Re: Your question to Ask Dave Taylor
Philip Copeman
I am copying this to our Turbocashzone group, they are interested in
the business aspects of TurboCASH. Many of them are already
stakeholders in the project.
:-) Dave I am
pursuing this with you, not for the hope of getting free advice or
entering a consulting contract with you, but with the intention of
getting something together with you that makes both us millions of
Dollars. So if this is not what you want to do please tell me. I am
working on the assumption that you know the insides of the VC industry
and can actually use that on a good concept like ours to put it
together.
:-) I will go
through your mail - I like the Devils advocate stuff, meet ALL your
objections and then we should have a basis to move forward on. Walk
with me on this one and I will do all your links to the TurboCASH
community and give you the SEO that you so dearly crave.
First off, I am always delighted to see open source development
teams take the initiative to try and grow their businesses, and even
more happy to see that you're working from outside of the US/Europe
hegemony: the more international the Internet, the better chance we all
have of understanding each other and avoiding conflict.
:-) Careful this
is almost patronizing, Open source is like any business. It is a
brand that is there to use like Google to find you on the Web or
Microsoft when you want to be a corporate consulting partner. We are
not here to give the world free software, we are there to make money
for our users, put our project participants into business and along the
way to make ourselves $ 100 Million Dollars . We are not in Bible
Software or Education for mentally retarded children - we are in
BOOKKEEPING!
Having said that, I have to also say that I am skeptical you can
accomplish your goal of raising investor money for TurboCASH for a
bunch of reasons, and I think it's important to enumerate and discuss
them.
:-) I will meet
your objections and you will see that this is an opportunity that you
should not miss. We are not looking for favors here, we have a really
high return prospect. Its simply a good idea, that works and need
funding to internationalise it.
The first obstacle is an overseas investment: almost all the
venture capitalists I know actually dislike investing in companies that
are more than a few hours drive from their office. If you're seeking
investment money from San Francisco, for example, you'd have a very
tough time of it if you were based in Seattle, Washington or even in
Los Angeles, California, let alone a continent away in South Africa.
:-) I can't
believe this statement comming from you. You are kidding me right?
Skype, Rapid Freight, Internationally accepted credit Cards,
OSCommerce, TurboCASH, Google and number of other technologies have
made the world a VERY SMALL place. Our project participants come from
many countries. It matters not whether I am in Cape Town or Belize.
Noone has to drive further than the end of his desk to visit us. We are
there to investigate - ALL the time. You don't even need a password to
come in.
This is understandably frustrating for savvy startups that aren't
based in one of the major venture cities (Boston, New York, San
Francisco, etc), but investors like to keep an eye on their portfolio
companies and having to fly trans-Atlantic for a monthly board meeting
would be pretty prohibitive, and while online teleconferencing has
improved significantly in the last decade, there's a sense. of being
"on
top of things"
that is hard to duplicate, especially for the first
couple of meetings.
:-) We are not a
startup. Don't know what you mean here - we meet daily on Web meetings,
you can fly where ever you like, but it is not going to give you any
more information than you can get from your browser. Board meetings?
Where do you have your board meetings at Ask Dave? Do you have any idea
how the concept of the One man/Small SME - DSL- Web services - Home
business has exploded in the last few years. You are in it yourself. do
you think you are the only one? The market for this is millions. We are
ahead of the curve in dealing with them. I have every intention of
doing these deals without ever leaving Cape Town, they can come here is
they like but it really is not necessary. They may jusu as well visit
us in California or Sydney.
Secondly, there are international commerce issues with
ownership of intellectual property, legal rights of investors, and
similar that are considerably more complex for an international
investment. If you receive funding from a Palo Alto-based VC, for
example, and then decide to shut the company down and walk away with
the investment capital, what recourse do they have with the South
African courts to try and recover their investment, particularly as an
American company?
:-) Once again -
I live in South Africa, TurboCASH lives on the Web. The partnership
ownership can reside anywhere the partners Choose it to. The
intellectual value lies in servers and all partners have equal access
to these facilities. I personally don't even know where these servers
are, California somewhere, probably just down the road from you. Walk
there if you like, but I can get the there in seconds from my desk.
This objection is the same as any project would have and it should
easily be solved buy computer technology and legal agreement. If you
were right on this one, then Skype would never have happened (Swiss
guys).
I deal with this in En
Commandite Partnership
Then there's the conundrum of open source intellectual property.
If you're an open source accounting package, then your organization
doesn't own the TurboCASH application in a for-profit way since it's
already (I presume) available through the General Public License of
most open source, which means that anyone can give away what you'd be
trying to sell. (and after all, if you don't have anything to sell,
what's your revenue stream? Investors need to see a growing company
with a revenue stream, because they want to invest in growing
businesses, not ideas).
:-) I answer this
fully in my business plan. Clearly you have never worked on an Open
Source project, it has ownership like any commercial technology. You
need to get a bit closer to the Open Source business. Its like any
other. Funny enough, from a business point of view it has less to do
with the technology, it is owning the users that counts. Going back to
Skype. Any one can make a VOIP server, if you are right why did eBay
see fit to pay $ 4 Bn? With $ 10 Million you will be in business
against them, not that you would get anywhere. The deals in Open Source
have already bergun, projects much smaller than ourselves sell for
millions of Dollars. Read my business proposal for details.
I deal with this in What
Does the Partnership Own
Which leads to the other half of that question: what is your exit strategy for TurboCASH? Venture investors want to know that 24-36 months down the road there's a reasonable chance of acquisition or (less so now than in the late 1990s) going public so that their investment can be "realized", that they can cash out and actually see a profit for their investment. That's why acquisitions are so sweet: invest, say, $2mil in a company when they're worth $5mil total, help them grow in the next two years to a valuation of $50 mil, and when they're acquired cash out and walk away with a cool $20 million, a profit of $18 million. If you don't have any exit strategy, you can have the best business in the world and the majority of VCs would just shake their head without even reading your business plan.
:-) I deal with
this in "Who
would want to deal with us"
I realize that this probably isn't the answer you were hoping for,
and I apologize for that, but I am continually surprised at the zealous
queries I receive from companies seeking help with raising capital,
companies that really don't have the basics covered from an investor
viewpoint.
:-) I don't know
what you mean by "not having the basics covered. I have gone through
all you objections above and if you follow the links through to my
business plan, you will see that I have in fact answered them in
advance. I have stood on both sides of the VC table in my career. Now
my suggestion is this:You understand the VC process, stop sitting on
the side - take a position - take a position on us- stop looking for
the objections and start looking for the opporutnities - lets make
something together.
I'd also suggest that you read through my previous article How much equity does a VC take? and also pay
attention to the other sites that I link off to from that article too.
:-) I read these -
good articles. Thats why I decided to call you. I figure that
commenting on deals is great, but you looked like the type of person
who can actually do one. I figured you could asses my proposal clearly
and then connect me to the right person, who could then "drive over to
your place" and browse our severs from your desk. Its the modern world
man!
Good luck with TurboCASH, and I hope this is helpful!
:-) I hope we will take this further.Dave Taylor wrote:
First you woudl have to show me that you are not merely a computer response.
Okay, how about if you check what I wrote:
http://www.askdavetaylor.com/2106
Regards,
Dave Taylor
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