(Image: Christine Johnson)

In her nine to five job, Christine Johnson creates platforms, events, and workshops to help get ideas and technologies from the military, federal labs, and universities to market them to mainstream consumers.

So it only makes sense that the entrepreneur would have a knack for doing the same thing with people—making their ventures more visible and useful for general consumption. Hence, why she started DiversiTech (short for Diversity in Technology). Johnson founded the organization not only to nurture minority tech startups and make sure they have access to an array of opportunities, but also to ensure that mainstream tech communities know where they can find viable minority-owned startups.

Her interest in Internet startup companies was piqued once she got involved with social media. Johnson began visiting conferences and realized she was often times one of very few minorities in the room. She asked herself: “What can I do to change this?” Johnson and her team started holding events to help aspiring tech entrepreneurs network with one another, as well as devising educational programs that prepare them to be a part of the tech ecosystem.

Last month, her self-funded organization hosted an event to help Philadelphia-based DreamIt Ventures collect applications for the new cycle of their highly successful minority accelerator. At the event, William Crowder, managing director at DreamIt Ventures, spoke to the crowd about the formula for a successful minority startup.

“He spoke about getting away from our cultural norms,” says Johnson. “We are so used to partnering with people who look just like us.  We are so insular and that is to our detriment. You have to get out there and mingle with the masses; that may mean having a founder that is Caucasian or Latino, but you have to be open. If you’re only looking for someone with brown skin, you’re putting yourself at a huge disadvantage.”

But Johnson says this advice doesn’t counter her goal of building an organization focused on minority networking. “DiversiTech is important because there needs to be a home base to come back to. When mainstream communities are asking, “Where are the black technologists? [We can say] we’re here.”

She has made it a point to build partnerships with numerous individuals, groups, and companies who want to ensure the tech landscape is diverse. Corrie Davidson, Google’s DC community manager, made an appearance at the meetup, informing attendees about Google’s local endeavors and tools the corporation has available for small businesses.

The Entrepreneurial Development & Assistance Center at Morgan State University is a DiversiTech partner. The organization’s events are well-attended,  attracting tech enthusiasts such as Chad Womack from The American 21 Project, Inc., Women In Bio co-founder Robbie Melton and Marc Mathis of Mataron Development. They all provide mentorship and support to the organization.

In the future, DiversiTech will host monthly events at a coworking space called GeekEasy. They will also be working with the women and career-focused organization NewLatina and Foster.ly, a community of entrepreneurs in Washington DC, Maryland and Virginia, to expand partnerships between various ethnic groups. In addition to bringing in speakers, Johnson hopes startups will use her events to fine tune their pitch before presenting to investors.

That’s soon to change with the Entrepreneur Access to Capital Act, designed to help startups tap sources of capital other than bank loans, venture capitalists, and angel funds. “Given the dire need for investments in startup and high-growth companies, lawmakers have been pushing to allow individuals to make $1,000 to $10,000 contributions in new or existing companies,” says Thomas “Danny” Boston, member of the Black Enterprise Board of Economists and producer of the Gazelle Index, a national survey of minority-owned firms. New financial regulations have made it “next to impossible for small business owners, especially black businesses, to get bank loans—unless they have a near stellar credit record,” he says.

The practice of crowdfunding appears to provide a reasonable way around this barrier, Boston says. However, he warns, it also could be easily abused since any would-be entrepreneurs could use crowdfunding for fraudulent undertakings.  Congress is still fiddling with the details, in part to make sure investors are well-protected. But Boston believes “to be successful, crowdfunding would need extensive transparency and regulatory controls to avoid abuse.”

The Entrepreneur Access to Capital Act, which has bipartisan support, was approved by the House of Representatives last fall with the intent of making it less arduous, less expensive, and a lot quicker to raise seed funds and grow businesses. Startups could use crowdfunding without having to register first with the SEC to raise up to $2 million from an unlimited number of individuals who can invest up to $10,000 each. Current securities laws allow only accredited investors (such as someone with a $1 million net worth) to buy a financial stake in a business, with few exceptions. Entrepreneurs could use crowdfunding websites to post information about their businesses and offer perks such as T-shirts in exchange for financial donations.

(Continued on next page)

“Anyone can use crowdfunding to fund any business idea,” says Slava Rubin, CEO of IndieGoGo. “By making an impassioned pitch to the people in your network and beyond, you are able to put yourself out there and discover what opportunities and funding might come your way.”

Small businesses can optimize crowdfunding, Rubin says, by using it for presales to demonstrate product demand. “Usually when you are looking for bank funding or venture capital to start your business, you need to prove first that you have a solid, profitable idea,” he explains. “With crowdfunding you have the opportunity to prove there is a need and a demand for your product. People who believe in your idea will fund your venture.”

Furthermore, by using creative videos to engage others, and using Twitter, Facebook, and e-mails to promote that engagement, you can easily and readily test your marketing message and approach on your target audience, adds Rubin. On IndieGoGo.com, campaigns that use video receive, on average, 114% more funding.

The following three funding models can assist you with financing your life’s passion and next big project.

Crowd funding is the latest trend among artists. The way it works: you pitch your project, create a monetary goal, and then engage social networking to drive friends, family, and others online to donate. There are several crowd funding websites out there, including Kickstarter.com, one of the more popular ones. Although a lot of artists are utilizing it, not everyone is successful at it.

Issa Rae’s campaign is one that proved lucrative. Rae is the creator, director, and star of the Web series The Misadventures of AWKWARD Black Girl (ABG). Within a month, she raised more than $56,000 from nearly 2,000 backers using Kickstarter, surpassing a target goal of $30,000.  She used the funds to shoot remaining series episodes (which cost about $5,000 per episode to produce). ABG follows the title character “J” and her friends as she navigates through life, love, and awkward situations.

It was in-kind support and volunteers that enabled Rae to film the first several episodes. At the time she launched her fundraising campaign in July 2011, the Web series averaged 60,000 viewers per episode. She figured if 50% of her viewership donated a dollar each she could get $30,000 in donations offering such perks as ABG wristbands, T-shirts, autographed posters, and digital downloads of the season.

ABG’s cast and crew mobilized viewers through Facebook, Twitter, and Tumblr to repeatedly urge friends and acquaintances to support the campaign. Word-of-mouth spread through social media and several blog posts. “A lot of the bloggers turned the campaign into somewhat of a movement. By supporting us people would be helping to change the face of media,” says the  26-year-old filmmaker.

(Continued on next page)

It also helped that Rae had an existing product. “People had already seen the show. They had decided they liked the series. They wanted to see the show continue.” So, Rae and her producer made a strategic move not to release the eighth episode. “We did a cliffhanger and advertised the campaign, basically saying if you want to see more please donate, otherwise we may have to end the series here.” The season finale, episode 12, will be released Jan. 12, 2012. Rae is now looking to monetize the Web series via advertising and sponsorship.

Top 3 crowd funding sites:
•    Kickstarter.com
•     IndieGoGo.com
•     RocketHub.com

Top 3 components of a successful campaign:
1. Have a good pitch, which means engaging video and copy plus perks such as exclusives
or discounts.
2. Be proactive by sending out e-mails, using social media, and targeting influencers in organizations, on YouTube, and in the blogosphere.
3. Have an audience that cares—an inner circle of friends, family, and fans.

Crowd funding sites aren’t free:
•  Kickstarter.com charges 5% plus a payment processing fee; you must
meet your goal before the money
changes hands.
•    IndieGoGo.com charges 4% (9% if you don’t meet your goal) plus a processing fee.
•    RocketHub.com charges a flat 8%.

Besides the networking, parties, travel, and goody bags, there are several benefits to playing the film festival circuit. Big name distributors tap big festivals such as Sundance and Cannes for properties. After its world’s premiere at the 2011 Sundance Film Festival, writer-director Dee Rees’ film Pariah and a second script were acquired by Focus Features (owned by NBC Universal) for a reported “high six-figures.”

It’s a project that has come full circle. When Rees’ 2007 film short Pariah got picked out of thousands of entries to show at the prestigious Sundance Film Festival, she figured she would fly to Utah for 10 days, promote the movie, hang out with her crew, and book it back to Brooklyn, New York. But the 34-year-old filmmaker’s coming-of-age drama about a teenage lesbian was so well received that the Sundance Institute (which offers development programs for filmmakers and playwrights) asked about a feature script.

(Continued on next page)

Not a problem since Rees had adapted her film short from the first act of a full length script.  She raised the initial $10,000 to finance the short using the crowd funding site Kickstarter.com, writing the film while interning on the set of Spike Lee’s movie Inside Man and finishing New York University’s graduate film program. After submitting the feature script for Pariah, Rees was invited to participate in both Sundance Institute’s screenwriting and directing labs. And the film’s producer Nekisa Cooper, 36, was invited to the institute’s inaugural creative producing lab.

“We gave them grants ranging from $5,000 to $10,000 to move the project forward during the development, pre-production, and post-production phases,” says Michelle Satter, founding director of the Sundance Institute’s feature film program. “We made a deep commitment to go through every stage of Pariah’s development.” Overall, Cooper estimates that grants accounted for 17% of the film’s financing, not including an in-kind donation of Kodak film stock.

Empowered with feedback and assorted filmmaking strategies, Cooper and Rees further sought private investors for Pariah, filmed on location in Brooklyn for 18 days in late December 2009. Cooper wrote a business plan and formed an L.L.C., and obtained a fiscal sponsor, Women Make Movies, that served as the film’s 501(c)3 pass-through for grants received; with a total of nine investors, including individuals and companies, they received 67% in private equity backing and 16% in distributor advance. While the duo had investors, they also had voluminous expenses. Cooper says financing was a “constant cash flow exercise where I was chasing the budget.” She sought three no-interest cash flow loans ($10,000 and less) from friends of the project throughout the course of production and drew up e-mail agreements with terms to repay those loans.

Pariah opens in New York, Los Angeles, and San Francisco on Dec. 28, and other cities in January 2012. Cooper and Rees are currently developing a third film and are negotiating an offer to develop a one-hour scripted TV show with a cable network. Rees is also developing a TV show with HBO.

Top 3 film festivals:
•    Sundance Film Festival
•     American Black Film Festival
•    Cannes Film Festival

Film festivals aren’t the only game in town; there are festivals for musicians, playwrights, and other artists that offer the same benefits.  Check with local arts organizations.

(Continued on next page)

Top 3 reasons for playing the festival circuit:
1. Get your work viewed by a broader audience.
2. Build critical buzz through word-of-mouth and press reviews.
3. Draw the attention of potential
investors or distributors.

Award-winning documentarian Byron Hurt has received grants and prizes to make his films. Currently Hurt is finishing up Soul Food Junkies, a project he chose after he saw his father plagued by health challenges and obesity. That experience led him to question soul food as a culinary tradition.

Before tackling the topic of food, Hurt made three other films, including I Am a Man: Black Masculinity in America, and Hip-Hop: Beyond Beats &Rhymes, a documentary that tackles issues of masculinity, sexism, violence, and homophobia in hip-hop culture, which appeared at the 2006 Sundance Film Festival and on PBS’s Independent Lens series.

To get Soul Food Junkies launched, Hurt did a modest amount of crowd funding. He embarked on his own online fundraising campaign. The goal was to get people to donate $1 each. He was able to accept tax-deductible donations through a fiscal sponsor, Third World Newsreel. His fundraising efforts netted a little more than $1,600. “I reached out to my personal contacts, friends, and colleagues, sending an e-mail or two, asking them to donate as much as they could.” He also received $1,000 from the Aepoch Fund, an experimental foundation.

Hurt then approached the Independent Television Service’s (ITVS) Commissioning Fund and submitted a treatment that delineated how he would shape his narrative, and what it would look like on the screen. The fund gave him $25,000 to research his subject. He used the money to buy books and connect with soul food historians, cooks, restaurateurs, and people in the food justice movement. He also shot footage for a trailer that would convince ITVS that an hour-long program on the subject would be worthy of their investment.

Hurt resubmitted a longer version of his trailer and treatment, securing grants from ITVS, for more than $200,000. He used that as leverage to get an additional $100,000 from the Ford Foundation. “The vast majority of those funds went into staffing and crew, administrative costs, and editing,” he says.

(Continued on next page)

The 42-year-old filmmaker admits that the process can be rough. “It’s hard to break through; only 2% to 3% or less of those who apply to ITVS get funded. When I did Beyond Beats & Rhymes, I actually got rejected by the PBS folks twice.” He went through two years and several rewrites of his proposal. “You have to keep at it,” adds Hurt. 

There are various grants, fellowships, and awards available to musicians, performing artists, writers, filmmakers, and visual artists. The Foundation Center
is a great starting point.

3 Leading Grant Organizations:
•  National Endowment for the Arts
•  PEN American Center
•  New York Foundation for the Arts

—Additional reporting by Carolyn M. Brown

(Image: Scott Council)

What does it take to get your tech company funded by people other than your family and friends? It’s a lot harder for tech entrepreneurs than for those who are trying to raise capital for a brick and mortar business. The product and customers are sometimes less tangible.

Before launching FileBlaze, a cloud-based file storage and streaming service, Chuck Baker, 41, worked as an executive producer for music artists like Mya and Dru Hill. He realized there was a void in ways to transfer large uncompressed files like music, videos, and photographs, and preview them in real-time from the Web without also downloading other memory intensive software. He created FileBlaze to help prevent piracy, leaks and unauthorized downloads of copyrighted material.

Initially, he and partner Rhahime Bell relied on angel investments. Over a three year period, they raised approximately $2.5 million from 16 investors, including themselves, family and friends like former basketball player, Alonzo Mourning, and filmmaker, Malcom Lee. Baker used the money to erect the site in increments starting with an alpha prototype that cost $250,000 to build. With each new investment they deployed new features to the site. Recently they received a bank loan for an undisclosed amount and they’re hoping to raise $15 million on their next round of financing. Despite so many investors, the two still retain a 59% majority ownership in the company.

Whether you live in California’s Silicon Valley, New York’s Silicon Alley or somewhere in between, it’s important to understand how angel or venture capital financing works in the technology world.  You don’t want to make a bad impression by pitching a venture capitalist when you don’t have all of your ducks in a row.

Most startups boot strap and use angel investors to do market research, file a patent, and create an alpha prototype, but the first round of financing, sometimes called the Series A, is the amount a company needs to secure to create a beta product, recruit the first set of core employees or partners, test the product, and begin generating revenue. Series A financing can be between $1 million and $12 million depending on the company’s needs and goals, and investors at this round are usually taking a big risk.

Also know that VC money isn’t free. Expect to give up a percentage of your equity to your investors. The more risky the investment, the more equity you might need to give up. Series B financing is usually sought after the company has become more established and the amount can range depending on the valuation of the company.

Funding rounds can be made as long as the company needs money to expand operations. For example, Gazelle, a four-year-old, Web-based company that recycles cell phones and other electronics for cash, raised $22 million in a Series D financing round. The company plans to use the new round to market its services to mass media.

Continue to next page to continue reading and watch Chuck Baker’s start-up tips…

Even Twitter, which has been around for more than five years and is valued at $8 billion (according to the tech blog AllThingsD), recently raised more money by authorizing the issuance of 25 million new shares, priced at $16 per share.

While visiting San Francisco this summer, I dropped by the FileBlaze office to talk with Baker about how he was able to build capital, retain equity and keep his company on track. Watch the video and read below for his insights.

Invest in your intellectual capital. You need more than a vision to ask people for money. This means if you can’t bring money to the table, then bring your skills and experience. Investors will fund you if they trust that you or your team has a solid business or technology background. Find people who can fill in the gaps where you lack skill or experience. “If you’re a business person, find a chief technology officer. If you’re a CTO, find a business person that has experience bringing products to the market,” says Baker, who also previously worked as director of strategy at Village Ventures, a VC firm.

Fund to the next milestone. Don’t try to raise $1 million and tell investors that they will see something in a year. Instead raise $100,000 to $150,000 and deploy an alpha or beta prototype, or try to make your company revenue positive. This way you can reach a milestone and fund a second round with a higher valuation because now you have shown investors that you’ve accomplished something. That will help you avoid diluting the equity.

Focus on niche markets and niche consumers that you understand. A lot of times new media companies focus on the broad appeal of the Internet and all of the potential customers therein. Instead, Baker suggests that you focus in on a niche community. “Take a page out of Mark Zuckerberg’s playbook. Focus on that freshman in your dorm at Harvard and offer the best product for that niche and hopefully that niche will become something that everyone can get excited about and reach a broader audience. With FileBlaze Baker focused on digital professionals, because he had worked in the industry and he knew the ins and outs of the needs of that community.

So you’re great with computers, love the latest apps and often advise friends on what programs they need to adopt. Still, starting a tech company can be quite an undertaking; especially if you are essentially a novice. Here are some tips on what to do in order to get started.

1) Join a tech incubator or accelerator program where you can take advantage of free or reduced price office space and equipment, collaborate with other tech entrepreneurs, and receive insight from veterans. For example, the NewMe accelerator program will bring seven minority-led startups from across the country to be mentored by Silicon Valley’s best and brightest for nine weeks this June. Keep in mind that some accelerators require an equity stake. Check your local university or search the National Business Incubation Association for organizations near you.

2) Get into the Lean Startup Movement. Some of the best tech startups started with simple designs, ideas and html coding (Remember, Facebook anyone?). Initially you should opt to create a Minimal Viable Product. You do need to demonstrate that your idea is useful and will eventually be profitable for its investors, but it’s not a good idea to spend a lot of money right out the gate. Instead, take advantage of free, open source software like, Ruby on Rails, a web application framework that includes tools to make common development tasks easier, and survey your potential customer base to determine what they want or need.

3) Search for early stage seed capital using resources like AngelList, a free social community of angel investors and venture capitalists who share deals with each other. Getting introduced on the list can result in an invite to pitch your idea and possibly get funded.

4) Network and participate in events like Startup Weekend, which is held in cities around the world and gives tech entrepreneurs, developers, and programmers, a venue to form teams, learn programming, develop prototypes, and start companies.

5) Perfect your tech pitch. The tech elevator pitch can be far more difficult than a regular elevator pitch since there might be a lot of technical information to convey to your audience. It should be available even when you’re sleep. In other words, if someone visits your website wanting to know what you do, you need to be able to explain it to them in clear consise terms. That might mean using a video animation service like Switch Video or SayitVisually.

6) Finally, seek out other African Americans in technology with similar goals. Black Founders, is one new organization created to promote diversity and provide mentorship in the Silicon Valley startup community. They are planning to expand their events to other cities, including New York. Also try searching for Black Tech groups in your area on Meetup.com. Currently, there is a Blacks in Tech Meetup group in New York and Los Angeles. If one doesn’t exist in your city organize it yourself.

For more information: Read Startups Open Sourced, a collection of interviews with 33 tech founders, who talk about programming, design, VC funding, and sustainable/lean growth. The book talks to BE Nexter Justin Seibel who launched Justin.tv, a platform where people can watch and broadcast live streaming videos. The book is $20 as an ebook through paypal or $30 for paperback at Lulu.com.

Are you ready for your 60 second pitch? (Image: Thinkstock)

Okay, so 30-60 seconds may not seem like a lot of time. But in the confines of an elevator, it’s an eternity. And in pitching your business to someone, it’s ample time to show them what you’ve got. Of course, every word and second counts.

To win anyone over with the perfect pitch starts well before you step inside an elevator, a boardroom or take center stage. Avoid being lost for words or leaving money on the table by mastering these 5 P’s to the perfect pitch.

1. Preparation

Doing your research is a must for anyone looking to convince someone about anything. Know your stuff and come correct with the information. (Don’t just arbitrarily drop stats and facts.) From the ins and out of your industry (i.e., How large is it? Where/How does your business fit within in?) to statistics on the problem your product or service looks to solve.

2. Purpose

Who are you? What does your service, product, or business offer? If you are already in business, briefly note how profitable or impactful it is to date; if not, provide realistic estimates related to your business’ performance. Think: Results. Also include what you look to do, especially if this speaks to how the listener(s) can be of support to you.

3. Potential

Your pitch is not about what the listener can do for you, but rather it’s to illustrate how you and your business can be of help to them (consider your audience as potential customers). Think: What is the problem that your product or service solves? Or better yet, what’s in it for them?

4. Punctuality

Being brief is an understatement here. Think: Get in and get out. But it’s not about rushing; it’s about delivering a pitch that’s quick, simple and to the point. Pace yourself; speak clear and fluently. The goal is to win someone over in at least 30-60 seconds, not run them off or have them walking away asking, “What the heck was that?”

5. Presentation

This is neither the time to freestyle nor to approach someone with a memorized speech. Bottom line: Come ready to play. In crafting your pitch, start from a macro of what you want to say, and then reel it in with bullet points in order to create a micro (unscripted) message to work from. For some it easier said than done, but make it enjoyable. Aim for being calm, cool and collected. Who wants to give money to someone who looks like they’re about to implode from nervousness? The more familiar you can become with the information, the less anxious and better focused you’ll be in order to nail it.

Whether it’s an angel investor offering $10,000 or $10, give them all you’ve got. You never know who can help and how. If you truly believe in your idea and are passionate about seeing it come to fruition, then you’ll forget fear and have no qualms about asking for what you want.

So, are you ready to pitch your business and enter for a chance to win $10,000?

Enter here for the Black Enterprise Elevator Pitch Competition; the winner will receive $10,000 to help jump start their business. The competition is during our annual Entrepreneurs Conference + Expo, taking place May 22-25, 2011 in Atlanta Georgia. Visit blackenterprise.com/ec for more details. As an incentive BE is offering you a discount on early registration: Just enter code BEDG295 and receive $200 off.

Get the money you need to start your business (Image: Thinkstock)

Access to capital is a chief concern of small business owners.

For many technology companies, venture capital backing provides the best means to quickly expand a business. But in 2008, when the financial industry went into a dizzying downward spiral, so went the pursuit of venture capital for many companies. Venture capital investments fell from $28 billion in 2008 to $18 billion the next year, according to the National Venture Capital Association. This setback didn’t halt everyone’s efforts, but rather afforded those determined small businesses the opportunity to rethink their business goals.

BidMyCleaning.com was one of them. Launched in April 2008, the e-business provides an online service that matches residential customers with local cleaning services. The company turned a profit after being in business only six months and this past year revenues were at $1.2 million, up from $800,000 in 2009. After not only staying afloat but thriving in a turbulent economy one would think securing venture capital would come easily–this is no longer the case.

So in combating this new reality, the BidMyCleaning team has become more strategic about pursuing venture capital funding and other means to enlarge the business in times of economic hardship. “Now that our business model has been proven, we’re looking at finding partners to assist with bringing the business to scale,” says co-founder CEO Raymond Aker, 38, who offers these three tips for making your business more attractive:

1. Entering competitions means strengthening your network and increasing your visibility. Business plan and other competitions—whether you win or lose—can provide tremendous opportunity. They give potential investors a chance to review your business as well as offer priceless feedback.

2. Create your board strategically. Comb through your team’s respective networks to find people with venture capital connections and industry or startup experience.

3. Markets are cyclical, so be prepared. As the bottoming out of the U.S. economy showed in 2008, businesses need backup plans. BidMyCleaning sought out local strategic partnerships to drive revenue.

For more on the company BidMyCleaning, read “Clean Sweep” in the March 2011 issue of BLACK ENTERPRISE.

Want to know more about how securing capital for your small business? Then attend Black Enterprise’s annual Entrepreneurs Conference, taking place May 22-25, 2011 in Atlanta Georgia. Visit blackenterprise.com/ec for more details. As an incentive BE is offering you a discount on early registration: Enter code BEDG295 and receive $200 off.

Stone decided to combine her passion for fashion with her studies in “new age marketing.”

With an avid interest in online media, Kimberley Stone decided to combine her passion for fashion with her studies in “new age marketing.” The 27-year-old launched POSHGLAM.com in 2005 as an effort to increase networking opportunities in the fashion industry and influence the market.

Stone says 30% of her website’s traffic comes from social networking sites.

Though she’s mum on revenue figures, she says POSHGLAM does have multiple sources of revenue streams including advertising dollars, integrated marketing opportunities, and providing interim public relations for luxury brands–among others.

With 131,000 unique visitors, POSHGLAM’s growth has been steady and Stone is aiming to take the website to the next level with backing from venture capitalists. Check out what this business-savvy entrepreneur has to say about social media and securing venture capital funding.

How have your leveraged social media to build your brand? How did you develop a strategy?

The core components of the brand must always be kept in mind and nothing one does as a marketer should compromise the principles that are the essence of why the brand exists. Thanks to online measuring tools like compete.com, we are able to benchmark the site against our competitors and do a true situational analysis. But it’s important to keep your own analytical records via your private home-based server as well. A lot of online tools are still working toward accuracy and can’t be relied upon.

• We use Facebook for sharing articles and replicating our market through connective friends.
• We use Twitter for micro messaging and building awareness via hashtags and linkbacks.
• We also use news feeds for those who love to feed our site into Google Reader or any other feed service.

Explain the pros and cons of social media partnerships?
Social media, simply put, is about being social. If a company can’t get along with other properties or people online, they might as well get out of the business. Partnering with other sites to share the market is a great strategy for site promotion, loyalty, and business longevity.

You use geo-targeting advertising. Why is this an advantage?
It enables us to pinpoint a demographic based on zip code and target consumers in the area for localized content and advertisements. It comes in handy with the international properties for POSHGLAM, including POSHGLAM.co.uk, POSHGLAM.fr, and POSHGLAM.it.

Venture capitalists are vying to invest in POSHGLAM. What was your strategy?
Venture capitalists have to be courted; you can’t just harass your way into their rolodex. You have to have the right marketing materials for them to take you seriously. It’s important to let the right people know you are raising funds and to surround yourself with a great support system. It’s important for investors and peers to know your drive and ambition, and to exude professionalism at all times. Most importantly, when an investor interviews you, they are not necessarily looking for reasons to invest but, rather, reasons not to. It’s important to rid your business plan of investor ‘red flags’.

What advice would you give to online upstarts looking to attract investors?
We built a strong board of advisors. It’s always attractive to investors to have experienced wisdom on your side. Know your business like the back of your hand and know your competition even better. It’s important to stay aware of the evolution of your business plan–it’s a progression, not a project. It’s something that should be restructured every time the SWOT analysis changes. I have approximately eight business plans depending on who I am pitching, and I tweak them according to who is interested in seeing it and why.

Greene provides a glimpse into the mind of the venture capitalist.

The old adage that it takes money to make money has always rung true. And with the lingering effects of the financial crisis and credit crunch remaining, access to capital – particularly bank loans – has never been more difficult to obtain. While private equity is an option, entrepreneurs often fail at the process or proper planning and therefore are denied the capital their businesses require.

Robert L. Greene, principal at SYNCOM Venture Partners (No. 8 on the BE PRIVATE EQUITY list with $410 million in capital under management) says the firm receives nearly 400 deal proposals annually. The firm provides equity to companies that are primarily in early, mid and growth stages of their capital growth cycles in the media and communications space. Past financing deals included Radio One and Black Entertainment Television.

When going over an investment proposal, Greene says the SYNCOM team pays close attention to the following:

• It must be a business that’s in a high-growth sector.
• There’s a unique and defensible aspect to that business. Venture capitalists (VCs) want a good idea that has unique aspects to it that prevent other people from easily emulating it.
• The entrepreneur must possess some domain expertise that gives VCs the ability to determine the likelihood of success. They look for an entrepreneur’s ability to have assembled capital, assembled and led a management team, developed and executed against a strategy and ultimately exit the venture successfully.

Greene offered the following advice to entrepreneurs looking to tap this avenue to capital.

Understand that venture capitals are investors. “We’re actually very disciplined about how we invest our capital and we want to invest in companies that efficiently use that capital to achieve growth,” Greene says. “So if it takes $15-$20 million in order for you to start growing, then that’s a more difficult value proposition than $2-3 million incrementally invested over time.”

Plan for your capital needs before you run out of cash. Greene advises companies to give themselves twice as much time as they think it’ll actually take to raise the money to do so. “If you come to us with a 90-day requirement, chances are it’s not going to be fundable because it’s going take us at least that amount of time to understand the business, get comfortable with the entrepreneur, and plan to mitigate the risk associated with it,” he says. “Oftentimes entrepreneurs will come to us after they’ve exhausted resources when in fact, their resources coupled with ours should go into the deal concurrently.”

Realize that dilution isn’t necessarily a bad thing. Entrepreneurs often fear dilution of their equity ownership in a deal and therefore hinder their business’ opportunities to obtain capital to grow, according to Greene. “At some point, you come down to the fact that if the company is going to be successful, you have to bring third party resources in,” he says.

Don’t pull your money out. Entrepreneurs often believe that when they raise venture capital they can automatically take some of their money off the table, Green asserts. “That’s a difficult value proposition because venture capital is not buyout capital and it’s also not public market capital,” he says. “So the notion of my capital going in as a VC and your capital coming out as an entrepreneur fundamentally misaligns our interest.”

Understand the nature of a VC deal. “It’s not just capital and securities being exchanged,” Greene says. “It’s the notion of all the resources being able to be assembled at a point in time when growth can be achieved.”

Carolyn Green

Carolyn L. Green is co-founder and managing partner of EnerGreen Capital Management, a Radnor, Pennsylvania-based private equity firm that focuses on late venture and growth stage companies involved in the energy and environmental industries. She says business capital will continue to be scarce in the next year or two as the nation moves out of the recession, but you can position yourself well by bearing the following tips in mind.

Show your track record. “Show investors that your product works in the marketplace,” she advises. “If you are someone who wants to get into business, think about what you do well and how you can make that attractive to someone. Stay in your area of expertise and add value where you can.”

Look to buy. “You don’t always have to look at start-ups,” Green points out. “Take a look at the community around you and find out who has a business that they’ve been operating for 10 or 20 years. They’ve been successful but the owner may be aging and may not have children to take [the business] over. Keep your eyes and ears open at community meetings, in your church, lodge, or fraternity. There are real opportunities out there if you’re open to them.”

Think big. “Black-owned companies need to be competitive – period,” Green declares. “We don’t dream big enough. It is generally easier to borrow more money than to borrow less. You go through exactly the same process, filling out the loan papers and getting the credit checks, borrowing $7.5 million as you do borrowing $75,000.”

Maya Payne Smart is a frequent contributor to Black Enterprise.