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What's Happening at Venture Architects
who we are talking to
Why did you create Golden Seeds?
I started Golden Seeds in 2004, after a career in financial services caused me to envisage how different the world would be if we had more women at the top, owning and running businesses, and thereby creating corporate cultures where women could not just survive, but thrive. I was shocked to learn that women entrepreneurs have historically received only 2.4% of venture capital investment dollars. There is now plenty of research indicating that companies with a higher proportion of women in senior management and at the board level have higher returns on equity (including a 2007 study from Catalyst, and a 2008 study by McKinsey). Additionally, a recent report called Women in Fund Management by The National Council for Research on Women, researches the opportunity to create a more stable and sustainable financial system by bringing a more balanced representation of women to both the investment and board room table. Today, what we have proven out is that investing in women entrepreneurs is a great investment strategy. We have already achieved some excellent returns (our first investment returned 9X over three years) and are excited about the companies in our portfolio. The women entrepreneurs that we have backed are all extraordinary people and I am proud to be associated with them.

Can you provide some insight about your investors and what types of deals they invest in?

Golden Seeds is a 100+ member organization, with members in New York, Boston, Philadelphia and San Francisco, where we hold monthly forums. Our members are highly accomplished, successful business people - both men and women - who have discovered that angel investing is an extremely rewarding second career. They are cashed-out entrepreneurs, former CEO's, Wall Street analysts and bankers, public company board members, and retired industry executives. Angel investing enables us to remain current and at the cutting edge of innovation in several sectors, the opportunity to work together on a deal team, and to obtain board experience. The best part is you don't have a boss! To date, we have screened 945 companies of which 200 have presented to our Forums and 22 have received funding for a total of $12mm invested. Our portfolio encompasses software, hardware, health care, consumer goods, and media. Golden Seeds invests in women-run and/or women-founded companies in which the woman has significant equity and holds a C-level position. Our target companies are high growth and beyond proof of concept, with an addressable market of $1B. We seek investment opportunities that have a pre-money valuation of typically less than $5M and are capital efficient investments with a clear exit strategy.

What advice do you have for entrepreneurs who are pitching to investors?
First, know your audience and find out what they are looking for. Utilize any resource possible to target the pitch to your investor audience. It goes without saying that you should be able to speak to any and all aspects of your business, especially the financials. Remember, you are speaking to investors and they want to know that their investment will be in financially disciplined and focused hands. Also, know your competition. There is a good chance that the investors have seen competitors in your market. You want to convey to them why you have a better mousetrap. Finally, speak clearly, slowly, succinctly, and confidently. At this stage, investors are betting on the entrepreneur as much as the idea. You want to stand out as someone with whom investors want to align their investment dollars.
What we are advising

It was no surprise to us when multiple members of our circle forwarded an article entitled Investors Pay Business Plans Little Heed, Study Finds from a May issue of The New York Times. The surprise to many of these friends however, was that we agreed with the article's main premise: business plans are not the main event in the process of raising capital.

Serious investors are interested in hard evidence, smart management with track records of success, proven products/services, revenue from real clients, and large market opportunities - not words on a page. However, as the article eventually pointed out, entrepreneurs benefit greatly from a good business planning exercise that forces them to think objectively about their business and identify red flags and inconsistencies that investors are sure to uncover during the pitch. Even more importantly, good business planning helps entrepreneurs explain their business from the investor's perspective. This is absolutely critical and surprisingly difficult for unseasoned entrepreneurs.

Everything flows from a basic strategic plan. You need to have one. But the secret is keeping it really simple at the start and then being prepared to evolve it quickly once the market starts talking to you. So while it's true that busy investors don't want to read a 50-page-adjective-laden-creative-writing-puff-piece, your ability to get funding may still depend on the effort that goes into writing a smart plan. And when investors do ask you for it - and you can bet that most of them will - it better be good.

Study other winners and champions to learn how they mastered their skills such as the six-part guest author series in TechCrunch called The Song of the PowerSquid: The Inside Story of the Life of an Invention. Essentially, it's a voyeuristic look at one person's quest to turn an idea into a reality. In this case the idea is a cephalopod-inspired power strip with outlets situated at the end of short cords to eliminate the problem of losing outlets to bulky transformer plugs. For the latest in TechCrunch's guest author series, check out From Nothing To Something. How To Get There written by Meebo CEO Seth Sternberg about the decisions a young entrepreneur needs to make when she/he is first starting a business. Both are easy-to-read entrepreneurial sagas rife with lessons to be learned.

If you are in the process of developing a marketing strategy for your company, this article shouldn't be missed: Media & Internet: How Teenagers Consume Media. Written by a 15-year old summer intern and published by Morgan Stanley Research Europe, we heard about it when a friend forwarded a Financial Times article about the sensation it caused. Thanks Milton!

What we are reading

In a world of modern, involved, caring parents, why are so many kids aggressive and cruel? Where is intelligence hidden in the brain, and why does that matter? If 98% of kids think lying is morally wrong, then why do 98% of kids lie? What's the single most important thing that helps infants learn language? NurtureShock: New Thinking About Children is a collaboration between award-winning science journalists Po Bronson and Ashley Merryman. They argue that when it comes to children, we've mistaken good intentions for good ideas. They demonstrate that many of modern society's strategies for nurturing children are in fact backfiring because key twists in the science have been overlooked. Nothing like a parenting manual, this book explores themes and issues that transcend the struggles of individual parents and children. However, don't look for conclusions tied up nicely with a big bow. The authors present their findings with impeccable storytelling and let you decide for yourself.
What our clients have to offer

Are you kissable? eatwhatever has defined a new space in the breath freshening market as the only two-step solution to fresh breath - providing both long lasting fresh breath (in the form of a gel cap) and instant freshness (in the form of a mint). Made in the USA with only premium ingredients, it is vegan, gluten-free, sugar-free, and contains organic oils. eatwhatever has attracted attention from, The New York Post, and Fox Business as well as celebrities such as Zooey Deschanel and stylist Carson Kressley.

Friends of Venture Architects will receive 15% off your order when you enter "FRESH" as the coupon code at checkout. This offer is valid for 30 days from the date of this newsletter.
What our clients are accomplishing

Congratulations to Blue Dasher Technologies for beginning to integrate Dasher Virtual Drive within My Florida Regional MLS, one of the nation's largest multiple listing services for over 30,000 real estate agents in the central part of Florida. An addictive tool, Blue Dasher is a leading provider of high quality, geo-coded, street-level panoramic images of major U.S. population centers, which it licenses to third-party providers of commercial, industrial, government, and consumer applications. Blue Dasher's patented image and viewing technology delivers exact address matching and high-density photography that enables a realistic street drive. These features enable buildings and properties to be pinpointed for increased efficiency and permit true-to-life tours of residential and commercial areas from a user's PC. Licensees have the ability to embed, within the images, detailed information such as multimedia, property data, or advertising into specific points within a geographic area.

HerCut launched its line of hair care products at Fred Segal Studio Beauty Mix in Los Angeles last month. The first week of sales exceeded expectations in every way, including almost tripling sales targets. HerCut has also reached an agreement with leading beauty retailer Sephora to begin rolling out its products on beginning in October 2009. Its products will then begin appearing in all US Sephora stores in February 2010, and in Canadian Sephora stores shortly thereafter. Emmy Award winner Kyan Douglas, best known as the "Grooming Guru" from Queer Eye for the Straight Guy, has signed on as exclusive HerCut Brand Ambassador. Until now, the world of hair care has only been about hair types and styles. HerCut is the first-ever hair brand to deliver "Hair Care for Your Haircut." HerCut boldly changes the paradigm and creates an entirely new category with products that focus on enhancing specific haircuts and their performance. HerCut's patent-pending Catalysts(TM) optimize the desired behavior of five basic haircut types - The Bob, The Blunt, The Shag, The Long Layers, and The Pixie. In addition, HerCut focuses shampoo on the haircut with cleansing that strengthens the roots, as well as conditioner that improves elasticity to deliver any haircut's intended shape. Packaged according to persona, all products retail from $22.00 - $28.00.

Developed by a board-certified plastic surgeon in response to patient and especially physicians' frustrations with existing dermatological solutions, Scarguard Labs' breakthrough scar treatment system has been cited in four clinical studies and praised by countless doctors and nurses affiliated with the most reputable medical institutions. Scarguard Labs' OTC business includes Scarguard MD, the #2 branded scar treatment product sold in pharmacies and supermarkets throughout the country, as well as eight products in various stages of development, sales and distribution. In May 2009, Scarguard MD broke into mass market sales with its release in all 1,685 Target stores nationwide. The company also has developed several patented prescription drugs, two of which are going through the FDA approval process.

What we care about

Your old cell phones could be growing leaves instead of collecting dust. Flipswap is a mobile trade-in and recycling company that estimates each item's worth based on its condition and the current market demand. Focused almost entirely on cell phone handsets, Flipswap will either pay you for the device or they'll recycle it for free (pre-paid envelope included) and plant a tree in your name. Since 2005, Flipswap has turned over more than 730,000 handsets. Add yours.

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