Your Debt ChecklistWritten by Dave Williams
A Debt Checklist is only sensible way to organize and control your finances. Most people aren't actually aware quite how much debt they possess - in fact, a recent survey found that almost 75% of UK adults were up to £5000 out when asked to estimate their non-mortgage debt. They weren't much better when asked to produce a cashflow statement showing how their hard earned cash was being spent each month! A Debt Checklist is a plan you can use to get a grip on your finances, and will allow you to understand in black and white, where savings can be made, and how debt can be tackled most effectively.Obviously, you will have a savings account. If you DON'T, go open one now. Choose a large, reputable bank or loan company so you won't have any problems getting access to your funds when you need them. Secondly, you need to cut back on your credit card spending. Credit card companies do everything they can to encourage you to spend, and even more to try and cajole you into only paying off minimum each month, making credit cards MOST expensive way to borrow money you are ever likely to come across. If you find yourself paying for 'small' items with a credit card, you are asking for trouble. Not only will you be that annoying person in front of grocery queue at Walmart paying by card, but you will also rapidly lose ANY idea of what you have spent, and where. Debit cards are SLIGHTLY better than credit cards for these small purchases, but not much - you will still face a terrible temptation to spend more (up to 50% more than paying by cash, if recent surveys are to be believed!)
| | Venture Leasing: Startup Financing On the RiseWritten by George A. Parker
According to Pricewaterhouse Coopers, investment by institutional venture capitalists in startups grew from less than $3.0 billion at beginning of 1990’s to over $106 billion in 2000. Although venture capital volume has retreated significantly since economic “bubble” years of late 1990’s, present volume of around $ 19 billion per year still represents a substantial rate of growth. Venture capitalists will fund more than 2,500 high growth startups in U.S. this year. The growth in venture capital investing has given rise to a relatively new and expanding area of equipment leasing known as ‘venture leasing’. Exactly what is venture leasing and what has fueled its growth since early 1990’s? Why has venture leasing become so attractive to venture capital-backed startups? To find answers, one must look at several important developments that have bolstered growth of this important equipment leasing segment.The term venture leasing describes equipment financing provided by equipment leasing firms to pre-profit, early stage companies funded by venture capital investors. These startups, like most growing businesses, need computers, networking equipment, furniture, telephone equipment, and equipment for production and R&D. They rely on outside investor support until they prove their business models or achieve profitability. Fueling growth in venture leasing is a combination of several factors, including: renewed economic expansion, improvement in IPO market, abundant entrepreneurial talent, promising new technologies, and government policies favoring venture capital formation. In this environment, venture investors have formed a sizeable pool of venture capital to launch and support development of many new technologies and business concepts. Additionally, an array of services is now available to support development of startups and to promote their growth. CPA firms, banks, attorneys, investment banks, consultants, lessors, and even search firms have committed significant resources to this emerging market segment. Where does equipment leasing fit into venture financing mix? The relatively high cost of venture capital versus venture leasing tells story. Financing new ventures is a high risk proposition. To compensate venture capitalists for this risk, they generally require a sizeable equity stake in companies they finance. They typically seek investment returns of at least 35% on their investments over five to seven years. Their return is achieved via an IPO or other sale of their equity stake. 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. Appreciating 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. Additional advantages to startup of venture leasing include traditional leasing strong points --- conservation of cash for working capital, management of cash flow, flexibility, and serving as a supplement to other available capital. What makes a ‘good’ venture lease transaction? Venture lessors look at several factors. Two of main ingredients of a successful new venture are caliber of its management team and quality of its venture capital sponsors. In many cases two groups seem to find one another. A good management team has usually demonstrated prior successes in field in which new venture is active. Additionally, they must have experience in key business functions—sales, marketing, R&D, production, engineering, and finance. Although there are many venture capitalists financing new ventures, there can be a significant difference in their abilities, staying power, and resources. The better venture capitalists have successful track records and direct experience with type of companies they financed. The best VCs have industry specialization and many are staffed by individuals with direct operating experience within industries they finance. The amount of capital a venture capitalist allocates to startup for future rounds is also important. An otherwise good VC group that has exhausted its allocated funding can be problematic.
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