How Private Equity Is Driving Value

A new study finds that financial-sponsor-backed companies are outperforming their publicly held peers.

CFO.com:
Vincent Ryan      Follow on Google 

... From 2006 to 2012, E&Y found in its recent study of North American PE deals, PE-backed firms spawned a return of more than five-fold that of investor returns on publicly held companies. 

English: Diagram of private equity fund structure for Private equity, Private equity fund, Private equity firm (Photo credit: Wikipedia)

About half of that return (realized when the PE firm sold its ownership interest) came from strategic and operational improvements. For the most part, E&Y found, it was growth in EBITDA (earnings before interest, taxes, depreciation and amortization) that created this value for PE firms’ acquisitions -- in particular, growth of the organic variety. 

English: Diagram of private equity co-investment structure for Equity co-investment (Photo credit: Wikipedia)

At companies that exited their PE owners in 2010-2012, for example, organic-revenue increases accounted for 45 percent of EBITDA growth, up from 39 percent pre-recession (2006-2007). (Click here for an interactive chart.) 

Diagram of leveraged buyout transaction structure for Private equity, Leveraged buyout (Photo credit: Wikipedia)

E&Y says the results stem from PE firms changing the business models of the companies they own. ... 

“In the 1990s and the 2000s, if PE firms bought at the right time and then held the investment, they made money based on the multiples expansion in the public markets,” says Jeffrey Bunder, global private equity leader at Ernst & Young. Now, however, PE firms are concentrating on driving earnings growth, he says. 

English: Different methods to assess value on the secondary market (Photo credit: Wikipedia)

In almost all of the PE deals E&Y studied, for instance, once the PE firm acquired the company, the financial sponsors had a 100-day plan to either enhance revenue (52 percent) or generate cash (32 percent). “It’s more of an operating model: getting the right management team in place, driving business expansion into different geographies, adding products and expanding through acquisition,” Bunder says.

But it would be wrong to suggest that the old value creators for private-equity firms no longer contribute. Higher stock market returns still drove 17 percent of PE-owned companies’ overall returns, and the additional leverage PE-backed companies took on accounted for 25 percent of overall returns. In addition, cost reduction at acquired businesses still drove 26 percent of EBITDA growth for the deals PE firms existed during 2006 to 2012.

Healthy equity markets have also enabled successful exits of private-equity-backed firms through initial public offerings. And even the multiple-expansion effect has returned. “Multiples, which compressed significantly during the post-crisis years and negatively impacted performance, have rebounded in the recovery period and accounted for 30 percent of overall PE returns,” the E&Y report says.

PE firms indeed are holding companies longer — an average of 5.1 years in the study’s deal population in 2012, up from 3.4 in 2006. While the Great Recession certainly had something to do with that, “longer hold periods … also point to increased engagement by PE owners in the businesses they back,” said the E&Y report.

For the study, Bunder’s team analyzed deals that PE firms exited during 2006 to 2012. They chose acquisitions that had an initial value of $150 million or higher.

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When Banks Won’t Touch Your Company

Alternative financing firms take on credit risks that financial institutions don’t want.

CFO.com
Vincent Ryan

When commercial bank lending rises on a sustained basis as it has the past year, it’s hard to fathom some companies being denied credit. … [There] are always companies (and industries) that are just not bankable. … Among them: firms that are cash-flow negative, start-ups with intellectual property but no customers, and young industrial companies that need to finance fixed assets before entering production phase.




Loans (Photo credit: zingbot)

The situation for the have-nots could get worse in the next few years: pieces of the new Basel III bank capital rules may force banks to be more selective with their capital commitments, especially to companies of marginal creditworthiness.

But there are some alternative financing sources that are hungry to deploy money and willing to finance higher-risk projects. … “There’s not a lot of yield to be gotten in the public bond markets. Private capital providers need yield in their portfolios,” says Allen Weaver, senior managing director at Prudential Capital Group, which invests long-term money from insurance companies and pension funds.

Take Deep Eddy Vodka. When demand was outstripping the capacity of its bottling line equipment last year, the two-year-old spirits start-up called on many banks but found its business model didn’t line up with their idea of creditworthiness. Deep Eddy spends a lot on sales and marketing to build its brand and grow its topline fast, paying less attention to profits for now, says John Scarborough, the company’s vice president of finance. Once bankers saw the business’s operating losses, they said they needed personal guarantees from Deep Eddy’s principals.




Image via CrunchBase

After searching, Deep Eddy found Fountain Partners, a provider of lease lines of credit for capital equipment. “Fountain was willing to look at the business model, peel back the onion a bit, and see that there was a fundamentally strong business underneath,” says Scarborough. Deep Eddy landed a $250,000, 36-month lease to buy its new high-capacity bottling line, as well as a sale-leaseback of existing equipment to generate additional working capital.

There is a knock on alternative financing, though. A nonbank financier’s cost of capital is higher than a traditional bank, ... Since its cost of capital is higher, the borrower pays a higher rate.
“With the funds we are running right now, we are looking for rates of return that are double-digit, and we are very clear about our willingness to take large-scale risks that make that [rate] deserving and fair,” says Tom Carter, founder of Fountain Partners and a former CFO.

Also taking those credit risks are business development corporations (BDCs), which are publicly held investment companies that must distribute 90% of their profits to shareholders. By leveraging their balance sheets, BDCs can get their cost of capital down, says Manuel Henriquez, CEO of BDC Hercules Technology Growth Capital. Hercules originates senior secured loans, often collateralized with intellectual property, and has a cost of capital of 5% to 7%, compared with 2% to 3% for a bank.

The real advantage of alternative financing is not in the hard costs, though. Henriquez says his clients … can place their deposits and operating accounts into any bank. … [The] financing agreements are a lot less covenant-driven. And in the event a company gets into trouble, “the loan doesn’t get passed to a workout group whose sole purpose is to get the bank’s money back at whatever cost, because regulators are breathing down its neck,” Henriquez says.
“Because we are not regulated like a bank and have permanent capital on our balance sheet, we can work with a company through difficult times,” he adds. “We expect our companies to stumble, like a little kid on a bike.”

Not that borrowers shouldn’t pay attention to the cost of alternative financing. In lease deals, notes Scarborough, sometimes the actual interest rate is buried in a bunch of numbers. …
While monthly payments with interest rates higher than a typical bank loan may scare finance executives, nonbank debt lets some companies save expensive equity capital for strategic uses. It doesn’t make sense for a start-up to buy furniture, servers, and routers or fund working capital with equity dollars, Henriquez says: …




Understanding Financial Leverage (Photo credit: Wikipedia)

“In consumer packaged goods, value is created by the brand,” says Scarborough. “We have a finite amount of capital and the highest-return, best use of capital is to invest in marketing programs and a world-class sales team, not equipment.”

But alternative financing firms don’t have an infinite appetite for risk, either. Fountain Partners looked at several deals in the solar industry between 2006 and 2011, Carter says, but never extended credit to one. His reasoning: basic science and execution risk around the companies’ manufacturing plans, and the fact that many of the solar companies didn’t have enough venture money to reach production phase.

Still, in general, firms like Fountain take a more expansive view of a borrower’s prospects. “We take risk that large-scale financial institutions shy away from,” says Carter.

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Bank Loans Driving Business Credit Expansion

The bulk of business capital needs are being met by bank balance sheets, as opposed to shadow banking firms or capital markets investors. Is that a good thing?

CFO Magazine
Vincent Ryan

After ceding a lot of corporate financing to shadow banking firms and capital-markets investors prior to the financial crisis, banks are driving corporate credit markets again, financing the bulk of credit expansion with their own balance sheets.




English: Components of the liability side of the Federal Reserve System balance sheet using statistical release dates from January 4, 2007 to Arpil 2, 2009. This is the liabilities of all 12 Federal Reserve Banks combined as reported by the Federal Reserve. This image was created using openoffice.org Calc spreadsheet program. See table below for source data. The data was obtained from: http://www.federalreserve.gov/releases/h41/ (Photo credit: Wikipedia)

The total volume of bank loans of all types increased at a 3.3% annual rate in the second quarter, according to the Federal Reserve, …a continuing trend since the fourth quarter of 2011. And the third quarter is off to a good start, with lending activity at U.S. commercial banks expanding by …13% annualized, in the week ended July 4.

In addition, commercial and industrial loans on U.S. banks’ balance sheets grew 12% in the second quarter, after an 11% rise in the first quarter, according to Fed data, and dollar volume on banks’ books was at its highest level in two years. Bank credit growth is skewed toward business lending, according to a recent equity research report from analysts at investment bank Keefe, Bruyette & Woods. “Businesses have begun to increase leverage to take advantage of low interest rates,” the report points out.

This trend is mostly positive, but is having so much of capital creation dependent on banks’ balance sheets good for business borrowers or for the U.S. economy?



English: Components of the asset side of the Federal Reserve System balance sheet using statistical release dates from January 4, 2007 to Arpil 2, 2009. This is the assets of all 12 Federal Reserve Banks combined as reported by the Federal Reserve. This image was created using openoffice.org Calc spreadsheet program. See table below for source data. The data was obtained from: http://www.federalreserve.gov/releases/h41/ (Photo credit: Wikipedia)

 

As banks are ascendant, capital markets are pulling back. Recent flow-of-funds data from the Federal Reserve show that the debt outstanding in the asset-backed securities market, for example, fell to $1.9 trillion, from $2.2 trillion a year ago and $3.3 trillion in 2009. There is still no securitization market for most private-sector loans, say KBW analysts, who see “a continued decline in the ABS market for the foreseeable future.”




Logo of the Securities Industry and Financial Markets Association. (Photo credit: Wikipedia)

Meanwhile, U.S. corporate securities issuance is down in a number of categories year to date, according to the Securities Industry and Financial Markets Association: … Straight corporate debt issues are flat with last year on a dollar basis, as are initial public offerings….

Even venture-capital investments are down in 2012, according to the MoneyTree report from Pricewaterhouse Coopers and the National Venture Capital Association. VC funds invested $5.75 billion in 758 deals in the first quarter, a decline from $6.7 billion in 861 deals invested a year ago.

The problem with relying on banks for funding is that the markets are signaling that banks are not good credit risks.

U.S. and European banks’ credit default swap (CDS) spread averaged 19 basis points between 2004 and 2007, but since then the average has been 230 basis points, writes David Munves, a managing director at Moody’s Analytics, in a report published Tuesday. The average European and U.S. bank credit rating, as implied by CDS spreads, is “Ba1,” defined by Moody’s as a credit “judged to have speculative elements and subject to substantial credit risk.”

“Banks are a key part of the global economy, and higher and more volatile spreads limit their ability to attract capital and to fund themselves at reasonable levels,” says Munves.

Banks are also just generally riskier. “U.S. banks have higher risk profiles than before the financial crisis began, whether measured by credit spreads; equity prices; reputation, management and governance practices; or credit ratings,” Munves says.
A
nd JP Morgan’s trading losses and the LIBOR scandal have once again raised questions about the risk controls at large banks. This is occurring at a time when banks are having a tough time growing earnings and hitting return on equity targets, despite the boom in commercial and industrial lending.

The quality of commercial banks as counterparties is worrisome but not bad enough to make companies avoid having them as creditors. There are plenty of positive trends at commercial banks. Due to regulatory changes, banks’ capitalization ratios are rising, and the quality of their loan portfolios is improving, with loan delinquency and net charge-off levels falling across the board.

Though they may be a greater credit risk in the capital markets, the largest commercial banks also have plenty of low-cost funding from deposits with which to finance loan growth. In its second-quarter earnings report last week, Wells Fargo said its core deposits were up 9% from a year ago, and its deposit costs were 19 basis points, down 9 basis points from a year earlier.

On the other hand, it would be costly for a large commercial bank to raise equity capital in the current market climate. The average U.S. bank has a market-price-to-book value of 66%, compared with 171% in 2007, according to Moody’s Analytics. On the debt side, if banks’ ratings worsen, the cost of credit could become prohibitive also.

After their experience during the financial crisis, companies know how precarious bank funding can be. Many banks pulled back on lines of credit and reduced unfunded commitments drastically when they encountered pressures financing their own businesses. That is not a problem right now, but if the U.S. economy worsens and capital markets don’t revive, banks might turn off the business lending spigot once again. Companies should be careful not to rely too much on bank debt in their capital structure.

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Why Bootstrapping Is As Over-Rated As Raising Money

Image via CrunchBase

 TechCrunch
Ashkan Karbasfrooshan 

Photo credit: Leonard John Matthews
Entrepreneurship requires balancing unbridled optimism with delusional foolishness.  Most entrepreneurs are mocked and misunderstood until they are wildly successful, at which point the chorus changes from “good luck with that ‘business’, pal” to “I always believed in ya, buddy!”


Master of your Domain

There is an undeniable appeal to the notion of bootsrapping your company to success without venture capital. While bootstrapping has many advantages aside from control and ownership—…—the reality is that the disadvantages may be greater. …


Yes, Mo Money = Mo Problems, but Money = Lifeline
Throwing money at problems is usually a short term fix.  …
But with no safety net (let alone a warchest) on your balance sheet, you can’t really pivot if your business is hitting a wall.  Even if you’re doing well, money is your lifeline, so lacking it may starve even the most promising of bootstrapped companies, preventing you from investing in growth or supporting your clients.  So in a best case scenario, you’re operating with one foot on the pedal with another in the grave.  You’re basically in a perpetual state of fund-seeking, which is far more distracting than being in fundraising mode.…


Give equity to grow equity
Fundraising is an art, and in Silicon Valley, conventional wisdom suggests that you “raise as much money as you can”.  …

Except raising as much money—or diluting—as much as one can is good for investors but bad for entrepreneurs. …

But this shines a light on another reality of value creation: you have to ensure that others want to see you succeed and prosper, and the only way to do that is to hand out equity; as John Doerr says “no conflict, no interest”.


Meet the Board: Your More Objective Bad Cop
Once you have investors on board, the board they assemble will come in handy when you need to make tough decisions.  Knowing that you have a regular evaluation and review of the business’ operational and financial metrics helps you succeed, plain and simple.

It’s also helpful for the CEO to be able to play good cop to the board’s bad cop.  Indeed, many CEOs lack an objective sounding board and have an emotional attachment to an idea which not only wastes money but more importantly, the best years of your life.

So while too many companies chase the flavor of the month at the behest of their investors, the board will push you until your business takes off or you need to pivot.


Psychological Price Floor
While businesses should be valued on their financials, the historical valuation that investors place on your company may play a role in at least determining a floor price in a worst case scenario or a framework, at least.  …

Conversely, I have been told at least a dozen times that not having raised any venture capital values my company at a discount.


The Perception Problem: Red flag?
Moreover, not raising money from professional investors is—in all honesty—a potential red flag.  It’s rare for an entrepreneur to run a business and spend millions of dollars without having any outside help.  When that is the case, it’s a normal reaction to wonder: why?  Why hasn’t outside money been raised?  It’s unfair, but saying that it’s never come up would be a lie.


No Sympathy Points
Ultimately, while you may score extra points for building a large business despite being bootstrapped, you don’t actually score many points for running a small business if you have avoided venture capital, even though 99.9% of VC-funded companies wouldn’t exist or last as long as yours if they didn’t have VC funding to rely on.

The cliché is that it’s not the destination that matters, but the journey.  …  In the sports and business world, it’s all about the outcome.  No one remembers the score, let alone how the teams played the game, they remember who won, even if it means giving in to greed and resorting to bad behavior.

When it’s said and done, you can own 100% of a lemonade stand or 1% of Coca-Cola. While these are extreme polar opposites and a middle ground does exist, you have to understand that neither approach to building a business comes without its share of problems and drawbacks. In some ways, you build a business despite bootstrapping or raising VC, and not because of it.

Image via CrunchBase

Editor’s note: Contributor Ashkan Karbasfrooshan is the founder and CEO of WatchMojo.  Follow him @ashkan.

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Five New Management Metrics You Need To Know

Image via CrunchBase Forbes

12/13/2011 @ 10:58AM |128,876 views

James Slavet, Greylock Partners
This is a guest post from James Slavet of venture firm Greylock Partners. Slavet’s investments include Coupons.com, Groupon, One Kings Lane and Redfin. Greylock Partners has invested in Facebook, LinkedIn and Pandora..

…“If you can measure it, you can manage it” is a business saying that goes way back. … Regardless, most managers only measure outputs, not inputs… Similarly, most companies measure traffic, revenue or earnings, without considering how to improve the company at an atomic level: how to make a meeting better, or an engineer more productive.

Here are five metrics that great teams should measure:

Image by Jordanhill School D&T Dept via FlickrMetric 1: Flow State Percentage

Jobs that require a lot of brainpower—software programming for instance—also demand deep concentration. You know that feeling when you’re “in the zone,” … That is flow, a term coined by psychologist Mihaly Csikszentmihalyi. Unfortunately, most of us are constantly interrupted during the day … Studies have shown that each time flow state is disrupted it takes fifteen minutes to get back into flow, if you can get back at all. And programmers who work in the top quartile of proper (i.e. uninterrupted) work environments are several times more productive than those who don’t.

Ideally … knowledge workers can spend 30% – 50% of their day in uninterrupted concentration. Most office environments don’t even come close. To get started, ask your engineers to track for a few days their personal flow state percentages: how many hours each day are they in flow, divided by the number of total hours they’re at the office. And then brainstorm ways that the team can move this number up. … Tom Demarco has written insightfully on the topic of flow.

Image by Wesley Fryer via FlickrMetric 2: The Anxiety-Boredom Continuum

Years ago, … [an] instructor said something that really stuck with me. He said that his goal was to keep all of his students in the pocket between boredom and anxiety – but closer to anxiety. In other words, we shouldn’t be so overwhelmed that we break down and give up, but we also shouldn’t be coasting either. …

… Star performers can get bored easily, and often function best when they’re expected to rise to great challenges. You want expectations to be high, but not completely overwhelming. With this in mind, check in with your employees periodically … If they have low energy, or are showing up late and leaving early, they may be bored. If they’re responding to small setbacks with anger or frustration, or getting sick a lot, they may be pushing too hard.

Metric 3: Meeting Promoter Score
…[A] one-hour meeting of six software engineers costs $1,000 at least. …Nobody tracks whether meetings are useful, or how they could get better. And all you have to do is ask.

In the last minute of a meeting, ask the participants to each rate from 1 to 10 how effective the meeting was, with one suggestion for making the meeting better. … Verne Harnish has some good ideas about running better meetings.

Metric 4: Compound Weekly Learning Rate
… Joi Ito wrote recently about “neotony”, the retention of childlike attributes in adulthood. This ability to learn is like the compounding interest on an investment: after two or three years, a relentless learner stands head and shoulders above his peers. … So try asking your team this question: how did you get 1% better this week? Did you learn something valuable from our customers, or make a change to our product that drove better results? As your team gets into a learning rhythm, you can review this as a group. 1% per week adds up.

Image via WikipediaMetric 5: Positive Feedback Ratio

…John Gottman …, a psychologist, is the author of “Why Marriages Succeed or Fail”.

In his research, he found that marriages that succeed tend to have five times as many positive interactions as negative ones. And when a couple falls below that ratio, their relationship falls down too.

Cover via AmazonThe same is true at the office, … Catch people doing good things. Never miss a chance to say something nice, even if you feel a little silly. Then when you have feedback on areas to improve, they‘ll really listen. It may be hard to manage to the 5:1 ratio at the office, but you should be mindful of the balance.

So, there you have it, 5 metrics that will never show up in the best companies’ financial statements or a Wall Street Journal article, but are the kinds of reasons those companies succeed. Tracking these five metrics isn’t glamorous. But it’s something everyone can do. And it really works.

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FAQ: What the new U.S. crowdfunding bill means for entrepreneurs

Image via CrunchBase

LinkedIn

Scott Edward Walker is the founder and CEO of Walker Corporate Law Group, PLLC, a law firm specializing in the representation of entrepreneurs.

Last week, the U.S. House of Representatives passed a crowdfunding bill that will allow startups to offer and sell securities via crowdfunding sites and social networks. If passed by the Senate and signed off by the President, the bill will become a law, giving entrepreneurs new options for raising money for their companies. …

What is crowdfunding?

As the term suggests, crowdfunding is funding from a crowd of people; that is, many people provide small amounts of money to finance something. Crowdfunding has its roots in charitable causes, including the advent of microfinancing …

Can startups use crowdfunding now?

Under current laws, startups may not sell stock or other securities through crowdfunding sites or social networks… They may, however, accept donations.
This is because of applicable federal securities laws ... The laws include the following:

• A prohibition against “general solicitation” — which means that a company may not offer or sell securities unless there is a substantive, pre-existing relationship between the company (or a person acting on its behalf) and the prospective investor. (See “Can I Raise Money For My Startup Via Twitter?”)

• Disclosure and state law compliance requirements if the investors are not “accredited investors” — which usually makes the offering too costly and onerous. (See “Ask the attorney — securities laws.”)

• A requirement that any intermediaries (including websites) must be registered with the SEC as a “broker-dealer” in order to legally accept any transaction-based compensation in connection with the sale of securities. (See “Finder keepers could be losers, weepers”).

What will the new crowdfunding bill do?

Basically, if this new crowdfunding bill becomes a law, all of the foregoing prohibitions and requirements will be lifted, and a startup will be able to sell securities through crowdfunding sites like Kickstarter, or social networks like Twitter or Facebook, so long as the company (and its intermediary, if applicable) comply with the bill. According to the bill, the company will have to meet these key provisions:

• The company may only raise a maximum of $1 million, or $2 million if the company provides potential investors with audited financial statements.

• Each investor is limited to investing an amount equal to the lesser of (i) $10,000 or (ii) 10% of his or her annual income.

• The issuer or the intermediary, if applicable, must take a number of steps to limit the risk to investors, including (i) warning them of the speculative nature of the investment and the limitations on resale, (ii) requiring them to answer questions demonstrating their understanding of the risks, and (iii) providing notice to the SEC of the offering, including certain prescribed information.

Are there any downsides to crowdfunding for startups?

Yes, there are several key downsides that you need to be aware of before jumping into crowdfunding.
First, startups must understand that minority stockholders have certain significant rights under state law, including voting rights, the right to inspect the company’s books and records, the right to bring a derivative claim on behalf of the company, and certain protections against oppression by the controlling stockholders. …
Second, having hundreds of stockholders is an administrative nightmare and will be time-consuming and costly. …
Third, startups will likely have difficulty raising funds from VCs and other sophisticated investors if they have hundreds of unsophisticated stockholders. …

What’s next?

Now we wait for the U.S. Senate, … The White House supports the House bill, so upon reconciliation, it will be signed into law. Then entrepreneurs will have a new option to consider when raising money for their startup.

About the Author, Scott Edward Walker

Scott Edward Walker is the founder and CEO of Walker Corporate Law Group, PLLC, a boutique corporate law firm specializing in the representation of entrepreneurs. Scott has 15+ years of broad corporate law experience, including nearly eight years at two prominent New York City law firms. He has built a strong team of lawyers, with offices in Los Angeles, San Francisco and Washington, D.C. You can follow him on Twitter as @ScottEdWalker or check out his blog.

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Cautious optimism: Startups will come out ahead

Image via CrunchBaseEntrepreneur Corner VentureBeat

August 23, 2011 | Adeo Ressi

It’s hard to not get a sinking feeling in my stomach when I watch the stock market drop and hear smart people talk about a 25 percent correction. …

However, if you look closely, there is a new reality today. There are reasons to be cautiously optimistic.

Image via WikipediaFirst, let’s start by looking at the modern angel investor. … [Many] of today’s angels work in startups and have pulled money off the table through a sale, IPO or, more likely, the secondary markets. They are skeptical of public markets after the debacles of 2000 and 2008. Therefore, while a 16 percent decline in the public markets may drop the aggregate amount of angel investments, modern angels will continue to invest in what they know: startups.

Image via WikipediaSecond, let’s look at the limited partners (investors in venture capital funds). Long before this correction, many of them had already fled the venture capital asset class, and they are not coming back. … Smarter VCs have adjusted by tapping sovereign wealth funds and other alternative capital sources, including the wealth of the partners themselves. …

Third, the VCs themselves have already been doing fewer and fewer deals since the end of 2008. … Entrepreneurs have already adjusted to a world where venture capital is a scarce source of capital (AngelList, for example), so a change in deal volume should not significantly change startup financing.

Finally, the mergers and acquisitions market is better positioned than it has been in the past. Large corporations are sitting on enormous cash reserves, and it is only a matter of time before we see a greater number of acquisitions. The thousands of angel-backed startups being launched each year represent attractive acquisition targets. …

Even if the correction continues and startup financing shrinks, we’re not facing a post-party “sober-up” stage similar what happened to 2000 and 2008. The reality is that creating meaningful and enduring technology companies is not a zero sum game. In a world of nearly seven billion people with 30 percent internet penetration and nearly two thirds of the global population using cell phones, there is room for thousands of new technology companies each year. And, if everything does go to hell again, the true entrepreneurs make their own luck.

I for one maintain a healthy dose of cautious optimism: Startups will come out ahead.

Image via CrunchBase

Adeo Ressi is the founder of the Founder Institute, a global network of startups and mentors that launches hundreds of technology companies per year across four continents. Applications are now open in over 10 cities worldwide. Follow the Founder Institute on Twitter at @founding.

Adeo will also be one of the “sages” appearing onstage at DEMO Fall 2011, a conference co-produced by VentureBeat. It’s happening in Silicon Valley Sept. 12-14.Register Today and take advantage of our special VentureBeat Partner rate of $995.00.
[Image via Olena T./Shutterstock]

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