Author Interview

The Questions:

·        What is the book about?

·        Who is it written for?

·        Why did you write the book?

·        What is the book’s point of view?

·        The book’s format is unusual.  Why the alphabetical, key-word format?

·        How were the key-words chosen?

·        Can you give me an example?

·        So is this a book about business law?

·        Are there entries that do not involve the law?

·        Why so much emphasis on accessibility?

·        Tell us about the side-bar entries.

·        How is the Growth Company Guide different from other books on fund raising?

·        Tell us more about the annotated venture investment agreement included in the book.

·        How did you first become interested in growing companies?

·        What has your experience taught you about entrepreneurs?

The Interview: 

Question:          What is the book about?

Answer:            The Growth Company Guide 4.0 is a handbook for people who manage growing companies and the institutions and individuals who finance their growth.  It provides readers with practical advice about key business and legal issues growing companies invariably face as they try to attract and retain the resources needed to support expansion – capital, talent and intellectual property.

The book describes the types of investors who invest in growing companies, methods to attract investors, and ways to evaluate funding proposals.  It includes strategies for pricing and negotiating fundraising deals an other contracts. It describes methods for selling stock, protecting company secrets, and using stock and other non-cash considerations to attract and keep key employees.

Question:        Who is it written for?

Answer:            The book is written for people who operate growing businesses, people thinking about going into business, business students, and people who advise growing companies, like lawyers, accountants, investment bankers and consultants.    

Anyone interested in knowing more about how growing companies get funding and how those deals are structured and priced will find something useful in the book. Anyone who wants to improve the odds of succeeding with their entrepreneurial efforts would benefit from the book.          

People who invest in private companies find the book useful.  Venture capital firms use the book to train new fund managers and technology incubators use it to train entrepreneurs.

Question:        Why did you write the book?

Answer:            The Guide, and its predecessor The Venture Magazine Complete Guide to Venture Capital, were written as a tribute to my entrepreneurial father. He found great value in practical books about business and would have loved to have one that deals with the practicalities of  raising money for a growing business. He would have particularly appreciated the business-law advice relating to structuring deals and employee incentives.

Question:        What is the book’s point of view?

Answer:            The book is written from the perspective of a business lawyer who has specialized in representing growing companies and their investors for more than three  decades.  Think of it as an open conversation with your business lawyer without the usual hourly fee, only here your lawyer is a specialist who has helped numerous other companies face the same growth related issues you are facing.

Question:        The book’s format is unusual.  Why the alphabetical, key-word format?

Answer:            The Growth Company Guide 4.0 is designed to be a real-time source book for busy entrepreneurs and executives that gets readers directly and quickly to the information they want. 

For example, if a reader wants to know how sophisticated investors determine what price they are willing to pay for company stock, he can find out by turning to the entry entitled Pricing.  There he will find a discussion of how investors evaluate and price investments in growing companies.  The entry also suggests strategies for negotiating with investors and cross references the reader to  discussions of a common alternative pricing method in the Discounted Cash Flow entry and negotiation techniques in Negotiation.

Question:        How were the key-words chosen?

Answer:            The words and phrases described in the book are the same terms that entrepreneurs and investors use to describe issues companies encounter as they grow and their needs for capital increase.  They are the jargon entrepreneurs hear as they search for capital, structure funding deals, work with trade secrets, or pursue individuals to help them grow the business.

Question:        Can you give me an example?

Answer:            Of course.  Think about the business owner who receives an investment proposal from a venture capitalist.  The proposal may call for the sale of convertible preferred stock, the granting of anti-dilution protection, registration rights, and first refusal rights to the buyer.  Each of these requests have significant consequences for the business owner and the business.  To find out what those are, the reader need only look up those entries in the book.  In each case, the entry will describe the business and legal consequences of the request and explain how different variations of the request can effect the company and its owners.

Question:        So is this a book about business law?

Answer:            Yes and no.  This is a book about the practicalities of growing a business.  Many of those practicalities involve legal implications of business decisions reflected in contracts and other documents that reflect company agreements or structure. A financing, for example, involves numerous interrelated contracts and documents. If you don’t fully understand the implications of what you have agreed to in these complex documents, you may end up at a serious disadvantage. If you are using stock to attract key employees, for example, you should understand something about the various alternatives and vesting schedules so that you can make informed decisions and structure a plan that meets your company’s needs.

Question:        Are there entries that do not involve the law?

Answer:            Yes.  Some of the biggest challenges an entrepreneur faces do not involve legal issues.  The question of how to price the company’s stock when selling to an investor is one.  No one wants to sell at too low a price but there is little guidance available to the growing company executive about how to arrive at a reasonable price.  The Growth Company Guide tackles the issue head on with practical discussions of two common methods sophisticated investors use to evaluate companies.

Reading the entries on Pricing and Discounted Cash Flow will show the reader how to use projected future results to arrive at a realistic valuation of his business.  How to write a compelling business plan and executive summary when searching for capital, another non-legal issue, is treated extensively in the Business Plan and Summary entries.  How to evaluate the option of going public or determine the most appropriate type of investor for a company are other examples of non-legal issues treated in depth in the book.   

Question:        Why so much emphasis on accessibility?

Answer:            Most entrepreneurs have too many things to do and too few resources to do them with.  Fund raising is a good example.  Few entrepreneurs have time to really learn about raising capital from traditional sources before they need money.  As a result, many good ideas don’t get funded.  And even the entrepreneur who obtains funding usually finds himself dealing on uneven terms with an investor whose business it is to know the finer points of private company investing.

The Growth Company Guide’s format remedies this situation.  Its alphabetical design and extensive cross referencing helps entrepreneurs learn the important fund raising concepts quickly and easily while they search for money.  In so doing, it improves the reader’s chances of raising funds for his company.

Question:         Question:         Tell us about the side-bar entries.

Answer:            Answer:             There are a series of complimentary entries throughout the book that are not based on key-words that provide insight into solutions to common problems or issues entrepreneurs have to deal with. These include advice from the author and others. The entries include discussions on dividing share ownership between founders in ways that do not impair the ability to raise outside capital and maintaining control of a business after a fundraising. In all, there are 25 of these entries.

Specific entries include How to Care for the Entrepreneurial Investor, Real World Conflicts in Fundraising, and Practical Strategies for Negotiating with Investors. They also include a Joint Venture Checklist, a Sample Venture Capital Letter of Intent, and an entry on how to Think Like a VC.  

Question:        How is the Growth Company Guide different from other books on fund raising?

Answer:            For one thing, it deals with more than just fund raising.  It also deals with how to structure intelligent deals, how to value a private company, how to protect company know-how and secrets, how to use noncash assets to attract and retain key people, and how to use the resources available to growing companies to  deal more effectively with employees.

For another, its perspective is different.  It is not written by a venture capitalist, who may be biased toward protecting investors, or by an entrepreneur, whose experience may be limited to a few financings.  Rather, it is written by an attorney who has 30 years of personal experience in representing individual investors, venture capitalists, entrepreneurs and growth companies in company financings, acquisitions, securities offerings, technology and general corporate matters.

It is also one of the few places you will find a fully annotated Series A Stock Purchase Agreement. The agreement is in a common form used by venture capital firms to invest in growing companies. The annotations describe how and why the agreement is structured in the way it is.

Question:         Question:       Tell us more about the annotated venture investment agreement included in the book?

                        Answer:           This is a great tool for tying together the concepts discussed in detail throughout the book. It appears in the appendix and gives entrepreneurs a first-hand look at the type of agreements they will be asked to make by venture capital investors. When you consider the annotated agreement with the Deal, Venture Capital Deal Structures, and Think Like a VC entries in the main part of the book, you get a unique insight into what venture investments look like and why they are structured they way they are. If you add in the Pricing and other entries, you have the kind of background you need to run an effective fundraising campaign and structure a more favorable deal.

Question:        How did you first become interested in growing companies?

Answer:            I first became interested in the special challenges growing companies face by watching my father start and grow two carpet manufacturing businesses in the 1960s and 70s.  I worked in those mills and gained a great appreciation for the skills and tenacity needed to make a company grow.  Later, I focused my legal practice on helping this same class of people.  This book is an extension of that practice.

Question:        What is your background for writing the book?

Answer:            I am a practicing lawyer and Member of the AmLaw 100 law firm of Womble Carlyle Sandridge & Rice, PLLC that has offices throughout the Mid Atlantic and Southeastern United States.  My legal practice includes representing private and public operating companies, venture capitalists, investment bankers, and individual investors in their transactions and general legal work.  I have completed numerous private company financings, private placements, public offerings, management buyouts, borrowings, licensings, joint ventures, mergers, acquisitions, franchisings and other transactions.

I have also served on the board of directors of successful venture backed companies, including one that sold for more than $500 million dollars in 2004. I have also put together and personally invested in growing private companies in the information technology and medical device arenas. Before that, my father, who was a carpet industry entrepreneur in the 1970s and 1980s, gave me first hand experience in what it takes to grow a company.

In addition to the practical side of working in and advising growing companies, I was a phi beta kappa and summa cum laude Economics major in college and earned a law degree from Duke University, graduating with honors and serving on the law review and moot court board.  I wrote The Venture Magazine Complete Guide to Venture Capital in 1987 and the subsequent Growth Company Guides.

Question:        What has your experience taught you about entrepreneurs?

Answer:            That they are starved for resources.  Most work grueling hours, don’t have enough money or staff, and compete against companies with much greater resources.  They need more than they can afford.  They have to react in real-time, which means they must assimilate information quickly to survive.

Most are good at marketing, sales, product development, people management, or some combination of the same.  Few know how to deal effectively with investors, value their company, structure incentive packages, or deal with a variety of other matters growing companies must face.  Most could use a book like the Growth Company Guide.