The Wild Startup [Infographic]

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Fostering Business Solutions, Inc.

By Christopher Kogge

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The Wild Startup is not always a shy animal, they actually can be quite bold. To better understand the nature of these strange creatures we take a look at their short-lived lives in their natural habitat.

.TheRealWildStartup

 

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Top 5 Startups of 2015

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Fostering Business Solutions, Inc.

By Harveer Singh

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Originally posted January 7, 2016 

Seeing as the year has just come to an end, I decided that it would be appropriate to display my favorite startups of 2015 (in no particular order). These companies are unique and are innovators in their respective industries. They all have immense growth potential.

What do they do?

Palantir is a Silicon Valley startup that services government agencies, such as the CIA and FBI, and businesses through accessible data analysis and specialized solutions ranging from fraud issues to national defense.

 

Valuation

Palantir raised over $880 million this year at a $20 billion valuation, making it one of the most valuable privately held tech companies in the world. Since inception, the company has raised $2.32 billion.

Why did I choose them?
  • Palantir is now the fourth highest-valued startup in the world after leading contenders Xiaomi, Uber and Airbnb.
  • They are backed by various government agencies and still have growth potential.
  • In 2015, Palantir’s valuation increased from a $15 billion valuation to $20 billion.
  • They are expected to IPO in 2016, because their revenues may exceed $1 billion (at which point you are forced to IPO).

What do they do?
SpaceX designs, manufactures, and launches advanced rockets and spacecraft.  Elon Musk founded the company in 2002 with the goal of revolutionizing space technology to reduce space transportation costs and enable the colonization of other planets. I know… It sounds like something from a Sci-Fi film.

 

Valuation
In January of this year (2015) SpaceX raised $1B in funding from Google and Fidelity in exchange for 8.33% ownership stake, establishing the company valuation at approximately $12B.

 

Why did I choose them?

  • SpaceX is the first and only company to achieve a vertical landing of a rocket that had traveled into outer space (this past month).
  • They are revolutionizing space travel & exploration initiatives.
  • This company is so unique that to me it is a winner.

What do they do?

Fatsack Outdoors Inc. is committed to keeping the age-old, outdoor traditions alive by leveraging the latest in technology to provide consumers with an enhanced and simplified sporting experience for not only the casual weekender but for the professional as well.

 

Valuation

Fatsack Outdoors is the smallest of the companies listed by far. The company went from nothing to being valued at roughly $2.6MM in one year (Started from the bottom, now were here? Not yet, but soon). Fatsack Outdoors recently opened their second round of funding to raise $500K at the above valuation.

 

Why did I choose them?

  • The company has immense growth potential proven by the partnerships they have created this year alone.
  • Leaders in the fishing and outdoor industries have showed great interest in the company since they first launched their app (available on the Apple App Store and Google Play) in February.
  • They have a strong Board of Directors (with an ex-executive of Verizon – Jack Plating and myself of course) as well as a highly focused CEO, Nick Rubio (also Chairman of the Board).
  • They have raised roughly $400K in their first year when they required less.

What do they do?

Lyft Inc. helps commuters get to their location via share rides with friends, classmates, and coworkers going the same direction or non-shared rides. All of this is possible by requesting a Lyft through their mobile application and all you have to do is sit back and wait. The company was founded in 2007 and is based in San Francisco, California. Lyft Inc. operates as a subsidiary of Enterprise Holdings, Inc. Its main competitor is Uber.

 

Valuation

As of January 2016 the company has a $5.5 Billion valuation due to a $1 billion investment from GM. Lyft raised more than $2B in seven equity funding rounds since 2010. The company’s valuation surged 2.5x from $1B in series B to $2.5B in series C, reflecting an 8.3 P/S ratio for Lyft (prior to the recent GM investment). Lyft also a $250 million investment from Saudi Arabia’s Prince Alwaleed Bin Talal, as well as the $1 billion from GM.

 

Why did I choose them?

  • In 2015, Lyft became the first ride-sharing company to offer trips to travelers at McCarran Int’l Airport in Las Vegas (As of Dec. 17th, Uber can also do this).
  • Between March and December of 2015, Lyft secured $927.7M in funding.
  • GM just invested $1 billion in the company, increasing its valuation.
  • Although I believe both Uber and Lyft are good investments, Lyft seems to have more upward potential, creating a bigger buffer when it comes to IPO time.

What do they do?
Birchbox offers online beauty products and retailing services.  The company provides makeup, shaving, hair, skincare, and fragrance products.  Additionally, it offers tools, gadgets and games, and lifestyle accessories. Birchbox, Inc. was founded in 2010 and is based in New York, NY. They are arguably the reason subscription boxes have become so popular.

 

Valuation

In April of 2014, the company raised 60MM at a $485MM valuation. They are expected to open a Series C round of funding at an estimated valuation of $750MM.

 

Why did I choose them?

  • In October of 2015, Birchbox launched its first in-house makeup brand, LOC (Love of Color).
  • They basically pioneered the subscription box services that everyone seems to be using now.
  • They are continuing to grow as per their next expected round of financing.

 

 

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Startup Dictionary: Words & Phrases You Need To Know

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In this post, I will go over essential terminology in the start-up world. These are words and phrases that I often hear when dealing with my clients and entrepreneurs. If you want to be able to intelligently follow a conversation in this world, make sure you enhance your vocabulary. This is the newest FBS blog post, “The Start-up Dictionary.”

 

Accredited Investor – It is often required of private companies to take investments only from those who qualify as “accredited investors.” These investors are generally high-net-worth individuals who have the access and ability to invest in higher risk investments such as Venture Capital, Hedge Funds, and Angel Investments. To qualify as an Accredited Investor in the United States, one must have a net worth of at least $1 Million (excluding the value of their primary residence) or have income of at least $200,000 each year for the last two years (or $300,000 combined if married) and be expected to make the same or more in the current year.

 

 

Angel Investor – An angel investor is an individual who provides financial capital to startups and entrepreneurs, usually in exchange for convertible debt or equity. These investors are often among the business owner’s family and friends.

 

 

Boot Strapping – Boot strapping describes when an entrepreneur starts a company with very little capital. The founder(s) usually use their own money or revenues to get the company going.

 

Burn Rate – This is the rate at which a company spends its money. It is important to know this number for budgeting and investment purposes. Knowing how much capital a company has and how fast it will disappear is essential knowledge for an investor or company management.

 

 

Churn Rate – The percentage of subscribers of a service or application who unsubscribe from that service during a given time period is the churn rate. It is important to know because your new subscribers must exceed the churn rate in order to continue growth.

 

Crowdfunding – This is an alternative way to raise money (without going through a PPM or other offering document). The people who are donating to the cause do not need to be accredited because they are not purchasing ownership shares. Using websites like Kickstarter, Gofundme, Crowdfunder, etc. business owners can raise small amounts of money from a large pool of people.

 

MAU (Monthly Active Users) – The MAU is used as a performance measure to see how many unique users visit an app during a given time period (usually 30 days). This helps determine the value of the company, website, app, etc. As long as your user growth is higher than your churn rate, you have a good product.

 

MVP (Minimum Viable Product) – The MVP refers to building a product with the least amount of effort that can also return customer value.

 

PPM (Private Placement Memorandum) – A PPM is a legal document used to sell debt or equity of a private company. In this document, you will find the business summary, risks & terms of the investment, financial position of the company, management biographies, and other information. It may also be referred to as an “Offering Memorandum” or “Offering Document.”

 

Seed Funding/Capital – This is usually the initial capital that is raised for a company (although there may be pre-seed rounds of funding as well). These funds usually come from the founders of the company, their friends, and/or family. These funds are offered in a form of a securities offering for an equity stake in the company.

Note: I have often seen the mistake of new companies taking in seed money outside of a securities/offering agreement. It is highly recommended to not do so in this manner for various reasons, one being that the terms may be unclear causing issues in the future.

 

 

Seed, Series A, Series B, etc. – These are the differentiators between funding rounds. The names are often seen as arbitrary, but they are used to differentiate the rounds of funding. Seed being the first, Series A second, and so on. Sometimes they are used in differentiating what type of money is being raised. For example, Series A can be to expand, B to grow revenue, C to grow users, etc.

 

Shoe String Budget – I know, what’s up with all the footwear lingo? Well, this refers to when someone is stretching a budget (aka using less money than is required).

Sweat Equity – This is when a party contributes effort and time to a company instead of capital. Start-ups will sometimes use this model when it is on a “shoestring budget” or is “bootstrapping” (Oh yeah, I just used them in a sentence). The owner will often pay with stock or stock options instead of capital for work done.

 

Term Sheet – This document outlines the basic terms and conditions of which an investment is made. It is usually a non-binding agreement that is used as a template to develop a detailed binding agreement that will be created later. It usually states what type of equity, debt or convertible notes (as well as what equity rates are received when converted)  are involved.

 

Value Prop (Proposition) – A value prop identifies why a consumer should buy one product or service over another and how your product uniquely creates value.

 Knowledge: Nolo.com, Investopedia.com, Forbes.com, Fundable.com, Techopedia.com, & Personal Knowledge

Images: funderbuilt.com (accredited image), wsj.com (angel investor image), businessinsider.com (burn rate image), causevox.com (crowdfunding image), wired.co.uk (seed funding image), virtue-marketing.com (shoestring budget image).

Top Tax Deductions For Your Business

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Mo money mo problems.” – Notorious B.I.G.

I think that Biggie Smalls understood the increasing pressures of running his own business. What are the two prime concerns a business owner worries about? The answer – increasing profits and decreasing expenses. This post will help you with the latter. Knowing how to use your business expenses to your tax advantage is essential to saving money. Listed below are some of the tax deductions that business owners (and the self-employed) can take advantage of.

 

Meals & Entertainment (M & E)

Probably the one that most people have heard of is Meals and Entertainment. If you are entertaining a current or potential client, you can deduct 50% of the cost as long as it is directly related to your business. You can also deduct these expenditures if the entertainment takes place before or after a business discussion.

 

 

Auto Expense

If you use your car for work or have a company car you can deduct certain costs to maintain the vehicle on your tax return. There are two ways to take advantage of this deduction:

Actual Expense and Standard Mileage Rate.

The first, Actual Expense method, is self-explanatory. You can deduct all of your actual vehicle-related business expenses, such as gas, repairs & maintenance, etc.

 

The second is the Standard Mileage Rate. With this rate, you can deduct 57.5 cents (2015’s rate) for every mile driven as well as tolls and parking costs related to your business. Many find this cost to be the more beneficial of the two deductions.

 

 

Travel

You can deduct plenty of business travel expenses. Just keep in mind that if you also plan on traveling for pleasure, you can deduct the entire trip only if the trip was primarily for business. Otherwise, you will have to split the costs. Also, if you take your family along, you can only deduct your own expenses.

Related expenses include (but are not limited to): plane fare, costs of operating/renting a car, taxis, uber, lodging, meals, shipping materials, tips, etc.

 

Books, Education, Legal & Professional Fees

Purchasing books that relate to your business may lead to deductions. If you buy books that help you do without legal or tax professionals they are fully deductible.

With legal and professional fees, you may deduct in the year incurred. If you have any future benefit for these fees, wait to deduct the cost in that year.

 

 

Bad Debts (Goods vs. Services)

Not getting paid is frustrating, but luckily you may be able to deduct your loss. If it is a Good that you sold, you can deduct the cost of the good you were not paid for. Unfortunately, if it is a Service provided, you cannot deduct the time you devoted to your client.

 

Office Related Expenses

These expenses include those that keep your office running. You can deduct office supplies, telephone & TV bills, postage & shipping, rent, etc. You can also deduct items used to advertise and promote your business, such as business cards, website costs, and so on.

 

Home Office: This can be a tricky one because you will have to determine the square footage of the office space. By the standard deduction method, you can deduct $5 per sq. ft. (the amount is capped).

 

Software: You can generally deduct required software costs, but they must be depreciated over a 36-month period. There are certain exceptions to these rules that would be best to check with your tax professional.

 

 

Moving Expenses

If you have to move because of a business or job, you can deduct certain moving costs. The new job must be at least 50 miles away from your old home or job to qualify.

 

Misc.

Bank service charges, business gifts, seminars, trade shows, business dues, business related magazines, casualty, and theft loss, etc. I would suggest always keeping track of your business related expenses in an excel sheet (even those you are unsure will result in a deduction). This way when it comes time to file your taxes you can discuss them all with your accountant. Accounting is very tedious and rules are always changing. Make sure to check all deductions with a tax professional to make certain that all regulations are obeyed correctly.

 

I hope this helped you all realize how many expenses you can use to your advantage when running your own business.

 

 

Image Credits: Title: dentons.com, M&E: dailyfinance.com, Auto: Autoexcellence.com, Travel: denverluxurycarservice.com, Office: themuse.com, Moving: meelheimsmoving.com. Knowledge base: nolo.com, Personal Knowledge

 

 

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Essential Business Reads

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Welcome back, it’s time for another FBS blog post! Listed below are a few of my favorite business books (in no particular order). These books have provided me with inspiration, knowledge, and positivity. All things that I believe are essential in anyone’s life. Although these books are business related, I truly believe that anyone can read them and learn a lot.

 

First on the list is The E-Myth Revisited  by Michael E. Gerber. Gerber speaks about why most small businesses fail and what to do about it. The author explains how every business needs three skill sets: 1. The entrepreneur (the dreamer and visionary), 2. The manager (the organizer) and 3. The technician (the worker). The technicians, who love what they do, decides to start a company on their own instead of making someone else rich (great!). Now the reason that this business will most likely fail is due to micromanaging by the technician (not so great). They will want to make sure everything is done the way they have always done it. Gerber explains the issue here and expands on what corrective action should be taken. It is a great book for anyone thinking of opening his or her own business. The E-Myth will teach you lessons that you would most likely learn the hard way.
The 4 Hour Workweek: Escape the 9-5, Live Anywhere, and Join the New Rich (Expanded and Updated) by Timothy Ferriss (what a title) may catch you off guard as you read it. Some of the things he preaches seem a bit outlandish at first, but will eventually strike a cord. The book is split into four sections: 1. Defining your goal and figuring out what you really want (and for those of you who cannot decide, he helps you figure it out), 2. Eliminate your distractions by learning how to be effective instead of just efficient, 3. Automate your cash flow, resulting in an increase of income and finally, 4. Liberate yourself by increasing mobility. He speaks about how he went from monotonously working for someone else for 40 hours a week to starting his own business and working 80 hours a week. The 4 Hour Workweek tells you the story of how he eventually transformed his life to working just a few hours a week while also making money and enjoying life. This book will inspire you to take charge of your life. If you work at a deadbeat job that doesn’t appreciate your work or if you are struggling to live your life while running your own business, The 4 Hour Workweek is for you.
Rich Dad Poor Dad by Robert Kiyosaki is one of the first business books I ever heard about. A friend introduced it to me when I was unsure of where my professional life would take me after college. It is the story of the author and a comparison of his “rich dad” and “poor dad.” It just so happens that his biological father, who has a doctorate, went to Ivy League universities, believes in working hard and saving money was the “poor dad.” Who would have thought? All the while, his “rich dad” (his friend’s father) who dropped out of school in the eighth grade builds an entrepreneurial empire by using his financial literacy and street smarts. Kiyosaki walks you through his life experiences to offer you a new perspective. Some people have criticized him about whether he was completely truthful in his book, but his message is loud and clear no matter what. I still believe that this book is a must read for anyone.
Black Swan: The Impact of the Highly Improbable. No, this is not the movie with Natalie Portman and Mila Kunis. This is a book by Nassim Nicholas Taleb, the essayist, scholar, statistician and risk analyst. The book dives into how unpredictable severe events are and how people underestimate their significance. These events are referred to as Black Swans. The three attributes that define Black Swan events are those that are irregular, have an extreme impact, and are eventually explainable (only in hindsight). Taleb’s writing style is very smooth and easy to read. You really feel like you are there with him when he explains some of his life stories. The Sunday Times even placed the Black Swan among the 12 most influential books after WWII.
Hold: How to Find, Buy, and Rent Houses for Wealth by Steve Chader is my usual real estate plug-in. Hold is the opposite of a get rich quick book, rather it focus’ on how one can create a lifetime of wealth through rental real estate investments. The book also comes along with downloadable content that puts the book into better perspective. As some of you know, along with business consulting, I have been heavily involved with rental real estate properties for years. This book has played an important role in my recent real estate knowledge while also continuing to offer inspiration.
Crucial Conversations: Tools for Talking When Stakes Are High by Kerry Patterson, Joseph Grenny, Al Switzler and Ron McMillan explains a skill that is very important in business, communication. In work settings, it is not uncommon that you will come across a number of critical conversations. Whether this be about a raise, a business deal or even heated conversations with a business partner it is vital for you to know how to approach the subject. I have experienced instances at my old jobs where tensions were high due to deadlines and cooler minds have prevailed. This book goes over certain techniques that will allow you to have a leg up in these instances.

This will likely be the beginning of a series as I have learned so many things from business books. I chose the above reads for this post as they cover a variety of topics. It is important to read inspirational books that spread positivity when working at the conventional job or owning your own business. They will motivate you to do better by providing a new perspective. Who knows, a book can be the final push that will change your life forever.

I will now leave you with a quote that I like from Oscar Wilde,

 

 “Anyone who lives within their means suffers from a lack of imagination.

 

Top 10: Business Apps

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 We live in a digital world. I think we have all heard this before, but the statement does hold true. These days technology is the primary driver in creating an efficient workspace. In this post, I want to share the mobile applications (in no particular order) that have saved me the most time and money (my two favorite things) in business.
 
1.    CudaSign (formerly SignNow) – CudaSign allows you to attach legally binding e-signatures to documents right from your phone. After opening your files in CudaSign, you can E-sign and add dates anywhere on the document. Once you finish, create PDFs and send them back out within minutes of receiving the original files. This app will cost you a whopping $1, but for the time it has saved me, I would have paid more.
2.    TurboScan – I don’t think I can explain to you how many times this app has saved me. There have been times when the Internet has gone out in the office or I was on the road where I needed to scan and send documents. TurboScan enables you to take high-resolution pictures of your work right from your phone. It also has a simple editing tool that allows you perfect your “scans” before you send them out as PDFs.
3.    Mortgage Calculator Plus – For those of you in the real estate space, this app is essential. It’s always important to understand the costs of obtaining a property, and in my case, if it will be profitable. Mortgage Calculator Plus allows you to easily calculate your potential monthly mortgage while considering all other costs associated with purchasing the property. In the investment real estate industry, this will help you save time by weeding out properties where the math just doesn’t add up.
4.    Mint – Whether you use it for your business or personal finances, Mint is a great tool to track your income and expenses. The app enables you to add various online accounts (checking, saving, credit card, stock, retirement, etc.) and organizes all the information in one place. Always keep a close eye on your money. Money can’t always buy you peace of mind, but if you save enough, it can buy you a Bentley.
5.    Audible – I can’t remember the last time that I actually had the time to sit and read a book. Therefore, I began listening to audiobooks instead, because knowledge is power, right? With audible, you can listen to your favorite books from your phone while on the go (driving, flying, at the gym, etc.). Ps: Keep an eye out for my next post about my all time favorite business reads.
6.    WhatsApp – Ladies and gentlemen, WhatsApp has become the new BBM. If you have business either locally or abroad, this is the app is for you. Not only can you text internationally for free, but you can now make wifi calls too. Most people I have spoken to in a business or personal capacity use WhatsApp regularly, especially internationally.
7.    Square – This is the only app on the list that I do not personally own, but have experienced via clients. If you are selling products or services for your small business, Square is the app for you. After downloading the app and signing up on their website, Square will send you a free magstripe that will allow you to make sales right from your phone. Coming from an accounting background, I like square because you can easily import your sales information into QuickBooks or any other accounting software. Some would say the 2.75% cost per swipe is too high, but I think that its simplicity and ease make up for it.
*The last 3 apps are specifically for my travelers out there. These apps will save you money and help organize your itinerary.
8.    TripIt – Don’t you find it annoying to fish through all your emails for flight and rental confirmation numbers? I did. TripIt will organize all of your traveling plans in one place. It takes your flight, rental & hotel order confirmation emails (without you doing anything) and arranges your whole trip from beginning to end.
9.    Skipplagged – This app has a very interesting history. The founder of the app was sued by various airlines and travel websites due to his unconventional and genius way of saving money on flights. The idea is that sometimes booking more flights will result in cheaper tickets. For example, let’s say you wanted to go to Chicago from New York. Skiplagged will book you a flight for North Dakota where your destination is actually the connection site (ie Chicago). The idea is that a connecting flight to North Dakota from New York is actually cheaper than a direct flight to Chicago (I just made this scenario up, so maybe it isn’t, but you get the point). The catch is that you can’t check in your bags, so use this for your short trips only.
10.    Hotel Tonight – The last app on the list has to do with booking hotels. There are many hotels out there that actually offer discounts if you book within a day or two. Hotel Tonight will find you these hotels, as well as break them out into categories (Lux, Basic, Hip, Solid, etc.). So if you need to take a last minute business trip, you don’t always have to pay an arm or a leg for a nice hotel room.

I hope you all enjoyed my first post. What apps do you use? Look out for my next post on my favorite business books!

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