Investment-management

Gerald A. Benjamin and Joel Margulis tell the current or prospective angel or early-stage investor how to best judge pre-IPO investments. They emphasize matching investors with the right entrepreneurs to create an effective team in which the investor not only provides the seed or early-stage capital but also contributes good advice and contacts. Besides discussing effective strategies, the book includes an extensive directory of top venture forums, angel organizations, publications and Web sites. In addition, any investor will benefit from the thorough rundown of due-diligence points that the authors recommend. While the book is targeted at prospective investors, we [...] encourage entrepreneurs with start-up companies to use it as a productive guide to making more effective funding pitches, although the companion book for entrepreneurs would probably be more helpful. One caveat: Some ideas are repeated - even with similar wording - from chapter to chapter. But overall this is a solid book, even though the free flows of money it evokes have been arrested somewhat lately.

It was the sub-title and a review I read (not on Amazon) that intrigued me to want to read this book. The book did not deliver on my expectations. I still walked away at the end saying, "So what?" It didn't seem that any particular premise had either been introduced or supported in a way that would make it 'applicable' -- so that you would have dropped the book several times during reading to run off and try a concept or two.

The most disappointing was the obvious 'filter' the author makes the reader look through because of his financial background as a CFO. And (someone please correct me on this if you can...I'm open for debate) I was most bothered by a premise that the entire book rested on. Where the concept of the efficiency of free markets was aligned to financial markets, including the stock market! I don't recall that association ever being a valid one when I was in business school.

As a microeconomist might take a theory of rational expectations and attempt to explain firm behaviour, McComish takes some basic elements of human nature and attempts to explain why firm behaviour might not be so rational after all.

Filled with amusing anecdotes and tales from the front line the book touches on an array of economic, political and psychological disciplines in a lighthearted way that encourages the reader to occasionally wear the hat of a cynic and question the norm.

Any manager who has spent time battling the inner workings of a large organisation, rationalising decisions post the event, arguing over cost allocations, arbitraging performance measurement mechanisms and so fourth will find the book both amusing and ringing frightfully true.

This book could easily have been cut by 100 pages or more without losing any information. The author says the same thing over and over and over and over again, almost as if he was being paid by the page (or trying to justify the high price with a thicker book). I did learn from it, but was annoyed skimming entire sections to simply reread what he's already said five times.

I think anyone interested in investing in private companies or anyone who wants to understand the process of angel investing should read "Angel Financing"

Many wealthy investors are turning to financing small businesses due to the huge potential return. Benjamin and Margulis tell us that the angel investor who put $100,000 into Ciena Corporation saw the value of his investment grow into $285 million in three years, when the company went public. Further, knowledgeable business people can enhance the value of their angel investments through their experience, knowledge, and contacts. Unless you're extremely wealthy, this ability to add value to your investments isn't available when you invest in large publicly-traded companies.

Angel investing isn't for everyone. Benjamin and Margulis say angel investors expect about one-third of their investments to fail completely. Further, many bad deals out there must be avoided. So, anyone considering angel investing should have business experience. And, there must be good chemistry between the investor and the entrepreneur.

To help new investors ask the right questions and avoid bad investments, Benjamin and Margulis provide a detailed due diligence questionnaire which will help investors understand what questions they should ask before making an angel investment.

"Angel Financing" is also a good book for entrepreneurs seeking angel financing. It helps entrepreneurs answer the questions: "Is my company financeable? Am I financeable?" And, "Angel Financing" helps entrepreneurs understand the private equity market.

We learn that the average angel investor is 48-59 years old, has a postgraduate degree, has management experience, and, typically, invests between $25,000 and $250,000 per deal. Many angel investors are self-made millionaires with a net worth between $1 million and $10 million dollars. Eighty percent of angels have previously started a company and have small business experience.

Benjamin and Margulis tell us that seeking private investments from people with a net worth below $1 million, or an annual income below $200,000, isn't usually desirable. These people do not possess the discretionary income to make angel investments and are usually not classified as accredited investors. This could create legal problems for the entrepreneur if the investment fails.

Benjamin and Margulis point out that many of the wealthiest families and individuals have their wealth managed by conservative trusts or professional advisors. So, seeking an angel investment from an ultra-rich person may not prove successful, because the trust administrator often kills the deal because of the high risk involved.

Because angel investors don't need to invest, Benjamin and Margulis tell entrepreneurs to be flexible in structuring the deal to meet the investor's needs. Many entrepreneurs do not listen adequately to what potential investors are telling them.

"Angel Financing" contains a good appendix about private placements, discussing such things as exemptions from full securities registration under Rule 504, 505, and 506, although much of this information is also available free from the SEC.

Benjamin and Margulis say that entrepreneurs should expect to budget about 10% to 15% of the amount to be raised as fundraising expenses. We learn that costs of a SCOR offering average about $30,000 nationwide. (SCOR, Small Corporate Offering Registration, allows companies to raise up to $1 million and is highly state-specific. Some states encourage SCOR while other states are more hostile to it.)

Overall, "Angel Financing" is an excellent book for entrepreneurs and angel investors.

Peter Hupalo, Author of "Thinking Like An Entrepreneur"

There are many books in the marketplace that target different types of entrepreneurs with different types of approaches. Respectively, none of them work unless you are starting a mom-and-pop business. Believe me, I've gone through most of them! I have found that they are either based on a fandango "boilerplate business plan" model or written by beings from outer space, with grand delusions that your idea will rivet the attention of a venture capital firm or an investment banker. Forget it, those days are gone.

If you are serious about finding and raising private equity for your start-up company, this book will give you plenty of facts, stories and anecdotes. Angel Financing will also give you the methods and processes to get it done properly.

Promote your idea into a practical one. This book is pure common sense. Write a business plan to attract financing. The blueprint for operating your company is the next step. Look around and discover that Gerald Benjamin is a pioneer in this field and his views about how to raise private equity is gaining a foothold and turning heads. Recently, I attended one of his seminars and the people sitting next to me were simply top-caliber entrepreneurs.

There are very few companies that will ever make it to the public equity markets. For example, many large companies such as SAIC (headquartered in San Diego) are employee-owned. Just look at the facts presented in his book and reconsider your options, especially if you would like to retain control of your start-up.

There is one suggestion. Carefully review all the how-to-do a business plan material out there. Make sure it is suitable for your exact needs

Good luck!

Can't say enough good things. Funny, insightful, loaded with expertise, a how-to for the rest of us. Thanks!

This book is a fantastic resource and is truly a must for every business, organization or club. If you ever wanted to know how to motivate and excite your employees, co-workers, members, or anyone else in a positive way without laying on the cash...this book has the answer!