Our Fearless Leader on FOXBusiness

Just a quick plug for our work at Altos Research. Mike Simonsen, our CEO, was interviewed on FOXBusiness News this week with a focus on potential bright spots in the US Housing market. Always cool to see our little shop get some national exposure. Here's a link to the video interview. (There's a short commercial as with all videos - just a quick 15 seconds then to the good stuff....)

H1B Visas: E2 Visa Requirements

I came across an interesting article on TechCrunch that provides a straight-forward guideline to the categories of work visas available for foreigners seeking entrance to the US, especially those seeking employment in Silicon Valley's technology sector.

One of visa categories is the E2 visa - this visa is designed to permit entrance to the US for a foreign investor that adheres to several strict requirements. I did some quick research, and found the specific guidelines for attaining an E2 work visa from Workpermit.com (unfortunately the US Customs and Immigration site doesn’t lay out the requirements as clearly as this…):

1. There has been and will be a substantial capital investment in the US. There is no specific cash threshold defined, but $40,000 is probably an absolute minimum, and any investment below $100,000 would need a very strong case to support it.

2. Risk Capital has been Committed; the investment must entail some risk to the investor (it may not be all in the form of unguaranteed credit). At a minimum, there must be a long-term lease of an office in the US.

3. The investor will control his/her investment. In this respect control is considered to entail owning over 50% of the US enterprise.

4. The cash invested is not marginal when compared to the total investment. In general, unless it is common to the industry to have higher amounts of 'leveraging' (such as in the property industry), 51% of the investment should be in the form of cash equity. Where debt is secured against other assets of the investor, it is considered to be 'at risk', and may be considered as part of the equity invested.

5. The enterprise is (or will be) active. In order to be 'Directing and Developing' their investment, the investor will require an enterprise that involves active management. 6. US workers are (or will be) employed. The treaties envisage more than just creating a job for the principal investor, but there is no requirement to employ a particular number of US citizens. Obviously, employment of large numbers of US citizens would be viewed very favorably.

7. The enterprise, or its principal investor, has a past history of successful trading.

8. That the 'investor' has sufficient acumen to direct and develop the investment enterprise. 9. That the principal investor, and any other E2 staff, are able and willing to leave the US upon termination of their E2 status.

As you can see, the requirements are strict and complete. The E2 Visa should not be considered to be a loophole or back office channel, but for foreigners that are willing to invest in the United States, it can be a very effective entrance opportunity to the United States. With the value of the US Dollar compared to the Euro and British Pound, this might be a good time to think about investing in the United States from abroad if you are a business owner overseas.

Michael Arrington’s complete article on TechCrunch includes a guest posting from Peter Nixey, founder of Clickpass, a start-up firm founded in the UK and now based in Silicon Valley.

Short-term Project Financing: Case Study

This question (paraphrased) was submitted by one of my readers:

"Hi Scott - I have been reading some of your financial blogs. I have a question for you, yes is a needle in a haystack... I am looking for capital - short term - to announce a local sporting event with internationally-recognized sports figures. My original funding source was delayed out of by 30 days and I need some immediate cash for expenses related to the event. Do any of your contacts have access to immediate funds with ticket sales as collateral?"

Funding of this sort doesn't fall into the normal "venture capital" funding out there, but I see a couple of potential options for you:

1. Talk with your event partners, such as the arena hosting the event about providing a short-term loan in exhange for a return on ticket sales. In the arena is booked, they might find it difficult to re-book their location with another event, and thus both of you would be losing money if the event does not happen. Take a partnership approach.

2. Approach your local vendors that stand to lose planned revenues if the event is postponed - same principle applies as with the arena hosting the event. Agin, take a partnership approach and leverage the fact that you're bringing this event to your city - they'll be buying into you and your ability to make the event happen.

3. Talk with a leading local bank about some derivative of Accounts Receivable Financing (sometimes called "factoring"). This type of financing is normally reserved for firms that have revenues booked as Accounts Receivables, but have not yet collected. Because the terms extended to customers may include net-30, net-45, net-60, net-90, etc., some lenders provide financing based on these future revenues, with some risk premium charged to you in exchange. While this doesn't match your situation exactly, a local lender or credit union may be willing to provide a loan in exchange for the aforementioned risk premium and some hefty sponsorship recognition from your organization at the event.

A search in Google for "accounts receivable financing" yields thousands of results where you can learn more.

Because of the short-term nature of your capital requirements, you'll need to approach private banking institutions and lenders, and avoid SBA (Small Business Association) loans. SBA loans take months to get cleared and its likely that your situation doesn't fit their lending criteria.

I'm suggesting a local bank because they may have more autonomy to make a quick decision locally, instead of the probable "up-the-ladder" decision process with a large regional or national ban. Plus, the local banker will have more implicit interest in receiving sponsorship status in exchange for providing an event loan.

4. Meet with the local Chamber of Commerce to discuss business contacts of private business leaders that can help you out of your situation. From what I know about your city, there are bound to be a couple local business leaders that might be willing to take a risk in working with your event. They may have some lenders in mind for your as well.

5. Contact your previous sponsors and VIP ticketholders and offer a significant pre-pay discount for sponsorships and tickets if you've had this event in the past. This would provide you with some quick cash flow for promoting the event.

In short, I'd consider any and all options if you're in that much of a bind. Take the win-win approach that everyone that gets involved with the event and leverage your existing work with previous events and your foundation. Hope this helps.

Funding 2.0 - SVASE

Last Thursday, I attended an SVASE event - "Funding 2.0 – How To Build A High Growth Startup Fast And Cheap." It's always interesting to check out the mindset of the Valley's newest entrepreneurs and hear what its successful members have to say.

Panel members were:

Mike Cassidy, Entrepreneur in Residence, Benchmark Capital
Matt Mullenweg, Founder, WordPress
Naval Ravikant, Partner, The Hit Forge
Peter Yared, Founder & CEO, wdgtbldr

Here are a few memorable one-liners (might be slightly paraphrased, but I think I'm close....):

Mike Cassidy on developing a strong Web 2.0 company:
"Find the lock-in effect; the network effect. That makes it hard for users to switch."

Matt Mullenweg referring to start-ups that are beginning to turn the corner:
"When you're in the green, the best times are ahead of you."

Peter Yared about outsourcing hardware:
"There should be no IT people in a software company."
"Why buy the elephant when you can ride the elephant?"

Naval Ravikant on making money on the web:
"Most money on the web comes from search mistakes."

I spoke to Peter for a couple of moments before the Panel began. Unfortunately, I didn't know of his success as an entrepreneur - our conversation was rather light. Had I known, I would have pressed him for some advice about Altos Research and our AltosCharts application...

SVASE continues to impress with their abundance and quality of events. I recommend their events to any enterpreneur that wants to get out, practice their pitch to strangers, meet people like you, and learn more about what to expect in getting your ideas from concept to realization. Must have been 150 people there.

Using Salesforce

I'm in process of migrating to Salesforce.com for our company's CRM. Here's what I know so far:

1. Salespeople there are meticulous during the sales process. I'm hoping this is because they're using Salesforce for their CRM.

2. You can get a user "seat" for about $65/month, and set up billing quarterly, semi-annually, annually, or bi-annually. Bi-annual prepayment gets you a discount.

3. I posted a "user case" on my profile, and received a call from a tech guy within a couple of days. He left me a voicemail because I couldn't take his call. I called him back and left him a voicemail. Another tech guy called me back about an hour later and walked me through the answer to my question. He was clear and thorough.

4. If you are using a contant/registration form on your website and you want to fully integrate Salesforce into your sales processes, you'll need to pull out the contact/webform on your website that exists and replace it with the Salesforce "web-to-lead" form.

That's all for now. Still haven't migrated our contact data over because of the day-t0-day fires, but I'm cautiously optimistic. Would be nice to be able to employ a consultant to handle the migration for us. But seeing that we're paying less that $1500/year, I'm not about to pay $2-3K to have someone come in and do this for us. (Though maybe I should, but cash flow is always the challenge in start-up land...)

"Your ideas are wrong, but. . ."

The second of the key concepts presented at the SVASE "Leveraging Service Providers" lunch event was:

"Any idea you have is the wrong idea. But then you learn from running the idea and figuring out what works."

This concept was introduced by Christopher Keene, and I nearly laughed out loud in agreement. I thought immediately about Economic Information Services LLC. I founded the company to focus on technology transfer services for new developers based in the former Soviet Union. The territorial coverage was intended to include the entire CIS, including Russia, Moldova, Ukraine, the Caucuses, and Central Asia. I planned to go at this alone from my office in San Francisco. (“Entrepreneurship is a team sport!")

After six months of slogging along, I attempted to plan a three-week business trip to Kazakhstan and Ukraine by myself. This included the notion that I would be able to pin down local companies and government agencies in these markets to a specific day and time for a meeting well in advance. Well, it doesn’t work that way in Kazakhstan. In Kazakhstan, you notify someone of the week when you will be in the city, and then they inform you that they may be available, give you their cell phone number, and tell you to call them the morning of the day that you would like to meet. For an organization nut like me, you can imagine my consternation at this.

I enlisted the help of a friend in Almaty, Kazakhstan that assisted with collecting information and agreed to take his vacation time from the university when I was in town. By the end of the two weeks, I hired this friend away from the university to be the director of our Central Asia office that we decided to establish. From there, we were off and running.

And by the way, in the course of the two weeks we realized that there wasn’t the funding available to support a private sector company solely dedicated to assisting with technology transfer, and over the course of the next year, we transformed the company to provide investment banking, business plan development, and project management services – what the company exists as today.

This macro-level example is one of hundreds of ideas that I’ve had for Economic Information Services LLC that when put into motion, produced vastly different results. But only after acting on the ideas was I able to determine the correct path to success.