Getting Funded

By Ryan Gorman, Senior Manager at Wolf & Company, P.C.

‘Tis the season to be jolly, right? The holidays are fast approaching and with it comes an overload of food, family, friends and fun… at least for most people. For a few too many of us in the start-up world, the Holidays are just a reminder of the Grinch counting down the days until yearend close and your yearend audit. If you’re reading this post, you most likely know all too well the stresses associated with yearend. Here are a few tips from TCN sponsor Wolf & Company P.C. to ease your anxiety as yearend approaches:

Be proactive
Last minute Holiday shopper? Don’t be! Get your information request list from your audit team as soon as possible. It’s better to prepare ahead then cram it all in the night before. Keep in mind that many of the items on the information request list can be prepared well ahead of time. Also, ensure your accountants are aware of any significant transactions during the year or any significant changes to your business.

Dust off last year’s management letter
Last year you may have received a holiday gift from your accountants… an internal control deficiency letter! Much like the sweater your crazy Aunt Elma gave you; it went into the bottom drawer and hasn’t been seen since. Well, it’s time to open that bottom drawer, dust off the letter and get moving. Address each of those items before the end of the year to avoid any repeat comments. Call your accountants for ideas on best practices for implementation. Addressing those comments now will make you look like a hero later (unless of course you’re wearing Aunt Elma’s sweater).

Anticipate pain points
Getting scrutinized doesn’t just happen around the dinner table. Avoiding scrutiny from your family and friends is about as easy as avoiding scrutiny during your yearend audit. Anticipating these areas is one way to ensure you are prepared. Focus in on areas of significant judgment and estimates. Review your allowance for doubtful accounts based on your current receivable portfolio. Review for the necessity of any inventory reserves for items selling at a loss, damaged goods or slow-moving items. If you have significant goodwill or intangible assets, review your projections for next year and ensure they are reasonable and achievable.

Avoid last minute surprises
Surprise…. The in-laws dropped in for an extended visit. Fantastic! As much as we want to help our clients out, you are on your own on that one. What we can help you with is to avoid any last minute audit surprises. Is there any new accounting guidance that impacts your organization? Call your accountants and discuss it with them before yearend. Do you have to comply with any debt covenants? If so, perform preliminary calculations to know whether you are in compliance. Do you have any new reporting requirements or deadlines? Review all new agreements and provide copies to your accountants. Now is the time to take a look at these areas to avoid the headaches down the road.

The Capital Network and Wolf & Co want to wish you a happy holiday season full of cheer, and not fear! If you’d like to hear more ideas on how to make your yearend audit less fearful, contact Wolf & Co, a long-time TCN sponsor and high quality accounting firm.

Wolf & Co. Technology Services Team:
Scott Goodwin: 617-428-5407
Ryan Gorman: 617-428-5482

Over 130 women (and a few men) attended last week’s second annual TCN Women’s Entrepreneurship Breakfast to discuss how to increase the success of entrepreneurial women in high growth startups.

Janet Kraus, Co-Founder and CEO of Spire and Entrepreneur-in-Residence at Harvard, proved to be an engaging and insightful moderator of the panel, which featured Diane Hessan, President and CEO of Communispace, and Rudina Seseri, Principal at Fairhaven Capital.

We know that women are launching high growth startups more than ever. Yet even in Boston, an entrepreneurial hot bed, companies lead by women don’t seem to aim as high or clear as many hurdles. TCN and Boston’s entrepreneurial community organized a breakfast event at Microsoft’s NERD Center on December 1^st to focus on the challenges around women’s entrepreneurship in Greater Boston.

So what does the landscape look like? We know that women are more efficient, have fewer failures, submit more patents, and are heavily involved in IPO’s. But is not all sunny: there still very few female investors, while women take on less capital than men. How many women are actually starting companies, and what are the successes they’ve celebrated and the challenges they’ve faced? What are the hurdles that women continue to face in starting high growth companies? Here are some statistics and questions to consider, taken from the opening presentation from the Women’s Breakfast.

1. There are currently 8 million U.S. businesses that are owned by a majority of women. If U.S.-based women-owned businesses were their own country, they would have the fifth largest GDP in the world, trailing closely behind Germany, and ahead of countries like France, the United Kingdom, and Italy.
2. It pays to be in Massachusetts! Nationally, women make up 8% of all company founders; in Massachusetts, women make up 27% of founders. Massachusetts has the highest rate of female founders in the country.
3. Between 1997 and 2004, the number of women-owned companies grew by 28.1%. That’s nearly three times the rate of all privately held businesses with employees.
4. The average venture-backed company run by women has 12% higher revenues than the average of those run by men but, on average, 33% less capital committed.
5. In 1988, 4% of the 134 firms that went public in the US had women in top management positions. In 2009, all but two of the 19 high-tech IPOs had at least one woman officer.
6. Women-led companies with more than $1 million in revenue are twice as likely as male-led companies to get debt capital rather than equity capital.
7. Only 8% of entrepreneurs backed by venture capital are women.
8. Angel groups are actively working to promote women entrepreneurs through the formation of groups focusing on women-led companies, such as Golden Seeds and Illuminate Ventures, and through the syndication of deals from these groups with other angels.
9. Women now represent just over 15% of angel investors, but only 5-7% of partner-level high-tech venture capitalists in the U.S. Firms with women investment partners are 70% more likely to lead an investment in a woman entrepreneur than those with only male partners.

Read more:

• CB Insights, tracking of 165 internet companies and their 300+ founders receiving Seed or Series A funding from VCs from Jan to June 2010
• The End of Men by Hanna Rosin in The Atlantic, July/Aug 2010
• “High Performance Entrepreneurs: Women in High Tech,” performed by a team led by founder and CEO Cindy Padnos of Illuminate Ventures
• “Where Are All the Women” Resource List by Mass Challenge

With these statistics behind us, why don’t women ask for external funding at the same rate as men? Is there still a difference between women and men when it comes to the entrepreneurial path?

There are many resources in New England to help women develop high growth companies:

• Astia
• Babson College’s Center for Women’s Leadership
• The Boston Club
• Boston Women in Finance, Inc.
• Center for Women & Enterprise
• The Commonwealth Institute
• Girls in Tech
• Golden Seeds
• Massachusetts Small Business Development Center Network
• MVVF Women’s Collaborative
• Simmons School of Management
• State Office of Minority and Women Business Assistance
• Springboard Enterprises
• Women Entrepreneurs in Science and Technology
• Women In Technology International
• WPI Venture Forum

The Capital Network provides education, resources, and a community for entrepreneurs seeking funding. We join the larger community in the challenge of answering these questions and building a sustainable ecosystem for womens entrepreneurship. Learn more about us at www.thecapitalnetwork.org.