2007.1.19 HOUSTON SMALL BUSINESS OWNERS LOOK TO VC’S FOR FUNDING AND GUIDANCE

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Kathryn Johnson
Director of Communications Technology
3151 Airway, Building G-3
Costa Mesa, CA 92626
(949) 265-5767
kjohnson@credentrust.com
January 19, 2007

HOUSTON SMALL BUSINESS OWNERS LOOK TO VC’S FOR FUNDING AND GUIDANCE
Area business owners look to the experts for capital and resources needed to expand or start their small business

Small business owners in and around Houston are coming to the conclusion that they need more space, more money, more resources and more guidance to grow and expand their business. Whether they are just starting out, adding more inventory or more employees, owners are looking past their personal and business credit cards, banks, their rich uncle, or even their wealthy neighbor. The city’s small business owners are turning to venture capital firms that are rich in experience and financial backing.
“We regularly work with entrepreneurs as they work to shape their novel ideas into viable businesses,” says Ned Hill, a partner with Houston-based Sternhill Partners. “Obviously, most entrepreneurs are interested in investment capital. But more broadly, we try to help entrepreneurs achieve success by applying our own operating experiences and industry knowledge – collectively thinking about how to best leverage their innovations in the marketplace, understanding the potential potholes along the way to success, and determining how best to mitigate those risks.”
Incorporating Houston’s diverse culture, international dining experiences, the city’s great education centers and the low cost of living expenses, all these aspects lead the small business owner to stay within the city to start a new business or to expand the existing one. Great VC firms such as Summit Capital Group, LLC, Sternhill Partners, Vanguard Ventures, DFJ Mercury and others, are reaching out to the small business community to help them make Houston a thriving place for businesses. Venture Capital activity is focused in five states with Texas coming in third with 6% of the activity,
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according to PricewaterhouseCoopers. With 5.3 million residents and a growth rate that is two times faster than the national rate, Houston is continually growing with job and business opportunities everyday. Houston ranks second in employment growth rate and ranked first in Texas, and third in the U.S. within the category of "Best Places for Business and Careers" by Forbes Magazine. With all these wonderful qualities, no wonder Houston’s VC firms are funding so many businesses.
“Helping the small business owner find capital is a very important job,” said Senior Development Manager Marcus Brutoco of Credentrust Software. “Venture Capital firms are there to assist small business owners write business plans and proposals, help with start up responsibilities, work with the business owner to find and hire the right people and place their own experienced members as the company board members.”
The process of finding a venture capital firm can be a daunting task, but with perseverance and knowledge, small business owners can find the perfect fit. The owners can scour the internet looking for the venture capital firm that will fit their needs, or ask friends and family for assistance to no avail. Doing research for the perfect VC firm is a worthwhile effort so that the owner doesn’t waste his time or the firms’ time with a business proposal that doesn’t match their particular criteria. Each VC firm specializes in particular industries and invests at certain stages of the business development. Examples would be Vanguard Ventures which started in 1981 and specializes in early stage businesses in technology and life sciences. They look for companies with break through and protect able technology. Another firm, Sanders Morris Harris, started in 1987, believes in investing right alongside the client and sharing rights and rewards. Their motto of striving to meet the diverse needs of high net worth individuals, should appeal to owners looking to expand their businesses. Sternhill Partners, voted Most Important VC firm in Houston by “Upside Magazine” in 2001, provides venture financing to seed and early-stage technology start-ups. The firm believes that the entrepreneur comes first and their goal is to build good companies using their own board members as corporate mentors. Overall, according to the Wall Street Journal, July 28, 1999, the technology industry start ups are the most funded. The technology industry attracts 62% of the venture capital investment, healthcare 21% and products and services following with 14%.
Another direction small business owners are taking involves turning to companies on the internet that help owners find funding, resources, insurance agents, equipment leasing and VC and Angel investors. Small business owners have so many things to worry about on a daily basis that any type of timesaving help would be greatly appreciated. These companies offer owners a service where they fill out one digital online investment package, then store it in a secured Vault, and then it can be seen by investors all over the country or right in their own neighborhood. Internet companies seem to be growing and becoming more prevalent in today’s’ fast paced society.
“Small businesses are the backbone of the American economy and especially in cities such as Houston,” said Tom Markel, CEO and Chairman of Credentrust Software that powers iBank.com. “With 5.3 million people in the Houston area, the opportunity for growth and development is phenomenal. VC firms throughout Houston and the nation have the chance to help thousands of small business owners fund their futures. Companies like iBank.com are here to provide help, guidance, resources and capital.”
As a small business owner realizes that they have outgrown their present situation, they look endlessly for help, guidance, basic resources and especially some monetary backing. Looking into venture capital funding, where a business owner receives at least one round of financing from a venture capital firm, is growing in America. In 1998, $21 billion was invested in private companies, and in the first half of 1999, investments grew to $11.4 billion with 1383 companies receiving financing from venture capital firms, according to PricewaterhouseCoopers. But in 2000, the venture capital industry noticed a decline in investments for the first time in two years. A report from Venture Economics and the National Venture Capital Association states the VC companies invested a total of $79.9 billion in 2000 compared to $33.7 billion in the first nine months of 1999.

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About iBank.com
Based in Costa Mesa, Calif., www.iBank.com, is America’s largest online small business Finance network. The network helps small businesses collect and store all business information inside a secure online VAULT; it helps create a digital loan package, and insurance and investor application packages. Formed in 1999, www.iBank.com utilizes advanced search engine technology, and numerous other online tools for communication and connecting in real time with a nationwide network of loans, insurance and capital sources for a faster, easier, and lower cost experience.