are offered more money than you think you need, it's probably a good idea to take it, even if that means a little more dilution.

Will you be making new investments in 2009?
Absolutely. We continue to focus on finding opportunities that are truly disruptive. We always ask ourselves whether a given company is just using the web to make slight improvements on something that already exists, or whether this simply could not exist without the web. We are only really interested in the latter. In addition, we look for defensibility not from technology but from a network effect or from a data asset that builds up over time. We care more about these kinds of characteristics and capital efficiency than we do about being in a specific vertical.
What we are advising
In mid-December, the National Venture Capital Association (NVCA) released its Annual Survey Forecast for 2009, which includes the predictions of more than 400 venture capitalists from across the United States. Interestingly, the survey did not report that investors will be sitting on the sidelines. Instead, most plan to continue funding, but in smaller traunches. While the survey obviously predicts a "difficult" year in 2009 with 92% of venture capitalists surveyed predicting a slowing of venture investment in 2009 vs. 2008, more than half (53%) of VC executives predict that they will invest in the same number portfolio companies in the coming year, if not more.

NVCA President Mark Heesen stated, "The recession and shuttered IPO market will place tremendous pressure on portfolio companies to tighten their belts and re-tool where necessary. We will likely see a marked slowdown of new investments as venture capitalists turn their attention to supporting these existing companies. That said, most venture capitalists will say that a down market is the best time to invest when valuations and competition are lower. There is no recession on innovation and great ideas will still get funded - especially in sectors that have more insulated demand such as clean technology and life sciences." We concur!
Get control of what's controllable. First, reduce costs selectively - no need to use the "spray and pray" approach. Next, if you need to cut costs by 10%, go deeper by 15% or even 20%. Then use those extra savings to double-down on critical initiatives that will help you stand apart from your competitors. Try to look past the current crisis and focus on where you will need to be when the market swings back.

We are seeing a lot of penny wise and pound foolish moves lately, but this is not the time to use out-of-date marketing materials. To stay competitive, you need to look sharper than ever and boast about your accomplishments even louder. Focus your cost-consciousness on choosing a creative design team (shameless plug, but we have one) who can design smart and suggest ways to save money on printing. For example, use standard formats for printed materials and print multiple pieces at the same time in order to negotiate lower production costs.
What we are reading
The Snowball
Whether you want some inspiration during the dark days of the Madoffathon or just need to build up your biceps, The Snowball: Warren Buffett and the Business of Life is a winner. A whopping 838 pages - 960 when you include footnotes - the remarkable story of a remarkable man is well worth the heavy lifting. And if you like biographies and enjoy this one, make sure to read Katherine Graham: Personal History, also a fascinating read that includes Graham's unique perspective on her friend Warren Buffet and his influence on her business decisions.
What our clients have to offer
Jennifer's Homemade
Jennifer's Homemade was born out of a passion for baking. The foundation of Jennifer's Homemade is delicious biscotti, breadsticks and flatbread made from scratch. The vanilla is pure, the chocolate is gourmet and the rosemary is fresh. A portion of all proceeds is donated to help end world hunger through Daily Bread Food Bank, a partner of America's Second Harvest. Jennifer's Homemade has been featured in Food & Wine, and Gourmet Magazine, The New York Times, The Big Idea with Donny Deutsch, The Situation Room with Wolf Blitzer, National Public Radio, and American Express OPEN small business print advertising campaign - and Jennifer has baked with Martha Stewart on The Martha Stewart Show. Jennifer's Homemade is sold at approximately 100 Whole Foods stores across the country in addition to other grocery and specialty stores.

Friends of Venture Architects will receive a 10% discount off everything at Jennifer's Homemade when you enter "venture" as the coupon code. Everything is absolutely delicious but our favorite is the rosemary breadsticks!
What our clients are accomplishing
Our client, Dr. Robert Melillo, Founder of BrainBalance Centers recently released Disconnected Kids: The Groundbreaking Brain Balance Program for Children with Autism, ADHD, Dyslexia, and Other Neurological Disorders. Since 1998, nearly 1,000 children have completed the Brain Balance program. Written in an accessible style, Dr. Melillo shows parents how to use this drug-free approach at home, with customizable exercises for physical, sensory, and academic performance, advice for behavior modification, information on foods to avoid, and a follow-up program for lasting results. As one reader wrote on Amazon, "Run, don't walk to get this book, particularly if you are a parent or a professional who deals with children with developmental delays!" Alternatively, parents can now visit one of nine Brain Balance Centers across the country.

IndustryConnect officially launched their new B2B e-Media platform at the annual International Association of Exhibitions and Events (IAEE) Expo! Expo! in Miami, Florida last month.  The technology will provide the trade show industry with an effective web-based tool to keep attendees and exhibitors connected 24/7/365 while creating a significant new revenue stream for show organizers. At the launch, Mark Stevens of International Exposition Company said, "IndustryConnect's new technology may very well be the online strategy that will revolutionize the trade show industry."

The current economic crisis has led to one of the toughest tuition collection environments ever for private K-12 schools at a time when market downturns have hammered the endowments that fund much of the available financial aid. As a result, SmartTuition, a tuition management company, has experienced a record number of inquires about its service over the past 90 days. On January 11th, an Associated Press story referencing SmartTuition was carried in over 800 newspapers nationwide, including USA Today, Washington Post, Minneapolis Star-Tribune, Houston Chronicle, and Crain's New York. Also, SmartTuition was recently selected as the single-source tuition provider by the Catholic Dioceses of Orlando and Paterson.
What we care about
Yes Pecan!
We care about ice cream - especially when it's combined with a smart, worthwhile cause marketing campaign! If you indulge in Ben & Jerry's new "Yes Pecan" flavor (amber waves of buttery ice cream with roasted non-partisan pecans) at their Scoop Shops during the month of January, they will donate the proceeds to the Common Cause Education Fund. Common Cause is a nonpartisan, nonprofit advocacy organization founded as a vehicle for citizens to make their voices heard in the political process. Their Education Fund conducts research, education, and outreach activities. The calories don't count if it's for a good cause!
Venture Architects, LLC positions private companies for success in the capital-raising process through the development of business plans, financial projections, and investor presentations. We help our clients to plan, operate and communicate. Since 1998, Venture Architects has worked across a wide variety of industries with over 400 early and growth-stage companies, which have raised approximately $450 million in investment capital.