When Larry Muray went to a Christmas party in Moraga last year he wasn’t expecting that meeting Don Smith there could have a great impact on his business. Smith is a member of Keiretsu Forum, the largest Angel Investor network in the Bay Area with reach in the whole United States and beyond. Muray, co-founder of the Lafayette based start-up NovelX, met the right “angel” at the right time.
Angel Investors (AI) are a prime source of financing for start-ups, filling the gap between family and friends funding and venture capitalists or banks, with investments from $500,000 to $1.5M. AIs often invest before the business is profitable, taking higher risks level, and expecting higher returns. “Banks tend to be reluctant to invest in early stage companies that are not yet profitable,” says Muray, “Angel investors understand the risk, but can also see the upside potential of an investment early on.” John Rossell, President and CEO of the California Bank of Commerce, concurs, “Angel investors complement the work that banks do for businesses that are young. They play a crucial role for the business vitality of the economy.” The Small Business Administration estimates that there are at least 250,000 angels active in the country, funding about 30,000 small companies a year. The total investment from angels is estimated at anywhere from $20 billion to $50 billion as compared to the $3 to $5 billion per year that the formal venture capital community invests.
Some AIs are wealthy individuals investing independently, other organize into groups or networks to share research and pool their investment capital. Randi Williams, founder of Keiretsu Forum, claims his group is the largest network in the world. “In 2000 I had decided to retire early after a successful career in real estate,” he explained, “but when I started to diversify my portfolio, I started to lose money. I decided that I needed to organize a network of people that would be experts in other areas of the economy, so we could make good investment decisions together.” Williams had an already large network of wealthy friends so Keiretsu took off rapidly. Today Keiretsu comprises 750 accredited investor members (by invitation only) throughout eighteen chapters on three continents. Since Keiretsu Forum’s founding in 2000, its members have invested over $180millions in 200 companies in technology, consumer products, healthcare/life sciences, real estate and other segments.
“I joined the network 3 years ago,” says Joao Magalhães, a Moraga resident and investor, “it has opened new worlds for me.” The Bechtel retired executive who knew everything about infrastructure now gets prime knowledge and access to all kinds of new business adventures. “One of the unique aspects of Keiretsu is that members conduct themselves the due-diligence process that leads to investment recommendations,” he says. All of the Forum’s members have extensive business experience, and they have to be able to spend some time as active participants in the screening process. “About 1 to 3 companies are selected for every 50 submissions,” says Williams. Once accepted, the companies introduce themselves to the different chapters to raise the money they need. It’s not Keiretsu that invests, but each individual member who decides to pitch in or not.
For companies that need funding the process is transparent. “In January, we submitted an application and passed through several rounds of screening before we were selected to present at the monthly Keiretsu Forum Meeting – actually four presentations … one at each of their Northern Californian Chapters,” says Muray, “we are currently in the due diligence process.” As any entrepreneur in start-up time, Muray feels that nothing happens as quickly as he would like, but he found the 9-week Keiretsu process was very well organized and thorough. “It touches on all aspects of our business including our business strategy, financial model, IP position, marketing strategy as well as the background and experience of the team.” said Muray before adding that the Keiretsu allocation was $500K of a planned $1.5M round.
The money will be raised by an undisclosed number of the Forum’s members. “There is no minimum investment requirement,” says Williams, “in fact, new members cannot invest during the first 6 months of their membership, they have to participate and learn.” “I have less than 5% of my investment engaged with Keiretsu,” says Magalhães, “and I do not expect a return for 3 to 7 years.” Keiretsu claims an average return on investment of 22% per year. According to a study by Robert Wiltbank (Willamette University) and Warren Boeker (University of Washington) published in November of 2007 “the average return of angel investments is 2.6 times the investment in 3.5 years— approximately 27 percent Internal Rate of Return”. They highlight a wide range of results with 52% of all the angels studied returning less than they had invested and 7% achieving returns of more than ten times the money invested.
Wednesday, May 13, 2009
Monday, May 11, 2009
Will Native Plants Take Over Front Lawns?
Replacing all or part of the front lawn with native plants was one of the highlights of the May 2nd “Bringing back the natives garden tour”. The different looking style, once scarcely seen, is spreading like weeds in all Lamorinda neighborhoods. But even a native plant advocate like Nora Harlow from EBMUD says, “it’s not an easy endeavor to replace a lawn with native plants,” then she adds, “done right, it’s absolutely gorgeous.” Speaking from experience, local homeowners explain why they’ve made that choice, in spite of the tradition of green grass that has dominated the suburban landscape for decades.
The green lawn is a well-established American tradition. “A smooth, closely shaven surface of green is by far the most essential element of beauty on the grounds of a suburban house,” wrote Frank J. Scott, in The Art of Beautifying Suburban Home Grounds, in 1870. Today, as author Michael Pollan (“The Homnivore Dilemna”) noted "Like the interstate highway system, like fast food chains, like telephone, television and cable, the lawn has served to unify the American landscape." North America now has more than 32 million acres of lawn under cultivation, occupying more land than any single crop, including wheat, corn, or tobacco.
The tradition though does have its roots on this continent. According to American-Lawn.com, green, weed-free lawns so common today didn't exist in America until the late 18th century. Instead, the area just outside the front door of a typical rural home was typically packed dirt or perhaps a cottage garden that contained a mix of flowers, herbs, and vegetables. In England, however, many of the wealthy had sweeping green lawns across their estates. Americans with enough money to travel overseas returned to the U.S. with images of the English lawn firmly planted in their imaginations. This image of wealth and prosperity swept the country with the selection of the proper crop of grass for golf courses and the spread of two key elements, the garden hose and the lawn mower. Today, the Canadian Center for Architecture goes as far as saying that “the preservation of a two-inch-high verdant pile is at once the common ground between happy neighbors, conforming to an unwritten and unspoken social contract.”
The desire for non-conformity was one of the motivations of Al Kyte when he decided in the early 70’s to remove his Moraga front lawn. More importantly, maintaining grass just didn’t make much sense to him. “My garden has a clay soil with slope and a lot of sun,” he said, “I could just see the water run down the hill.” When the Moraga resident took a class on how to attract birds to his garden by planting native plants he had a revelation, and replaced his grass with a manzinata chaparral and wild flowers. “I haven’t had to water it since the 70’s,” he says, “and it’s beautiful.”
If Al Kyte designed and planted his garden himself, it is not always the case. Shary Rosenbaum and her husband worked with a landscape architect. “We didn’t have the necessary knowledge of plants to create the garden ourselves,” she said. Originally the Rosenbaum had grass and shrubs, but everything died in the last drought, and needed to be taken out, “we wanted a garden that would be low water and low maintenance,” said Rosenbaum, “being different was not a problem.”
Local real estate agent Ben Olsen does not see a risk for the value of a home if one chooses a path of non-conformity. “Any well design native garden will look better than a lawn,” he says, “if there is a backyard lawn for kids to play, a native front garden is a real asset.” Thinking in term of return on investment might be a good idea because native gardens can be costly to install. “It’s horribly expensive,” said Rosenbaum who didn’t want to be more specific, but added, “it’s more than my salary as a lecturer in 2 universities.” Rosenbaum adds that she has no regrets and loves her garden, but that if there were one thing she would do differently, that would be to negotiate better with the landscape company.
If cost can be a barrier to entry in the native garden, lack of knowledge is just as detrimental to its spread. Garth Jacober at Harry’s Nursery does not sell many natives, “people don’t gravitate toward these plants,” he says, “when they think natives, they think ugly.” Kenny Murakami at the Moraga Garden Center agrees, “when they are small, the native plants don’t look very attractive, it takes knowledge and education to buy them, it’s not an impulse buy.” However Murakami reports having seen a dramatic increase in the sales of his native plants department. “Over the years the sales are getting better and better,” he says, “it started even before the drought and it increased dramatically last fall, which is the best time to plant.” Murakami has been getting more variety recently, but he can’t stock large quantities of plant since natives don’t like to live in a pot and require a high turn over. His more popular plants are the many varieties of manzanitas and California wild lilacs.
Barbara Leitner is a botanist, so for her the learning curve was not too steep when she decided to replace the lawn of her Orinda property with a meadow of wild flowers. Leitner went a step further than most, she wanted local native plants in her garden. She started many of the vegetation she used from seeds she collected. “I wanted plants whose ancestors grew here in the wild,” she said, “they are genetically compatible with wild life and will have no impact on natural populations outside the garden.” Leitner still worked with a landscape architect to design her garden, “combining plants in a garden is an art,” she says, “and I’m just a scientist.”
With her local native garden in front, Leitner saved 40% on her water bill last summer, but she does not ostracize the lawns. “Having some green lawn is nice to play games and we have some in the back,” she says, “it’s all about balance.”
The green lawn is a well-established American tradition. “A smooth, closely shaven surface of green is by far the most essential element of beauty on the grounds of a suburban house,” wrote Frank J. Scott, in The Art of Beautifying Suburban Home Grounds, in 1870. Today, as author Michael Pollan (“The Homnivore Dilemna”) noted "Like the interstate highway system, like fast food chains, like telephone, television and cable, the lawn has served to unify the American landscape." North America now has more than 32 million acres of lawn under cultivation, occupying more land than any single crop, including wheat, corn, or tobacco.
The tradition though does have its roots on this continent. According to American-Lawn.com, green, weed-free lawns so common today didn't exist in America until the late 18th century. Instead, the area just outside the front door of a typical rural home was typically packed dirt or perhaps a cottage garden that contained a mix of flowers, herbs, and vegetables. In England, however, many of the wealthy had sweeping green lawns across their estates. Americans with enough money to travel overseas returned to the U.S. with images of the English lawn firmly planted in their imaginations. This image of wealth and prosperity swept the country with the selection of the proper crop of grass for golf courses and the spread of two key elements, the garden hose and the lawn mower. Today, the Canadian Center for Architecture goes as far as saying that “the preservation of a two-inch-high verdant pile is at once the common ground between happy neighbors, conforming to an unwritten and unspoken social contract.”
The desire for non-conformity was one of the motivations of Al Kyte when he decided in the early 70’s to remove his Moraga front lawn. More importantly, maintaining grass just didn’t make much sense to him. “My garden has a clay soil with slope and a lot of sun,” he said, “I could just see the water run down the hill.” When the Moraga resident took a class on how to attract birds to his garden by planting native plants he had a revelation, and replaced his grass with a manzinata chaparral and wild flowers. “I haven’t had to water it since the 70’s,” he says, “and it’s beautiful.”
If Al Kyte designed and planted his garden himself, it is not always the case. Shary Rosenbaum and her husband worked with a landscape architect. “We didn’t have the necessary knowledge of plants to create the garden ourselves,” she said. Originally the Rosenbaum had grass and shrubs, but everything died in the last drought, and needed to be taken out, “we wanted a garden that would be low water and low maintenance,” said Rosenbaum, “being different was not a problem.”
Local real estate agent Ben Olsen does not see a risk for the value of a home if one chooses a path of non-conformity. “Any well design native garden will look better than a lawn,” he says, “if there is a backyard lawn for kids to play, a native front garden is a real asset.” Thinking in term of return on investment might be a good idea because native gardens can be costly to install. “It’s horribly expensive,” said Rosenbaum who didn’t want to be more specific, but added, “it’s more than my salary as a lecturer in 2 universities.” Rosenbaum adds that she has no regrets and loves her garden, but that if there were one thing she would do differently, that would be to negotiate better with the landscape company.
If cost can be a barrier to entry in the native garden, lack of knowledge is just as detrimental to its spread. Garth Jacober at Harry’s Nursery does not sell many natives, “people don’t gravitate toward these plants,” he says, “when they think natives, they think ugly.” Kenny Murakami at the Moraga Garden Center agrees, “when they are small, the native plants don’t look very attractive, it takes knowledge and education to buy them, it’s not an impulse buy.” However Murakami reports having seen a dramatic increase in the sales of his native plants department. “Over the years the sales are getting better and better,” he says, “it started even before the drought and it increased dramatically last fall, which is the best time to plant.” Murakami has been getting more variety recently, but he can’t stock large quantities of plant since natives don’t like to live in a pot and require a high turn over. His more popular plants are the many varieties of manzanitas and California wild lilacs.
Barbara Leitner is a botanist, so for her the learning curve was not too steep when she decided to replace the lawn of her Orinda property with a meadow of wild flowers. Leitner went a step further than most, she wanted local native plants in her garden. She started many of the vegetation she used from seeds she collected. “I wanted plants whose ancestors grew here in the wild,” she said, “they are genetically compatible with wild life and will have no impact on natural populations outside the garden.” Leitner still worked with a landscape architect to design her garden, “combining plants in a garden is an art,” she says, “and I’m just a scientist.”
With her local native garden in front, Leitner saved 40% on her water bill last summer, but she does not ostracize the lawns. “Having some green lawn is nice to play games and we have some in the back,” she says, “it’s all about balance.”
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