Venture Capital Turndowns

Here's basics for applying for venture capital and the need for a suitable business plan.

In the event you get turned down, as you will often be, keep coming back with follow-ups. Few seekers of venture capital are successful with their early attempts.

You must be consistent and persistent, to get attention. So stick to these basics and keep trying. Good luck counts.

Note: I have found that venture capitalists are not all brighter than most in the financial community. Those who have made fortunes at what they do in this work, mostly have stumbled upon the big winners. They have been taking bows the way lottery winners do when they pick winners. (See my Earl J Weinreb NewsHole® comments).

Technically Skilled Workers Still Needed

You constantly hear about many manufacturing jobs being lost to get lower costs overseas.

Could it be that we actually have a shortage of technically-skilled workers? Could that be because we are educating too many kids in college with the wrong skills?

The Organization for Economic Cooperation and Development completed a study that indicated that less than 10% of teenagers in the U.S. study skilled trade careers for jobs with manufacturers and utilities.

We have had this shortage for about twenty years. As a result, there aren’t sufficient qualified workers in many areas of essential work. And the workforce is getting older, so the problem is becoming more acute.

We get more unemployable college grads, more lawyers, and more manufacturing jobs sent overseas where the skills may be.(See the Earl J. Weinreb NewsHole® comments.)

Use More Arbitration

There’s a movement afoot to do way with arbitration for many complaints consumers may have where the dollar amounts are relatively small and the legal fees relatively high.

The pressure to do away with arbitration is especially strong in the securities industry where the complaint is about alleged bias towards the industry.

On closer inspection, you will note the complaints arise from the plaintiff lawyers who are financially hurt when legal disputes can be equitably and cheaply adjudicated without the use of expensive legal assistance.

And there is little evidence of bias where the consumer or investor has been hurt by the arbitration process.(See the Earl J. Weinreb NewsHole® comments.)

Venture Capital Needs a Practical Business Plan

When making a proposal for venture capital always use reasonable numbers in your proposed Business Plan. At the same time, you must show that your business is scalable. That business can become big enough to attract enough attention.

Venture capitalists make money by eventually selling their equity interest to the public on a large scale. They think in terms of hundreds of millions in potential profits. Your business therefore has to grow fast in just a few years, in order to be an interesting investment for them.

There has to also be what venture capitalists call an ”exit strategy.” When that eventual public underwriting or IPO, or a sale to a large corporation can take place. (See the Earl J. Weinreb NewsHole® comments.)

European Government “Austerity”

You keep hearing the media report that European governments with financial problems are now exercising austerity. But don’t believe it.

After all, these are all governments who got into trouble in the first place for spending too much money buying votes. They are not going to stop so readily.

The so-called austerity you hear about, when it’s implemented, comes from private industry in these nations. Look closely and you see little if any government layoffs. The politicians themselves get the same salaries and perks and pensions as before.(See the Earl J. Weinreb NewsHole® comments.)

Making Banks More Risk-Free

Banks in Europe and America are always under pressure to add to capital with stress rests, in order to withstand any potential, future credit problems.

Risk-weighted assets can be assumed to be as high as 70% of total assets in the large U.S. banks. The stress figure in Europe is half that for various accounting reasons; which are not that strong.

In other words, the assessments are pretty much subjective.

Furthermore, it’s all nonsense. As panic=driven problems will negate supposed cushions as will a tendency to have mark-to-market accounting.

Much of what goes on is political maneuvering and posturing. (See the Earl J Weinreb NewsHole® comments.)

The Best Way to Stimulate An Economy?

It may get very confusing to the general public. You know the U.S. economy and that of Europe’s is in dire need of a boost. And you keep getting two or three main recommendations on how to get the job done. But mostly you hear the points of view of politicians whose stand is usually wrong. Because it’s the one opinion that appeals best to unknowing voters.

The genuine answer is simple, once you refer to evidence of the near and distant past, to see what has worked and what did not. Simple? Certainly. But too simple for vote-seeking politicians to implement.

Monetary policy is important. That has to do, for example with how the Federal Reserve system controls inflation with interest rates, etc. But

then you have important fiscal policy that the White House is in charge of.
Thus, there is where the politicking starts, with the aid of Congress.
Some past and present facts:

One: You have the Keynesian free-spending we are so familiar with in the U.S. and Europe, that creates gigantic budget deficits, in the hope of stimulating economies out of recessions. Experience shows they help foster deep depressions. Yet, they sound impressive. Put more paper into the pockets of consumers sounds inviting but repetitive experience shows it’s downright self-defeating and becomes a treadmill to meltdown. Budget deficits cannot be sustained for long.

Two: Politicians may concede the danger of budget deficits by agreeing to balance their finances with higher taxes to meet enormous outlays. But they never reduce those expenses sufficiently to get at the root-cause of economic problems. Government spending, by its very nature, along with huge taxation, are taking needed capital and working cash that business must have for operating and expanding business. Higher tax rates tend to reduce tax revenues.

Three: The best alternative looks at tax rate reduction, in order to expand business, where total tax revenues eventually increase to help balance budgets. This has happened whenever tried. But the method is not attractive to politicians who are selling class-warfare. They refuse tax decreases to the “wealthy” business class, whose taxes, in fact, they politically target for increase.

Fact: Higher tax rates have been shown to decrease tax revenues. But this does not sit  well with political cant.(See the Earl J. Weinreb NewsHole® comments.)

Genetically Engineered Crops

Whether they’re referred to as genetically engineered seeds or genetically modified, crops produced with seeds produced with the aid of science over the past decade or two have gotten a bad press. And poor reception from those who have stood to benefit the most from the scientific advancement.

Investigations have shown that such crops have expanded by at least a third in volume, to help feed consumers at lower cost. Furthermore, they have shown the commodities to be entirely safe for consumption by humans and livestock.

Still a religious-like fervor exists against the use of such scientific progress, despite the overwhelming favorable evidence. (See the Earl J. Weinreb NewsHole® comments.)

Corporations Hoarding Cash

Those who argue U.S. corporations are hoarding cash really are not looking closely at balance sheets.

They are looking at cash deposits only. In other words, they are not aware of business operations or principles, or they simply make it a practice to overlook normal business obligations. The latter may be direct, pending or contingent, but they represent liabilities that companies have. (See the Earl J. Weinreb NewsHole® comments.)

Venture Capital Fact Of Life

There is plenty of venture capital around. However, the problem is that venture capitalists worry they have little escape opportunities with which to make their eventual profits.

Venture capitalists make their big profits only when they can sell their ownership through a major Wall Street underwriting. or with a private sale to a major corporation.

And that often is a long shot during a recessionary/tepid recovery economy. Exit strategy can become more problematic. Some skeptics may say the Bigger Fool Theory may be clearer; would-be buyers may not be as eager to buy in to as many venture capital propositions. (See the Earl J. Weinreb NewsHole® comments.)

The Magic of Private Property Rights.

Citizens in countries which allow private property rights with the rule of law always prosper in relation to those that do not. That’s not surprising.

Yet, do-gooders constantly try to assist the undernourished and starving in third-world countries without getting to the fundamental problem that effects every one of them. Look closely and you see corruption and the failure of governments to permit the basic private property rights that can help each and every citizen to cope, whether tenant farmer or ordinary laborer.
Those trying to help never get at the root cause of poverty. (See the Earl J. Weinreb NewsHole® comments.)

Why the Euro?

The Euro has become more of a political device than an economic requirement. Dreamt up and managed by the French, with the Germans called on to foot the bills as they come due with each country=member’s fiscal mismanagement, or the European Community’s monetary debacles as they arise.

Yes, the Euro makes it easy to travel about member countries because it eliminates the need to convert local currencies as before, But each country goes its own economic way anyway with its own ingrained cultural and spending habits.

The Euro has not been able to change those habits and, therefore, problems persist. (See the Earl J. Weinreb NewsHole® comments.)

Too many M.B.A.s?

About 150,000 M.B.A.s graduate each year. Our graduate schools have accommodated demand by producing such volume.

It’s easy to come up with what academe suggests a business executive or financial expert ought to know. At the same time, the educator must be certain not to make the course too difficult or classes will not be filled. Schools are a growth industry, after all. So we get a happy medium. Lots of students, and graduates. All with degrees, which in the real world of business and finance, have become relatively useless.

Except for their use in a resume. These days, we are reaching the stage where there are simply too many M.B,A,s to attract the attention they formerly did. (See the Earl J. Weinreb NewsHole® comments.)

Stale Medical Data

Government data are always far behind current information. It occurs with labor statistics; it’s certainly true in the case of medical practice.

The medical profession has up to date, practical knowledge. Doctors are aware of the nuances of medications and techniques which government data lack. Yet laggard government data will be the basis upon which ObamaCare will be dictated by panels.

This is not just an idle scare tactic by those who do not want government-administered decisions. This is the way medical decisions are made in the UK and elsewhere, under government health care. (See the Earl J. Weinreb NewsHole® comments.)

Is Current Testing of K-12 Students Valid?

Questions have been asked in recent years whether testing of K-to-12 students and even their often maligned teachers are bona fide.    Parents, usually among immigrant groups who are not fully familiar with English, are protesting that standardized collective tests that grade students and classes are not truly effective, nor are they they fair.

The New York Daily News had an article that noted a 2011 report commissioned by Congress and conducted by a National Academy of Sciences Committee, which found that America's test-based accountability systems "have not increased student achievement." The report’s author claimed "there is widespread teaching to the test and gaming of the systems that reflects a wasteful use of resources and leads to inaccurate or inflated measures of performance."

The basic argument of the groups is that test-makers are not aware of the society many students are from, and that the youngsters who cannot respond to tests should not be treated as dumb. And that youngsters who get little out of school are often victims of the system.

The perspective here is limited to the immigrants of today. Many of us remember when the same argument could have been used decades ago when other immigrants arrived. The children then also suffered from similar problems that face today’s newly-arrived kids. But over a short time, they were able to master standard tests. And without dumbing down standards to suit new norms that cater to the latest dubious educational whims.

The resolution seems to be in teaching English quickly instead of the current mishmash of dual languages. (See the Earl J. Weinreb NewsHole® comments.)

Awareness of Public Unions’ Pensions

 The main problem of public pensions is, unfortunately, hardly ever explained by the media. If it were, the taxpayers would be truly aroused.

If the employer, or locality, funded by taxpayers gives a 5% contribution toward pensions to a union member and does it as a 401 (k), as would most private employers offer today, that employee would invest it. That same contribution is given to the public employee, but with a major difference. He gets a defined benefit. He does not invest it. The state or locality must do it.

And because of one-sided, pressured negotiated terms, the negotiator is in a position of getting favors from the union he is dealing with, that is, political contributions.

But that is not the whole story. The taxpayers’ side must also assume the defined benefit; the need to earn as much as 8% on those retirement funds, when that is impossible and will be, perhaps for the next 50 to 70 years. (See the Earl J Weinreb NewsHole® comments.)

Your Business Career

The ability to think clearly and patiently about a subject is a quality that a job applicant can offer a prospective employer. However, this isn't a quality that a majority of high school graduates, even college students, are able to offer nowadays.

A suggestion: Think up ideas about what you want to do in your career if you're a job applicant or are interested in your potential career path. Then write the details of your thoughts down, for reconsideration at a future date. Repeat the process periodically, while acting as a Devil's Advocate.

You may get your best ideas from work experience and while you're at leisure.(See the Earl J Weinreb NewsHole® comments.)

M.B.A. Students as Special Projects Interns

The media reports that some major companies are paying a fee to colleges for the right to then hire a few of the schools’ M.B.A. students as non-paid interns for a relatively short term, in order that the students be in charge of  management or marketing projects. This makes little managerial sense.

The purpose for taking an M.B.A. course is to learn about business. I have always had misgivings about what can be taught at an advanced level in graduate school about business; most of what you learn is on the job. But here, the student is generally being placed in a responsible position right from the start. Such as, for example,  taking over the marketing of whole brands, etc.

Why not have a conventional internship program without the university fee involvement and the M.B.A. mumbo-jumbo? It all appears to be a school marketing gimmick, rather than an instructional program.

And why the assumption that M.B.A. students are qualified to take over such responsibility from the start? (See the Earl J. Weinreb NewsHole® comments.)

Expired Patents and Lawyers

A U.S. district judge has said its unconstitutional for plaintiffs to sue on claims that expired patents have appeared on defendant products. That the matter was a function of the federal government to pursue.

This type of lawsuit had become another growth industry for aggressive lawyers.

After all, there are many issued patents, particularly on consumer products. And patents have a limited life. And it isn’t always convenient to get the patent notice off a label soon after expiration. Or, is it a crime to let folks know you had the original patent in the first place?

But it’s hard to stop lawyers from trying. There are so many of them. And they have to make a good living the best they can. (See the Earl J. Weinreb NewsHole® comments.)

Too many MBAs?

About 150,000 MBAs graduate each year. Our graduate schools have accommodated demand by producing more degrees.

It’s easy to come up with what academe suggests a business executive or financial expert ought to know. At the same time, the educator must be certain not to make the course too difficult or classes will not be filled. Schools are a growth industry, after all.

So we get a happy medium. Lots of students, and graduates. All with degrees, which in the real world of business and finance, have become relatively useless.

Except for their use in a resume. These days, we are reaching the stage where there are simply too many MBAs to attract the attention they formerly did. (See the Earl J Weinreb NewsHole® comments.)

College-is-best and Other Media Slants

The media too often repeats  uninformed, college-is-best chatter without further thought. Facts given to the right sources will correct the problem over time.

Other examples: Much raw or “seasonally adjusted” governmental statistical releases are manipulative and are poorly explained.

Nevertheless, blaring headlines repeat erroneous raw data; editors no doubt know full well the information is tainted. What’s the purpose, except for news slant? (See the Earl J. Weinreb NewsHole® comments.)

Health Insurance Competition Really Cuts Costs

 Populist politicians love to tell how private insurance companies, or any private business, should be able to compete with any entity that is government-run, especially with regard to health insurance.

But we know that government entities are not operated at low cost. The Post Office is one example. Medicaid and Medicare are government insurance coverage run amok.

What pro-government insurance fans never tell you, is that government has no capital costs. The taxpayer subsidizes capital as well as operational outlays.

All private health insurance companies must provide expensive capital and funds and yet have only a few percentage points of profit to show for it.

Never fall for the argument that having a government agency option to choose from in health insurance will help the consumer. (See the Earl J Weinreb NewsHole® comments.)

The Questionable European Living Style

The European living style has been an impressive mirage. Since World War II most of its major countries have had social welfare types of government, outside that of Germany and Switzerland. With their GDP averaging 2% annually, while that of the U.S., for example, averaging about 3%.

But the proverbial chickens have come home to hatch the result. The short work weeks, long vacations and fancy pensions which have bankrupted European economies are now unsustainable and unmanageable. They no longer can be tolerated even by the politicians who have the tendency to buy off voters with unaffordable spending sprees. (See the Earl J. Weinreb NewsHole® comments.)

Intern Jobs?

An internship type of job is fine if it leads to a career you want, especially at the company offering the job. You probably selected that firm because it appealed to you for good reasons. And also, you will be getting little if any pay. It should be a true apprenticeship relation. That means the job is not a means of an employer getting someone to work for below-market wages. In fact, labor laws dictate against that.

So consider internships carefully, as they can be quite useful if selected wisely. (See the Earl J. Weinreb NewsHole® comments.)

Health Insurance for Undocumented

At least twelve million illegal immigrants may now qualify for free health care, for themselves and relatives, under ObamaCare and present local law. Undocumented immigrants still get medical care when they ask for it.

Only about eight million Americans cannot afford health insurance premiums. The media dwells on a number of well over forty million that includes many who do not want coverage or do not need it for any number of reasons.

I would think it would be far cheaper to give the needy group health coverage free of charge, without revamping the entire system.(See the Earl J Weinreb NewsHole® comments.)

ObamaCare and Doctor Supply

The Law of Supply and Demand applies to MDs and health providers as it does to all commodities.

You may tell the public you will increase their ability to get medical care. But to do so, you must also increase the number of doctors, and medical facilities, plus aides.

It takes about eight to ten years to educate and train a student willing and smart enough to become a doctor. At a cost of at least $100,000.

ObamaCare attempts to cut health costs through a reduction of doctor income. This would make it tougher to explain the investment or acquired debt of becoming a doctor. Nobody mentions training new doctors at government expense and if it ever happened, why train so hard for so little compensation? (See the Earl J Weinreb NewsHole® comments.)

Public Worker Unions

Why not have the House of Representatives in Washington approve the pay and work contract of all federal employees?

There is no really no reason for government unions. FDR wouldn’t stand for it during the New Deal and Great Depression. If fed government labor wants better pay, they can vote for a labor party or its equivalent.

Private workers can and should have the right to join private unions. Negotiation with private employers is totally different than dealing with taxpayers where a union has the ability to influence government politicians and bureaucracy. (See the Earl J Weinreb NewsHole® comments.)

Another Lower-Cost Health Care Possibility

Health care can be cheaper without ruining the entire system with a nationalized, socialized version.

One way in accomplishing this, would be for doctors and hospitals to set their bills at the lowest rates now being charged insurance companies. That discount would be given to the non-insured. That usually is a fraction of what the insured now pay.

Cannot afford that? Those who cannot pay, can get free government vouchers. (See the Earl J Weinreb NewsHole® comments.)

Medicare and Medicaid Fraud

Medicare fraud is estimated to be about $60 billion each year.

Widespread criminal operations go mostly unchecked because of poor government oversight. Fraud consists of ploys such as using dead doctor reports, fake patients and non-existent treatments.

The FBI says Medicaid fraud is a $10 billion annual industry. Practices involve billing for nonexistent or unnecessary services, kickbacks and inflated costs.

With all this, how is the government going to undertake a massive ObamaCare health insurance plan that will entail one sixth of our entire economy?

Politicians tell you only how this fraud-infested system is going to save money. (See the Earl J Weinreb NewsHole® comments.)

Ads With Limited Offers

I guess to write these ads at an advertising agency, the copywriter  needs a college degree in English Lit; maybe an M.B.A. or a similar advanced degree. But some common sense would suffice.

Have you noticed how many ads demand the consumer act promptly, by saying that their offer is limited to the next fifty or 100 callers? Because supplies are limited.

But aren’t these ads offensive to those  with some ability to reason?  Who are the ads kidding, except the truly ignorant? Are so many of the public so dumb?

Ads are expensive and it makes no sense for a company to limit itself while bothering to advertise for a limited response. The terms are a come-on. They are looking for thousands of replies or they stop their “limited” ads. (See the Earl J. Weinreb NewsHole® comments.)

The College Diploma Myth

It keeps being repeated: Go to college and get a diploma or you won’t get a good paying job.

Then you see number comparisons of college degrees of today’s youth, compared to the numbers gathered by their parents or earlier generations.The younger folks have more degrees. They must be smarter.

The college degree has also become a panacea for what ails the American economy.

Rubbish! No report on the subject is broken down to what today’s college degrees are worth in terms of knowledge, nor job practicality, compared to the past.

What do you do when looking for a job with an-easy-to-get degree in social science or political history? Or tennis? or whatever cockamamie subject today’s kids take for the years they waste on campus, while wasting their parents’ tuition and taxpayer subsidy funds.

In the past, youngsters learned trades, often without fancy college diplomas to hang on the walls. They were often smarter too. (See the Earl J. Weinreb NewsHole® comments.)