Financing a Small Business Start-Up…Despite the Commercial Credit Crunch!

Start Time: 6:15 PM

Agenda

• Purposes of this panel discussion

• CFEDC’s mission

• Background for discussion

• Panelist introductions

• Q&A

• Prepared questions: designed to highlight topics/issues of interest to CFEDC.

• Audience questions: Written questions from audience members during the first 30 minutes of the evening to be taken in last 30 minutes.

Purposes of this Panel Discussion

• Provide entrepreneurs, business owners and policy makers a better understanding of the financial resources available to start or grow a business in the Cape Fear region

• Discuss specific programs available to encourage the growth of creative industries and attract / keep knowledge workers to the region

• Learn from the expert panelists what they perceive as the main strengths and weaknesses of regional policies, regulations and programs in facilitating the smooth delivery of capital to foster the growth of new businesses in our region

CFEDC’s Mission• Sustainable economic development for the region,

building on existing strengths.

• ‘Quality of place’ is the lynchpin of the region’s future.

• Important to foster cultural diversity and equality, arts and a competitive primary education system.

• Acknowledge the industrial, economic and cultural past, and move the region toward a prosperous future in the new economy.

BACKGROUND FOR DISCUSSION

Start-ups are responsible for ALL net job creation in US

• “The Importance of Startups in Job Creation and Job Destruction” by Ewing Marion Kaufmann Foundation based on U.S. Census Bureau data from 1977 to 2005.

• Established firms (those over 1 year old) lost an average of 1 million jobs each year.

• In the same period, start-up firms (those under a year old) added 3 million jobs a year.

• “Job-creation policies aimed at luring larger, established employers will inevitably fail.” - Tim Kane, Kauffman Foundation senior fellow in Research and Policy.

Background for discussion

Cape Fear region among best for start-ups

Most positive attributes Wilmington Average for all midsized metro

areas

Employer establishments with 1-49 employees (2007)

10,242 11,214

Small business growth rate (2004-2007)

12.80% 5.00%

Percentage of population with bachelor's degree (ages 25-34)

32.50% 26.90%

Population growth (2003-2008) 17.90% 5.73%

Source: CNNMoney.com “Best Places To Launch: 2009”

Background for discussion

Cape Fear Stakes Its Future on Entrepreneurs Creating Start-Ups• A 2009 IEI working group agreed on four broad

strategies: cultivate creative assets, enhance education, foster connectivity, and transfer ideas to market.

• Sept 2010 status report indicates the Wilmington (Cape Fear) region is “rebranding itself as an ‘Entrepreneurial City’ to support the new creative businesses including web services, biotechnology, medical devices, and enterprises supporting the film industry."

NC Creativity Report, Institute for Emerging Issues, Sep 2010

Background for discussion

Credit Crisis: Both Debt and Equity Are Pinched

• “VC are behaving more like private equity firms; angel investors are doing the traditional role of a VC firm; and banks, with government-sponsored loan programs are "out there" but doing about as little as absolutely required by statute.” – Tom Looney, angel investor

•  “Most banks won’t lend to you unless you have been in business for three years. For startups, they are looking for 100% collateral and high credit scores from applicants.” - Robert Moses, chairman of the small business outreach committee of the New York State Society of Certified Public Accountants.

• Bank execs insist they’re in a tough position. While government officials want them to boost lending, they’re under pressure to be more disciplined about risk.

Background for discussion

PANELIST INTRODUCTIONS

Fran ScarlettRegional Director of the SBTDC

• Ms. Scarlett holds an MBA from Harvard Business School and a bachelors degree in mass communications from Boston University. Her extensive background includes over 18 years as a publishing executive at several major newspapers, including The Miami Herald and The Cleveland Plain Dealer. She is also a small business owner. Her management consulting firm, Scarlett Media partners with newspaper organizations to create and drive innovative products.

• The SBTDC specializes in helping businesses identify and prepare for traditional bank loans, SBA-guaranteed loans, Federal R&D and commercialization funding, equity capital investment and international export financing. The SBTDC helps business owners identify funding sources and increase the quality of our applications and proposals.

Panelist introductions

Clay BrownCB3 Capital Financing

• Clay Brown has a Finance and Banking Degree from Appalachian State University. He has been working in the banking and finance industry for over 9 years. He spent over 7 years with RBC Bank and is currently President of Commercial Finance for CB3 Capital Funding.

• CB3 Capital Funding works with small, medium and large businesses, offering help with Commercial Real Estate Loans, Equipment Leasing, Sale Leasebacks, Heavy Equipment Leasing, Heavy Equipment Financing, Medical Financing, Accounts Receivable Financing, Factoring, Bridge and Hard Money Loans, SBA Financing, Business Acquisition Financing, Hotel Financing, Stock Loans, Portfolio Liquidations, Private Equity, Joint Ventures and more.

Panelist introductions

Nancy NajarianNAJ Enterprises, LLP

• Nancy Najarian has a master’s degree from Georgetown University with a focus on international development, business and trade. She has executive-level experience in the luxury hotel and resort industry as well as 20-plus years experience identifying opportunities with the US Government for grants, loans, and loan guarantees. She is an experienced grant writer and government contractor.

• NAJ's focus is on funding to support the start-up and growth of green businesses and non-profits. NAJ has assisted clients with RFPs, GSA and other contracts and applications. NAJ also helps identify international funding opportunities for green and renewable energy organizations.

Panelist introductions

Don SprySenior Area Manager of US SBA

• Mr. Spry has a degree in advertising and PR from University of Louisville. He was Global Marketing Manager for startup of the Central Contractor Registration (CCR) program, and received the 1997 DOD Hammer Award for his work on CCR. He is project manager for GW Corp, a regional partnership to provide professional mentoring, counseling, and training to assist the Greater Wilmington small business community.

• The SBA provides technical resource mentoring for small businesses and minimizes lender risk with loan guarantees (40 - 85%). SBA is instrumental in job creation and economic development by facilitating capital investment - especially in small businesses, including start-ups. SBA's goal is to create winning situations for client, bank, and community through small business advocacy.

Panelist introductions

PREPARED Q & A

Give us a bird's eye view of your firm / agency.• Type of financing

provided

• Types of industries served

• Total amount of business capital you provide or facilitate each year 

• Territory covered

Q&A

Has your firm / agency assisted any creative industries or employers of knowledge workers find financing in our region in the last two years?  • Provide some examples

• Brief description of the type of financing provided/facilitated

• Illustrate a success story

Q&A

What criteria would distinguish a start-up best suited to equity investment?Indicate whether your firm / agency offers

assistance with…

• preparing a pitch

• identifying potential sources of equity investment

• follow-up services    

Q&A

What federal, state, or local legislation would most benefit start-up's in our region?• Existing and already showing benefits

• Existing but not yet having an impact

• New proposals (i.e. the state of NC should commit to a two year ZERO capital gains rate for start-up investments...and the Feds should hold the line on the current long term capital gains rate at 15%).

Q&A

Does your firm / agency offer any new financing options that show great promise for the region?• Highlight those affecting clean/green-tech,

medical devices,  pharmaceuticals, film, tourism

• Support your assertion by citing…

• Number of businesses to be supported

• Number of jobs to be created / maintained

(e.g. SBA's Small Business Jobs Act and Carolinas' Nuclear Cluster initiative)

Q&A

What other resources would you highlight for start-ups in our region?• UNCW Entrepreneurship Center

• Angel investor groups: Cape Fear Capital LLC, Wilmington Investor Network, Harbor Island Equity Partners LLC

• UNCW Small Business Technology Development Center & CFCC Small Business Center

• Other government resources: SCORE, Business Link North Carolina, NC Rural Economic Development Center

Q&A

If an entrepreneur does not qualify for financing on the first or second try, who cultivates that resource?

• Continued counseling / education (i.e. business plan development)

• Re-evaluation in light of new programs, such as SBA Small Business Jobs Act

Q&A

AUDIENCE Q & A

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NEXT Monthly Meeting

“The importance of the Film and Television Industry

to our regional economy”

Regularly scheduled meetings are the fourth

Tuesday of each month (Nov and Dec excepted).