How Venture Leasing Added Millions To A Startup’s Equity Value Written by George A. Parker
Craig Berman beamed noticeably after completing his board presentation. Berman, CEO of a startup that develops nanotechnology applications for defense industry, had just closed a $ 20 million equity round. Berman finalized round at an equity valuation that made whole board blush. Only six months earlier, Berman’s team faced a daunting technical delay that set company back three months. With only four months of cash remaining from a previous equity round, delay would cause Berman’s company to burn cash faster and to fall short of an important benchmark. The prospect of raising additional equity earlier than expected and at a much lower valuation than anticipated was a chilling thought for Berman and his board. Just as things appeared to be headed downhill, company’s CFO broached idea of obtaining $ 1.5 million in venture leasing. Roughly $ 600,000 of this financing would be used to finance existing equipment. The balance could be used for upcoming acquisitions of computer workstations, servers, software, and test equipment. A colleague had introduced Jamal Waitley, company’s CFO, to Jerry Sprole. Sprole heads Connecticut-based, Leasing Technologies International, a leasing firm specializing in equipment financing for venture capital-backed startups and emerging growth companies. It took Waitley less than a month to get financing in place. Cash from selling and leasing back existing equipment along with a leasing line to add new equipment allowed Berman’s firm to operate three extra months without additional equity. When firm finally completed its $ 20 million equity round, pre-money valuation was at least $ 5 million more than it would have been otherwise. Venture leasing had literally created millions of dollars for Berman’s shareholders. Like Berman’s firm, a growing number of venture capital-backed startups are taking advantage of venture leasing to build equity value faster and to expand infrastructure. What is venture leasing and why has it become so attractive to venture capital-backed startups? How are savvy entrepreneurs using venture leasing to increase shareholder value? To find answers, one must take a closer look at this important financing source for venture capital-backed startups. The term venture leasing describes equipment financing provided by equipment leasing firms to pre-profit, early stage companies funded by venture capital investors. Like Berman’s firm, these startups need business essentials like computers, networking equipment, software, and equipment for production and R&D. These firms generally rely on outside investor support until they prove their business models or achieve profitability. Where does venture leasing fit into venture financing mix? The relatively high cost of venture capital compared to venture leasing tells story. To compensate venture capitalists for risk they take, they generally receive sizeable equity stakes in companies they finance. They typically seek investment returns of at least 35% on their investments over five to seven years. Their returns are achieved via an IPO or other sale of their equity stakes. In comparison, venture lessors seek a return in 15% – 22% range. These transactions amortize in two to four years and are secured by underlying equipment. Although risk to venture lessors is also high, venture lessors mitigate risk by having a security interest in leased equipment and structuring transactions that amortize. Taking advantage of obvious cost advantage of venture leasing over venture capital, startup companies have turned to venture leasing as a significant source of funding to support their growth and to build equity value faster. Additional advantages to startups of venture leasing include traditional leasing strong points --- conservation of cash for working capital, management of cash flow, flexibility, management of equipment obsolescence, and serving as a supplement to other available capital.
| | How to Avoid Credit Card Late FeesWritten by Daryl Flagg
Everyone hates late fees and being late will cost you dearly these days. For some credit cards today, if you are late, you will have to shell out as much as $40 each time. This can put a nice sized hole in your pocket really quick.Below, I will provide you with some tips and strategies on how to steer clear of those monstrous late fees. This will not only save you a lot of money in long run, but it will also keep those money-hungry credit card companies, I won’t mention any names, from getting your hard earned money. Just pay your bill. One of easiest ways of avoiding a late fee is to just pay your bill each and every month by sending in a check, money order, or other type of payment to your respective credit card issuer. Just make sure you follow numerous guidelines, which are usually outlined on back of each credit card bill, on how to send in your payment. These guidelines must be followed precisely if you want to guarantee that your payment will go through on time. Payment guidelines may include everything from a specific payment address to time of day by which payment must be received to be credited that day. Many issuers also stipulate that payments must arrive in preprinted envelope sent to customer. While Fair Credit Billing Act requires issuers to credit payments day they are received, each issuer is allowed to set specific payment guidelines. If any of guidelines are not met, issuer can take as many as five days to credit payment. An on-time payment could easily become late during that five-day period, so follow those payment guidelines carefully. Just skip payment. One of more rare types of methods you hear of are Skip-A-Payment services. You can use these services to skip mortgage, credit card, or loan payments. Usually you would need to get in contact with your bank just to see if you even qualify or not. There are also independent companies out there that will allow you to do same thing, no matter what bank you are a member of. Depending on whose service you use, fee’s associated with it vary. When you use these types of services make sure you know how much you will be charged then decide if it’s worth it or not. Pay minimum due immediately. One of best ways to prevent a late fee from being charged to your account is to pay minimum due immediately. As soon as you receive your bill, send in minimum due. This will always insure that your credit card issuer received payment. You can always send in more money later if you decide otherwise. This is a great way to avoid missing a payment because if you forget to send extra money you can guarantee that you won’t be charged a late fee because minimum due has been already been paid.
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