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The Entrepreneurs’ Chronicle

Issue Four | Tuesday, July 1, 2003
Subscribers: 9814

Editor: Ryan P. M. Allis, University of North Carolina at Chapel Hill
Sponsors: Center for Entrepreneurship & Technology Venturing, The Entrepreneurs’ Coalition

"Make no small plans. They have no magic to stir men’s blood and probably themselves will not be realized. Make big plans; aim high in hope and work, remembering that a noble, logical diagram once recorded will never die, but long after we are gone will be a living thing, asserting itself with ever-growing insistency." -Daniel H Burnham, Great Chicago Architect (1907)


1. Message from the Editor: On This Fourth Issue
2. Life as an Entrepreneur: Week One
3. Presenting to Venture Capitalists
4. Program Review: LeadAmerica Business & Entrepreneurship Conference
5. Distinguished Entrepreneur Interview with Todd Ballenger, CEO KendallTodd

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Section One
Message from the Editor

Welcome to the fourth issue of The Entrepreneurs’ Chronicle. This newsletter contains articles on topics related to entrepreneurship, interviews with entrepreneurs, and reviews of books appropriate for the entrepreneur. It is published the first week of every month and brought to you by, the Entrepreneurs’ Coalition, and the Center for Entrepreneurship & Technology Venturing at the University of North Carolina at Chapel Hill.

This month’s issue begins with the article ‘Life as An Entrepreneur: Week One’ that chronicles my experiences as I begin my career as a full time entrepreneur. Following this we have an article by Bill Tuller on presenting to venture capitalists. Finally, the newsletter concludes with our fourth Distinguished Entrepreneur Interview with Todd Ballenger, CEO of Kendall Todd, a North Carolina provider of web based mortgage and financial advisor software, as he provides advice for young entrepreneurs.

If you have any comments, suggestions, or would like to contribute content to be published in the newsletter or online, I encourage you to contact me at Please do feel free to forward this newsletter on to your colleagues and associates. On behalf of the team I thank you for being a subscriber.

Yours entrepreneurially,
Ryan P. M. Allis, founder
Business & Entrepreneurship Resource

Section Two
Life as an Entrepreneur: Week One
By Ryan P. M. Allis

Article can be read online at

Finishing my salmon and pasta at 37,000 feet on June 2 I realized that my life was about to change. I had been dropped off at London Victoria station a few hours earlier and on the London Eye the day before. The week before I had been given an eighteen hour baptism of fire in Dublin—partying from 7pm until 1pm. Two weeks before I had relaxed in the seaside town of Southsea, finished the plan for the next fifteen months of my life, and enjoyed a football match or two.

Now, however, I was on a plane to Raleigh-Durham, North Carolina. I would arrive in five hours and enter a new world—a world of working one hundred hour weeks, obtaining insurance, paying bills on time, filling out forms, defending lawsuits, hiring employees, signing contracts, fighting fraud, maintaining records, having to deal with rent and taxes, and keeping track of financials. In short, I was beginning the first week of my life as a full time entrepreneur.

I came in around 3:30pm and made it to a taxi by 5pm after passing through very tight security. I took a taxi to Chapel Hill and was dropped off at my office. With no apartment or dorm, I would have to sleep at my office. I walked in and experienced the second greatest moment a serial entrepreneur can have—an empty office—an office devoid of material things in sight, but an office full of vision and imagination of what soon would be.

With the prior tenant, my friend Wes, having moved out two days before, I walked into that empty new office at 101 N. Columbia St. Suite 400. Seeing the office bare (minus seven boxes containing all my personal belongings in the corner) for the first time struck me. There were so many goals I wanted to accomplish, a company I wanted to build, and so many memories I knew were to come. During that moment I could envision my future and see a well-decorated busy room with four employees. I saw the blank walls and floors that would hold my whiteboard and desks for at least the next six months. It was an experience that will only be superceded when the company born in that room is successfully sold or goes public.

I went to bed that night on the floor after being awake for a full twenty-four hours. I fell asleep at 2:00am and curled up with a few shirts bundled to serve as a pillow. I woke up the next morning with a stiff neck. I washed up in the bathroom, stretched, and began my work. I began scheduling meetings, ordering business cards, and getting my personal and business finances in shape. The next evening I went out to the Rathskeller with my business partner Aaron, his girlfriend Sarah, Sarah’s roommate, and Aaron’s business partner Erik. I had such a feeling of accomplishment that night as a downed two hot plates of All-You-Can-Eat Spaghetti in the Chapel Hill landmark.

Over the next week that empty office would go through a transformation. After meeting with a friend from Kenan-Flagler Business School and UNC’s Entrepreneurship Club, he decided to come on and work with me as a partner in building Broadwick. He allowed me to store my effects in a spare room in his apartment and began to help me furnish the office. I inherited a glass desk from the former tenant and we purchased a classic wood desk at the UNC Surplus Auction.

Getting that one-hundred fifty pound monster from the auction to the second floor office was an adventure. We rented a U-haul to bring the desk to the door and the hired two homeless men for $5 each to help us bring the desk up. After we each had desks we ordered a whiteboard, desk pads, pen holders, staplers, staples, and business card holders. My partner had his parents bring over a mini-fridge that helped reduce our eating-out expenses and purchased a multi-function machine from our new homeless friend Bates we had met a few days prior. We also purchased a white loveseat from a graduating senior and moved that up to the office and inherited a black futon from my friend Erik that turned out to be a lifesaver. No longer would I have to sleep on the floor!

That second night my new girlfriend Erin came by to see me and the office. Living on the same dorm floor as her since August 2002, I had only met her in late April. It was such a relief to have someone to go out and have fun with. I was very glad that she lived in Cary, about a half-hour away, and took the time to come and see me. The office was almost as good as an apartment. We could watch movies on the board room projector and had a television with cable, a George Foreman Grill, a futon, phones, books, a loveseat, two mini-fridges, broadband internet access, a water cooler, and a bathroom. If we just had a shower there I’d never have to leave.

During those nine days in Chapel Hill I made a point to meet with a least one person each day and was working to ready the IntelliContact Pro software for launch. I got my first lesson as a full-time entrepreneur a few days in as our hosting company filed Chapter 7 bankruptcy forty-eight hours before we planned to launch our flagship product—always backup your data and code and always plan for things to take longer than you expect them to.

On June 12 I took a taxi back to Raleigh-Durham airport. I was off to Baltimore/Washington International for training for the LeadAmerica CSLC Business & Entrepreneurship Conference. I would have the chance to teach entrepreneurship and leadership to high school students for ten days and I was very much looking forward to it. I went from being all alone in my bare office to having a business partner and a fully furnished office, a growing network, and a new company ready to launch. I had made it through the first week of my life as an entrepreneur.

Section Three
Presenting to Venture Capitalists
by Bill Tuller

The Venture Presentation Process — Frequently Asked Questions

What is Venture Capital?

Venture Capital is money provided to companies in return for a large equity stake in the company. Venture Capitalist’s hopes the company grows so they end up with a large and valuable equity stake in a large company. These investments are made while a company is private, so this business is sometimes referred to as Private Equity.

What is the Structure of a Venture Capital firm?

Most charters of Venture Capital firms are to seek high returns of at least five to ten times the money invested by investing in early stage companies. Venture Capital firms are led by General Partners who manage the firm’s capital, make investment decisions and raise additional capital for their VC firm when needed. General Partners put up some of the money themselves, but most of the money comes from Limited Partners who are willing to make the long-term, risky investment into a Venture Capital fund in return for extraordinary returns.
What type of investment does a Venture Capitalist look for?

The General Partners in a Venture Capital firm want to make an investment where they can commit a large amount of capital to a firm that will grow quickly and create an "exit event" as soon as possible. This "exit event" usually takes the form of an Initial Public Offering (IPO) or Acquisition.

How do VCs add value?

The main value-add is providing early stage firms with sufficient capital to grow their businesses. Venture Capital firms are at the center of entrepreneurial activity, so many VC firms can also help you find partners, customers, and employees. A General Partner of the VC firm will also likely become a member of your board after an investment is made. They will help you with difficult strategic decisions since they usually have a lot of industry experience and influence. They will also help you raise capital in the future since they want their investment to continue to grow.

How do VCs find early stage companies to invest in? How do I get in contact with VCs?

By far and away the leading way a VC finds an investment is through referrals from their contacts in the industry. These contacts are usually through professionals in the Private Equity business such as attorneys, accountants, investment bankers, research analysts and leaders in your specific industry. Many of these professionals have relationships with General Partners in Venture Capital firms.

How do I get in contact with professionals in Private Equity?

If you are a successful early stage firm, most likely attorneys, accountants and investment bankers have already been in touch with you. Many of these professionals make it their business to seek out early stage companies, since they generate fees from you as you grow and require their services. Many of these professionals will also provide you with free services in the beginning in the hope of generating larger fees later.

If Private Equity professionals have not found you yet, you can locate them by asking other small businesses in your industry whom their accountants and attorneys are. These professionals are also always present at gatherings of growing businesses such as Information Technology and Biotech events.

What should I present to Professionals interested in my business?

You should have a Business Plan or Offering Memorandum describing your business, a detailed financial model with your projections, and a PowerPoint presentation if it is a meeting in person. If you do not have these documents or are unsure how they should look your documents should be helpful in this regard. We have prepared an Offering Memorandum, but it can easily be used as a Business Plan by taking out the Offering and Risk Factor sections. Private Equity professionals will also want to see the Income Statement, Balance Sheet and Cap Table.

A word on presenting your venture to anyone in the Private Equity industry. Treat the presentation like they will be making the investment decision because based on your presentation. They will be deciding if they would like to work with you and help you in your capital raising effort.

Do VCs read Business Plans/Offering Memorandums without referrals?

Sometimes. General Partners and their Associates read hundreds of Business Plans a week and the Business Plans/Offering Memorandums from referrals go to the top of the pile. If a referral is not available or if you are trying to blanket VCs in your area, try and send your Business Plan/Offering Memorandum and Financial Plan to VCs that invest in your industry. Research the VCs web site or ask people in the industry what types of firms they invest in. On the VCs web site they usually list their portfolio companies, which are the companies they have an equity stake in.

Where can I get a comprehensive list of VCs?

Here is a web site where just about every VC in the US is listed:
What should I have prepared when I meet with VCs?

Have the following:
• Offering Memo/Business Plan
• Financial Model (Income Statement, Balance Sheet)
• PowerPoint Presentation (also have hard copies)
• Demo of the product or solution (if possible)
The goal of a meeting with a VC is to get them to the next step in their due diligence. If possible have customer references available so they can continue kicking the tires of your company. VCs also like to look at a sales pipeline if you have one.

What are VCs looking for specifically?

Approach the VC meeting from a sales approach. You need to make the Venture Capitalist believers in your story. VCs always invest in people, and they look for leadership and integrity among other qualities. VCs are also looking for a company that can grow quickly with venture money and dominate a segment of the market. In addition, VCs base their decisions on activity in the public market. If wireless stocks regain strength in the market, then private equity interest in wireless stocks will also increase.

What are VCs focusing on in light of tough market conditions in the last year?

VCs are focusing on a path to profitability. Most VCs are only willing to make investments in companies that will reach profitability with the funds that are invested. Gone are the days where you only focus on revenue growth and get financing later. Your model needs to show positive cash flows from operations with the new investment.

VCs are also struggling with their own portfolio companies, and many VCs are not making new investments until market conditions improve dramatically.

How will VCs value my company?

Valuation is not a science, but VCs will value your company in a variety of ways. One way is by taking discounted revenue multiple to comparable companies that are publicly traded in your industry. Another valuation technique is a discounted cash flow analysis, but this is based on many assumptions. The earlier stage the company, the more guess work involved.

What if my company has not generated any revenue or very little revenue?

It is difficult to get VC money without revenues, but not impossible. If you can demonstrate you have a good product or solution with a large market opportunity and good partnerships with industry leaders, VCs may be interested. However, revenues are the best way to demonstrate a proven business model.

How should I value my company and how do I get the best valuation?

If you feel strongly about the valuation of your company or existing investors require a certain valuation, include this in your Offering Memorandum. However, the best way to value your company is to get multiple term sheets from different VCs and sit down with your advisors and choose the best one. If you have a close relationship with a particular VC and have only one term sheet (which is a whole lot better than no term sheet) you probably should give great consideration to taking the money after talking with your advisors. There are always some things that you can negotiate, as with any contract, but as an early stage company, it is best to take the money and focus on the execution of your business. Also, it is not in the interest of an early stage VC to be extremely draconian (although it may seem that way at current values) with respect to valuation because they want to make sure the founders and management have an incentive to see the business succeed.

Where can I find an example of a Venture Capital Term Sheet?

There is a good example of term sheet among other documents at the following web sites: (click on "Inve stment" under "Finance and Accounting")

What help do I need in analyzing a term sheet before I accept it?

Always have an attorney or private equity professional read any term sheet on your behalf before you sign. You need to be aware of all of the issues within it. Onerous liquidation preferences or anti-dilution provisions could make it difficult for you to raise capital in the future.

Where can I find Angel Investors if VCs are not ready to invest in my company?

Usually Angel Investors are found among friends or family who are willing to invest in you and your company. Professionals in Private Equity also have relationships with Angel Investors, so get to know Accountants and Attorneys focused on early stage companies even if you do not need or cannot afford their services. The best kind of Angel Investor is someone who has experience in your industry and is willing to ride through the up and downs of your business and industry.

Section Four
Excerpts from the Entrepreneur Interview Series

In collaboration with the Center for Entrepreneurship & Technology Venturing (CETV) at UNC’s Kenan-Flagler Business School, the team has begun the Distinguished Entrepreneur Interview Series this month. To fit the selection criteria one must currently be or have been a founder, co-founder, or start-up CEO in a company that has done more than $5M in yearly sales. One interview will be published in this section each month.

Below we include the full interview with Inspire Pharmaceutical CEO Christy Shafer:

Todd Ballenger, CEO of KendallTodd, Inc.

Todd has over 14 years experience in the financial services industry as a licensed securities, insurance, real estate, and mortgage lending professional. Todd founded three companies; Capital Savings Co, Inc., Advantage Capital Mortgage, USA, and PlanMax Financial. These three companies closed over $2 billion dollars in residential and commercial loans before being rolled into a Nasdaq IPO in 1999. Todd is considered an industry pioneer in the area of capital market and credit market convergence, and has published courses on lending and equity management currently taught as approved courses for Realtors, Appraisers, Builders and Lenders. Todd speaks regularly about the future of the ManagedMortgage, a mortgage that marries the financial advisor and the lender to effectively manage the home equity, and how financial advisors and lending professionals can work together to create a unique experience for the client through proper education at the time of a home purchase, or refinance. Todd was a two-time Inc. 500 winner, a three time KPMG Fast 50 winner, and the 1998 NC Mortgage Lender of the year. Todd has a business degree from the University of North Carolina, and teaches a class there on Entrepreneurship. His new book about creating wealth through effective mortgage management is due out the Summer of 2003.

What attributes make a successful entrepreneur?

Ability to flow with changes, focus on what the market wants or what we can reasonably project from both hard data and intuition that the market will want, hard work, focus on task, willingness to listen to outside influences, etc.

What do you believe are the necessary elements for a business venture to succeed?

A focused business plan where the team allows the business direction to change as one body, and does not become fractured by changes that result in a business getting on a horse every day and trying to ride in more than one direction. Experience helps, but is attained if one has the desire to stay the course and see the business through to its eventual success or failure. Money helps, but the type of business will impact how much of that is ultimately needed, and too much money often does more harm than good as the company moves too fast when they are just learning to ride their bike, making injuries all the more palpable.

How essential do you see an undergraduate degree or MBA being for an entrepreneur?

You learn what you have to learn to stay in business, or you perish. Not having an MBA, I can’t reflect on how it hindered me, many friends who have MBAs say the connections they made had more of an impact on their success that what they learned in the MBA program long term. If I were to do it again, I’d get a JD with an MBA which I think is the most powerful combination.

What role has academic education played in your own life versus the role of experiential learning and what has been the relative importance of each?

Academic education was required up until the point that I graduated from college. True experiential learning happens whether you want it to or not, but it is more prized after you gain control to direct it to areas that most impact your personal interests, desires and goals, and therefore I think it has more long term depth than academic education, but both play important roles, as without Academic learning the nature of the experiential learning would be different.

What are the three most important lessons you have learned about business and entrepreneurship in your lifetime?

1) the business is a business, and the death of a business does not equate to the death of the founder – going through a really ‘bad movie’ makes you appreciate the good ones and I would have never expected to learn so much from the challenges of a failed IPO
2) that good advice is priceless, and the money that I thought I saved on good legal, accounting, etc. in the early phases of my business cost me far more than I saved
3) that my employees don’t need to know anything more than what they need to know to be effective in their very clear and defined job descriptions – the idea of being a visionary is an initial draw to many, but once they start working for you it become a threat, and is best kept under a dark cloak until specifically unveiled with clear details on how the ‘change’ to the old vision affects them – because that is all they really care about.

What have been the keys to your success?

Ability to flow with changes, focus on what the market wants or what we can reasonably project from both hard data and intuition that the market will want, hard work, focus on task, willingness to listen to outside influences, etc.

What advice would you give to an aspiring young entrepreneur?

Get a great coach that has experience in your industry, then get a great coach that has no experience in your industry, and listen to them both.

What books would you recommend to aspiring entrepreneurs? Which books have influenced you the most?

Good To Great
Corporate Lifecycles
How to Win Friends and Influence People
Anything on Negotiation – Herb Cohen is my favorite
Anything on Selling – Zig Ziglar and Tom Hopkins stand out

Describe some of the biggest challenges or obstacles you’ve have encountered as an entrepreneur? How were these overcome?

Cash flow in competency – and effectively having a plan that incorporates that into the business – we bootstrapped so we learned to work on the cash flow from three months prior, In other words, spikes in cash do not make a trend until you have sustained them for three months, so if it is January, spend the cash you had available in October and you are less likely to spend your way into trouble.

What memorable mistakes, if any, have you made in business? What did you learn from them and how can they be avoided?

Trying to merge with another company and not realizing the impact on the two different cultures. I’d spend a great deal more time focusing on compatibility and not just the numbers.

What trends and changes do you see occurring in business today? What new technologies and industries will everyone be talking about in twenty years?

Wireless bandwidth and connectivity have my attention now. The use of those tools with the ability to integrate data to make life flow with less friction will still be a subject of discuss in 20 years. I believe a much larger percentage of the work force will be working from their home offices and telecommuting in the next five to ten years. I run my new business from my home and value the freedom and flexibility.

What are the best and worst things about being an entrepreneur?

Worst – The fact that you often work 80 hours a week as an entrepreneur to avoid working 40 hours a week as an employee.

Best – The possible returns for your efforts monetarily, personally, professionally.

Would you rank the following attributes in order of greatest to least importance for an entrepreneur, and comment briefly on the importance (or unimportance) or each.

13-A College Degree
11-Knowledge of Accounting and Finance
10-Knowledge of Marketing
4-Leadership and the Ability to Inspire
5-Ability to Communicate Effectively
Having the Right Advisors (same as solid team)
9-Good Networking Skills
6-Motivation and Ambition
14-Having a Good Idea or Plan
3-Being Able to Build a Solid Team
8-Being Able to Execute
12-Having a Bias towards Action

Are there any other thoughts, insights, or advice for aspiring entrepreneurs that you’d like to add?

I look for a burning desire to succeed and a great attitude over any other attributes for a potential entrepreneur.


This concludes issue four of The Entrepreneurs’ Chronicle. We’ll see you in August. Please do feel free to forward this on to your colleagues and associates. If you are not subscribed and would like to subscribe, please visit

If you would like to contribute content, become involved with the team, make suggestions, or provide feedback please feel free to contact us at

This newsletter is published by with support from the Entrepreneurs’ Coalition ( and the Center for Entrepreneurship & Technology Venturing at the Frank Hawkins Kenan Institute for Private Enterprise at the University of North Carolina at Chapel Hill (

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This Entrepreneurs Chronicle article was written by Ryan P Allis on 2/28/2005

Ryan P. Allis, 20, is the author of Zero to One Million, a guide to building a company to $1 million in sales, and the founder of Ryan is also the CEO of Broadwick Corp., a provider of the permission-based email marketing software and CEO of Virante, Inc., a web marketing and search engine optimization firm. Ryan is an economics major at the University of North Carolina at Chapel Hill, where he is a Blanchard Scholar. [learn more.