Category Archives: Business news

Global VC Post Financial Crisis

Global VC Post Financial Crisis
No matter your stance on the great Bubble debate, 2014 was a relatively remarkable year for those involved in the venture capital industry. Overall there was an increase in investing, valuations and fundraising. There was also a huge trend for industries to consolidate. Last year, about 4% of the firms who raised any funds accounted for just less than half of all capital raised. This led many to think that the VC industry was beginning to decline and shrink. However, after much research, most VCs continue to be excited about how their opportunities are lining up especially when it comes to tapping into the upcoming transformative tech companies. Read the rest of this entry

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VC market in 2013

 

Mobile Technology

Cellphone

Efraim Landa is a venture capitalist who provides both funding and expertise to emerging companies. A venture capital firm typically works with a startup company that needs funding and support to handle those first turbulent years until they can make an IPO. When a VC firm invests in an emerging company it basically purchases a portion of the company in exchange for a profit that will come as the company matures. It is generally expected that a company will be able to transition from its inception to an IPO inside of 10 years with the average being somewhere around 5 to 7 years. The venture capital firm provides the necessary funds to keep the business running efficiently until the time when a profit can be made. Entrepreneurs and venture capitalists such as Efraim Landa also offer their working expertise to the business to help ensure their successful business venture. Many successful entrepreneurs have stated that the expertise that is gained from experienced businessmen is more valuable than the funding that was secured. Read the rest of this entry

Successful Companies that Got Started with Venture Capital

Genband

Genband Inc Logo

When a business starts up, usually the largest challenged that the founders will face is securing funding to keep it going long enough to get it off to a great start financially. Effi Enterprises is a venture capital firm which helps supply entrepreneurs and emerging businesses with the funds needed to reach the next level of growth. A venture capitalist invests into an emerging company by purchasing part of the company. This is a relatively short term investment in a company with the expectation that the company will grow enough to bring in a sizeable return. Efraim Landa, who is an entrepreneur himself, invests venture capital into a start up business expecting that the company will experience this growth inside 10 years. There are many different businesses that use funding provided by a venture capital firm to help them reach a great level of success. Read the rest of this entry

What is Microeconomics?

Microeconomics

Microeconomics

What is Microeconomics? Simply put, Microeconomics is the study of economics on a small scale. Economist’s Dictionary of Economics defines Microeconomics a bit more detailed, “The study of economics at the level of individual consumers, groups of consumers, or firms… The general concern of microeconomics is the efficient allocation of scarce resources between alternative uses but more specifically it involves the determination of price through the optimizing behavior of economic agents, with consumers maximizing utility and firms maximizing profit.”

Basically, microeconomics deals with economics decisions made on a micro level. Microeconomic decisions come from both firms and individuals; these firms and individuals are motivated by cost and how it benefits the economy. The cost that is concerned about in microeconomics is that of financial costs (average fixed costs and total variable costs), and opportunity costs. Read the rest of this entry

How to Foster Innovation

Innovation

Innovation

Innovation is a very important aspect of running a business. It takes innovative thinking for an entrepreneur to get started and get the business off the ground to begin with; and it takes innovation to keep a business fresh and in a state of growth. Since so much business is conducted via the internet, small businesses are no longer just competing with local companies in their region but with global businesses. One of the keys to being able to keep a business alive is having an emphasis on innovation instead of getting in a rut of just doing things the old fashioned way.

According to the dictionary, innovation is defined as introducing something new, whether it is a method, an idea or a device. To maintain an innovative atmosphere it is important to create a work environment that fosters, stimulates and rewards creativity.

Business Model to Include Innovation

When developing your business model it must be a top priority to include innovation and creativity as core values. Employees need to know from the start that the company has an emphasis on innovation and that creativity is rewarded and not shunned. When you are drawing up the core values of the company do not be vague about innovative ideas. There is not enough to substantiate the thought in a simple statement like, “our company strives to innovate.” It leaves the employee scratching their head and wondering what needs to be innovated products or processes. Be very specific with statements.

Let Everyone Participate

Engineers can be great innovators; however do not limit innovations to just one type of worker. You never know when a great innovative idea for a product may come from an office worker or an accountant. Don’t discount their new ideas on how to process purchase orders or invoices. They may have some innovations that end up saving the company a substantial amount of money. An idea that leads to improvements may come from anywhere; it is important to encourage an environment which is open to innovation for everyone in the company.

Build a Creative Atmosphere

It is up to you to create a creative atmosphere. Use colors which stimulate creativity and make sure there is adequate lighting; natural light is best if it is possible. Use inspiring colors and hang artwork throughout the workplace. It is also a great idea to provide a variety of creative activities for employees. Providing the right environment can increase employee’s creativity and output. There are some companies which provide stimulating games such as foosball and pool to help keep employee’s creative juices flowing.

Designate Time for Creativity

Stuffing someone in a cold white office for hours on end will stifle creativity. Get your workers out of the office now and then. Perhaps one Friday a month take a group outing. This may depend on the type of work that they need to do but trips to the library, gym or even a local coffee shop can spark creativity. One book company we are familiar with takes their design artists out to local bookstores/coffee shops once a month. They take time to discuss the various book covers, the creativity or lack of creativity in the designs. This fosters innovative thinking.

Reward Creativity and Innovation

Make sure to reinforce innovative ideas. They should feel comfortable sharing new ideas and it is important that they get credit for the ideas that are used. Rewards do not have to be outlandish, gift cards are an inexpensive reward. It is okay to reward with money and some even offer a bonus as well as a simple, but public recognition of their contribution.

Fostering Innovation

To foster innovation will mean that you create an environment where new ideas are welcomed and rewarded. It is not an expensive undertaking to design a work environment that stirs up employee’s creative juices and foster innovation that each person has.

The Glass-Steagall Act

Glass-Steagall Act

Glass-Steagall Act

With recent computer glitches chipping away at investor’s confidence in the market, a repeat of the stock market crash of 1929 becomes a real fear. Investors such as Efraim Landa must continue to exercise caution in their investments. Effi Enterprises is a consulting business which offers counsel to emerging businesses and entrepreneurs regarding financial investments and how to increase the value of the company. They offer marketing strategies and assist in helping businesses get started with brokers, divestiture strategies, capital sources and IPOs. Because Effi Enterprises helps businesses create value it is important to stay up to date on various aspects of the market and note how changes can affect business on every level. One of the acts that helped shape the market as we know it today was the Glass-Steagall Act.

The Glass-Steagall Act (GSA) brought about a separation between commercial banking activities and the investment markets. This was due to the fact that most agreed that too much commercial bank involvement in market activities was behind the stock market crash of 1929. According to Congress banks were taking too large of risks with their depositors’ money. The GSA continued as established until it was repealed in 1999.

Just before the depression most feel that commercial banks were too careless in their investing practices. They did a lot of investing of their assets and became greedy by taking larger risks hoping to gain even larger financial rewards. The objectives of banking itself became somewhat blurred and many loans were made into companies that the bank had invested in. They encouraged their clients to invest in the same stocks. Many feel that this mismanagement of funds caused the stock market crash. Henry Steagall was chairman of the House Banking and Currency Committee and seated in the House of Representatives at the time. Senator Carter Glass founded the US Federal Reserve System. Steagall supported Glass after they added an amendment which would allow bank deposit insurance for the first time.

The GSA was in response to financial crisis and set up a sort of regulatory firewall between investment banks and other commercial activities. Banks were allowed a one year time frame in which to decide whether they wanted to specialize in investment banking or commercial banking. The Act allowed only 10 percent of the income for commercial banks to come from securities; but one exception was allowed in which commercial banks were allowed to underwrite government issued bonds. JP Morgan and other financial giants were forced to cut the services they provided which cut their income drastically as well. The goal of the GSA was to prevent banks from using deposits if an underwriting job failed. Many in the financial community felt like the GSA was too harsh and glass even moved for a repeal right after the Act passed claiming himself that it was an overreaction.

The Federal Reserve Board is the US bank regulator implemented the GSA but in 1956 Congress decided to regulate another bank sector. To keep any specific financial corporation from gaining too much power, they extended the GSA by adding the Bank Holding Company Act to create a wall between banking and insurance companies. This stopped banks from being able to underwrite insurance companies even though they could sell insurance.

There have been many debates over whether these restrictions were the healthiest option for the industry or not. Many felt like banks should be allowed to diversify to reduce risks and that the GSA restrictions had the adverse effect and made the banking industry riskier instead of safer. After the Enron market mistakes banks are more likely to be transparent and less likely of making risky or unsound decisions regarding investment procedures. Reputation is a key component in the market today and this in itself motivates banks to regulate their own activities.

In November, 1999, congress repealed the GSA and eliminated the restrictions prohibiting affiliations between investment and commercial banks. The Gramm-Leach-Bliley Act allows banks to engage in a wider range of services which include underwriting. The intent of the GSA was to prevent deposits from being lost if there were investment failures, the repeal and establishment of the Gramm-Leach-Bliley Act demonstrates that many times attempts to regulate can end up with adverse effects.

Lunch with Warren Buffett

Warren Buffett

Warren Buffett

Warren Buffett is a household name because of his great wealth. But many of us forget that he amassed this wealth through different forms of private investing and hedge funds. He learned valuable lessons at a young age through investing in the stock market. As he matured he ventured out into various practices in private investing. For many, it seems that having lunch with this very wealthy man would be out of the question. However, each year Warren Buffett sponsors a luncheon that is a fund raiser for his favorite charity.

The GLIDE Foundation

Normally, eating lunch at a higher end steakhouse in Manhattan with nine people would run somewhere around $1000. But this year it cost on investor nearly $3.5 million. That was the final bid on this year’s charity auction in which the winner gets to enjoy lunch with Warren Buffett and the proceeds go to a charity based in San Francisco, the GLIDE Foundation. The charity provides meals, housing and funding for community based clinics. Over the last 13 years the auctions have raised more than $11 million for the group.

The charity auction is conducted online and the winner gets to take seven friends for lunch with Warren Buffett at the Smith & Wollensky steakhouse located in Manhattan. In 2011 a fund manager, Ted Weschler paid $2.63 million to share lunch with Warren Buffett. But after the lunch Weschler was hired by Buffett’s Berskshire Hathaway as an investment manager. He only beat out one other person in last year’s auction in which only 8 bids were offered by just 2 people. Weschler won both the 2010 and 2011 auctions which yielded almost $5.3 million for the charity.

In 2012, there were 10 bidders in all and over 106 bids were made during the 5 days the online auction was open. When it ended, the winner had bid $3,456,789 exactly. This amount will be given to Buffett’s favorite charity and the winner will enjoy lunch with Buffett. Smith & Wollensky also contribute a minimum of $10,000 to the charity to host the lunch.

The goal is not for Warren Buffett to find future employees through the luncheon; it is simply to raise money for his favored charity. While Buffett isn’t looking for new hires through the auction, Weschler did end up getting hired by Buffett last year to help in managing Berkshire’s investment portfolio. Most of the time, the winner of the auction just gets the opportunity to sit and converse with Warren Buffett, known throughout the world as a profitable investor and a leader in entrepreneurship.

Discussions with Warren Buffett

But talk over lunch is not always only about money with this multi-millionaire. Although the big draw for many bidders is Buffett’s amazing business sense and outstanding success in investing, the lunchtime conversation does not center around potential investments. Since Warren Buffett has made such a mark on philanthropy, many past winners have wanted to discuss giving. Since 2006, Buffett has continued to slowly give a portion of his fortune. He wants to eventually divide his Berkshire stock up between five charitable foundations. He intends for the largest portion to go to the Bill & Melinda Gates Foundation.

Warren Buffett and Bill Gates have been trying to encourage extremely wealthy people to give away at least half of the fortunes they have amassed. Almost 80 of the United State’s wealthiest have joined in with this effort.

Auction winners have expressed that the time spent having lunch with the well respected Warren Buffett is well worth the price they have paid. The lunch usually spans several hours and Buffett answers questions as they are posed. Usually, according to Buffett, many of the questions are about non-business topics like family and philanthropy.