Author Archives: steve

Celebrating America’s Work Ethic

Thanksgiving is a celebration, but sometimes we forget that the first Thanksgiving was the result of overcoming hardship and collaborating with others toward a similar goal.

The reason the Pilgrims and Native Americans had such a large feast was due to the celebration of the end of preparation for the harsh New England winter to come. Similar for companies, celebration comes AFTER the hard work. Successful businesses combine grit and preparation in order to survive, the same qualities the Pilgrims needed to prepare for winter.

Celebration of Ants

Preparing for winter is a fitting metaphor for growing companies. You may remember an old Aesop’s tale called The Ant and the Grasshopper. While the grasshopper spent the entire summer singing and frolicking about, the ants worked hard to prepare for the bitter winter to come. Much like the Thanksgiving originators, the ants were able to celebrate before winter began as it meant survival. Meanwhile, the end of November meant death for the once happy grasshopper. A outcome sure to meet young companies who fail to put in the hard work.

Collaborating with Native Americans

The Pilgrims could not survive without the help of Native Americans. Being survival experts who knew the scope of the land, the Native Americans taught the Pilgrims everything they knew and provided them with invaluable capital. Today, companies need leadership experts, technology whizzes, sales savants, operations gurus and marketing specialists in order to survive. With a solid team in place, young companies have a shot at survival as they weather through the bounty of obstacles ahead.

I share these two anecdotes to stress the timing of celebration. Celebration should be saved for the success and success takes perseverance and determination. More and more, we see companies celebrating at the deposit of the first investor, but the true celebration shouldn’t come until profit is made. Like the Pilgrims and the ants, it is wise to work hard now to reap the benefits later.

-Steve Hogan, Managing Partner, Tech-Rx

Zombies On the Rise!

Halloween is here and the zombies are afoot! In fact, zombie companies are more common than you would ever imagine. Contrary to what you may believe, zombie companies aren’t just dead, non-producing leeches that suck the life out of their investors. They are very often simply challenged companies with a lot of potential. In fact, zombie companies usually have a compelling product and qualified team members.

So what makes them zombies? Zombie companies simply cannot grow without outside investment.  They are probably missing some essential talent and are unable to hire without investment. It is very typical in this situation that the investor makes the decision not to supply additional funding, thus pulling the plug on the company. While technically still “living” while they are able to function, they are unable to grow – in the business world, this is the equivalent of the living dead

What are symptoms of a zombie company?

Compelling product: Most of the time, zombie companies have a compelling product. It is what is keeping them alive! If not, they would most likely be a dead company.

Effective management team members: If the product is compelling, the team has to be somewhat effective. However, chances are the team is lacking in some way. Otherwise, they would have never become a zombie company in the first place.

Lack of momentum: If a company is lacking in momentum, chances are they are a zombie. Any signs of stagnation and you should consult with a zombie whisperer to prevent a disaster.

So now you know what a zombie company looks like, but what can be done to save these zombie companies? (Hint: it takes a little more than an injection of capital.) In our next blog, we will talk about the approaches we have taken to bring the dead back to life.

Stay tuned!

-Steve Hogan, Managing Partner, Tech-Rx

 

New and Improved Investor Network Membership Services

Going online has never felt better! Our Investor Network Membership Services have migrated to an online platform for the convenience of our Investor Network members.

Through the new site, Tech-Rx Investor Network members can view companies under evaluation, companies open for investment, opportunities declined, and other opportunities

Companies Open for Investment

Especially interesting is the  section of companies open for investment. These companies have been fully evaluated and are currently offering securities for sale. We include the company’s Private Offering Memorandum, our opinion of the company and other information that you may find valuable and make it available to you here on a confidential basis.

Investor Network Sign-Up

Interested in joining the Tech-Rx Investor Network? Well now you easily can because the sign-up and authentification process is online. New members can view investment opportunities shortly after they sign up.

Other Investment Opportunities

Oftentimes we come across interesting investment opportunities but are just not candidates for Tech-Rx. Here is where you will find these companies! Of course, if you are interested in investing in any of these companies, you must contact them directly. We would also like to note that Tech-Rx does not perform any type of due diligence on these companies and does not endorse them.

As the exclusive section of our website continues to grow, we look forward to enabling you to better make better investments.

-Steve Hogan, Managing Partner, Tech-Rx

Angel Groups Syndicate 3 Out of Every 4 Deals

The Angel Resource Institute (ARI), Silicon Valley Bank (SVB) and CB Insights released the Q2 2013 Halo Report last week. Results from the report pointed to the successful syndication of angel investments. You can learn more about this year’s investing trends and download the full report here. Halo-Report-2013_Q1-_Infographic 2013_Q2 _Infographic_Halo Report _final copy Retrieved from http://www.angelresourceinstitute.org/en/Research/Halo-Report.aspx.  

15% is Bigger than Zero

We are big fans of bootstrapping here at Tech-Rx! Not only does it allow you to maintain direction for your company and focus on the product, but it delays the need for outside investors as long as possible. Every time you trade cash for company equity, you are decreasing your amount of ownership in the company you built from the ground up. But at one point you are going to need outside funding if you are planning to grow (unless you have a hefty inheritance in your back pocket). Continue reading

No on General Solicitation

Eight days ago, the fundraising scene was changed when the ban on general solicitation was lifted. For the first time in eighty years, small businesses can now raise funds publicly. Under the new 506c rule, companies who file Form D with the SEC can solicit to the general public. However, no one is restricted to filing Form D if they want to raise money. There is the option of doing it the old fashion way!

Here at Tech-Rx, we are sticking to our time-tested and trusted 506b. There are several reasons we are not jumping the boat, the chief reason being that the alternative is quite onerous. Our first turn-off with Title II of the JOBS Act is that companies are required to take dramatic steps to verify investor accreditation. Investors in 506c deals will need to provide private documents such as tax returns or broker forms to companies they are interested in supporting in order to prove their accredited investor status. I don’t know about you but I try not to make it a habit to release such private information, especially with no guarantee of privacy.  (Does anyone else smell unwarranted government intrusion into personal matters?)

Our second turnoff is from the standpoint of the company. Companies are required to submit details to the SEC 15 days prior to general solicitation. Do you know anyone who has their presentation materials ready two weeks in advance? It is unheard of!

Lastly, failure to follow strict protocol will result in a one year ban from fundraising. In other words, certain death. A year is a long time in the early stages of a company and a year without funding is even longer.

Amidst all of the craziness of the new rules of engagement, we want to assure you that Tech-Rx is sticking to the traditional methods of fundraising through our accredited investor network.

What are your thoughts on general solicitation? Have you ran across any issues with the new rules?

-Steve Hogan, Managing Partner, Tech-Rx