WO2001046890A1

WO2001046890A1 - Method and device for financing business plans

Info

Publication number: WO2001046890A1
Application number: PCT/US2000/035229
Authority: WO
Inventors: Ishwari Singh; Kamal Mustafa; Neil Rubin
Original assignee: Bluestone Capital Partners, L.P.
Priority date: 1999-12-23
Filing date: 2000-12-22
Publication date: 2001-06-28
Also published as: AU2291601A

Abstract

A method for financing business ideas includes the steps of collecting business plans from a plurality of entrepreneurs through access (101, 103) and collecting investor information through access (201, 203). The system also classifies a plurality of qualified investors, and provides the business plans as online data to the plurality of qualified investors. An internal e-mail system (20) is provided to improve communications and confidentiality. Also provided is an apparatus for financing the business plans includes a storage device (10) for storing a plurality of business plans and a server (20) providing the internal e-mail system and a plurality of information in the form of electronic pages, a first electronic page accessible only to qualified investors, the first electronic page providing information as a function of the plurality of business plans.

Description

METHOD AND DEVICE FOR FINANCING BUSINESS PLANS

BACKGROUND OF THE INVENTION 1. Field of the Invention

The present invention relates generally to finance and more particularly to a method and device for financing business plans. 2. Background Information

The financing of small start-up companies or individuals with business ideas typically has been performed using venture capital groups and contacts.

Often, the basis for such funding is based on a business plan, which delineates the proposed or current make-up of a company or plan for a company. Such a business plan typically includes a review of the products and/or services to be offered or offered by the company, a review of market conditions, and financial history and projections. The financial information typically includes revenue, costs and profit projections. More detailed business plans including such financial information may be kept confidential, and often are disclosed to investors only after the signing of a non-disclosure agreement.

Entrepreneurs have posted business plans on the Internet, for example, in order to solicit funds. Garage.com for example collects business plans and posts them on the Internet for review by venture capitalists and qualified investors. General e-mail information is provided so that investors and entrepreneurs may contact each other by external e-mail. These e-mail communications must be transmitted, however, to general e-mail accounts which are often not very secure. Vcapital.com offers a similar service. The application process for these services is complicated and requires that a user submit an external e-mail address.

Problems with these services to date have included that entrepreneurs have been unwilling to disclose detailed information over the Internet, as business plans or other information may be confidential or business-sensitive. Also, investors and entrepreneurs have been unwilling or unable to communicate using normal e-mail addresses. This may arise from not having availability to an e-mail address, or more, likely, to being concerned about the confidentiality of communications transmitted to the outside e-mail address.

Moreover, many investors or entrepreneurs do not want to reveal an outside e-mail address for confidentiality reasons.

BRIEF SUMMARY OF THE INVENTION

An object of the present invention is to provide an improved method for providing financing for start-up companies or business ideas. An additional or alternative objective is to facilitate confidential and secure contacts between investors and entrepreneurs.

The present invention provides a method for financing business ideas which includes the steps of: collecting business plans from a plurality of entrepreneurs; qualifying investors so as to form a plurality of qualified investors; providing the business plans on a server to the plurality of qualified investors, the server being accessible to the plurality of entrepreneurs and the investors; and providing an internal e-mail service to the entrepreneurs and qualified investors.

By providing the qualified investors and entrepreneurs with an internal e- mail system, which preferably resides solely on a server of a service provider, the confidentiality of the communications of the investors and entrepreneurs can be enhanced. The entrepreneurs and qualified investors can be provided with identification and passwords and their own internal e-mail addresses. Internal e- mail addresses solely dedicated to the service also permit investors or entrepreneurs, who may have a variety of types of communications coming over their firm or external e-mail address, to separate investment e-mail in a confidential manner. Thus, an investor who may not want others who might have access to his external e- mail account to know of his or her investing activities can be assured that communications for the service of the present invention remain on his or her confidential internal e-mail.

The qualified investors may be individuals or corporations, and may be qualified as a function of one or more of numerous conditions, including but not limited to: (1) individual wealth or corporate book or market value; (2) revenue or individual income; (3) registration with a governmental body, for example the

Securities and Exchange Commission; and (4) membership in a corporate association.

These qualifying conditions help assure that the investors reviewing the business plans are of high quality and can provide adequate financing. In addition, the method preferably further includes having each of the plurality of investors sign a non-disclosure agreement before reviewing any business plans or before reviewing a more detailed information section related to the business plans. The signing of non-disclosure agreements often has required the extensive involvement of lawyers and other individuals, and has delayed the reviewing of confidential information. Advantageously, each business plan collected from entrepreneurs may include a non-confidential and confidential section. The confidential section then may be viewed only by those investors who have signed the on-line non-disclosure agreement.

Preferably, the non-disclosure agreement is an agreement between the entrepreneur and the qualified investor, signed by each with a digital signature. This direct agreement eliminates the need for the service provider to act as a middleman or enforcer of the non-disclosure agreement. If the qualified investor violates the non-disclosure agreement, the entrepreneur may enforce the agreement directly against the qualified investor. However, it is also possible that the service provider arrange for the non-disclosure agreement with the qualified investor.

The present method also may include the step of registering the plurality of investors and/or the plurality of entrepreneurs on-line. This step provides for an easy and simple method of collecting the business plans and investor data. The registration of entrepreneurs preferably includes receiving at least the name, address and business plan information of the entrepreneurs. The registration of the investors typically includes receiving at least the name, address and financial information relating to the investors. This information may be collected over the Internet, for example, using different input fields.

The step of collecting business plans from entrepreneurs preferably includes providing a set of predefined fields for entrepreneurs to provide business information. The predefined fields preferably include a field for general information, market information, competitors, financial history, and financial planning. Each of these fields preferably may be designated confidential or non- confidential.

Advantageously, qualified investors are provided with a user name and password to be able to access the business plans on-line. Moreover, each entrepreneur may be provided a user name and password for updated or changing business plan information.

Preferably the business plans are reviewed by a qualified investor, and only then is an internal e-mail address of the entrepreneur made available to the investor. Preferably, this is the only way for the investor to contact the entrepreneur, so that confidentiality is enhanced. The entrepreneur preferably can contact the investor only as a response to the investor inquiry. This enhances the confidentiality of investors, so that they are not repeatedly solicited by a variety of entrepreneurs, but rather only by those entrepreneurs whom the investor has contacted.

BRIEF DESCRIPTION OF THE DRAWINGS

One preferred embodiment of the present invention is described below by reference to the following drawings, in which:

Fig. 1 shows a device according to the present invention with a server accessible by investors and entrepreneurs;

Fig. 2 shows a flowchart of a preferred method of the present invention; and

Fig. 3 shows more detail of step 1006 of Fig. 2.

DETAILED DESCRIPTION Fig. 1 shows a server 1 which has a data storage device 10 for storing various information, including web pages and database information. Storage device 10 may be part of server 1 or may be accessible by server 1, through, for example, an Ethernet connection. Storage device 10 may be for example a hard disk drive. Server 1 has a central processing unit (CPU), which may be for example an Intel PENTIUM microprocessor. Entrepreneurs may access server 1 using entrepreneur access devices 101, 102, 103, which may be for example, desktop or laptop computers having a modem. The access devices 101, 102, 103 may be connected directly to the server 1 or preferably through an access controller 2. Access controller 2 may be part of the server, for example password control software residing on the CPU of the server, or may be a stand-alone device or peripheral, for example a device for controlling access to the server by identifying smart card information or other unique identifiers provided by access devices 101, 102, 103. Access devices 101, 102 and 103 may connect directly to a modem connected to server 1. Preferably, however, server 1 is a web server for providing web pages over the Internet, and access devices 101, 102 and 103 have modems which connected through an ISP (Internet Service Provider) to the Internet. Web pages provided by server 1 thus may be accessed by the access devices 101 , 102, 103 by the entrepreneurs providing a URL for a web page provided by server 1.

Server 1 contains an internal e-mail system 20, based for example on HTML code and ASP (active server pages), which permits a qualified investor to contact an entrepreneur, and for the entrepreneur to reply, as discussed below with reference to

In a similar manner, investors may access server 1 through investor access devices 201, 202, 203, and may be first allowed access only after passing through an access controller 3. Access controller 3 may be the same as access controller 2, such as password control software residing on the CPU of server 1.

Fig. 2 shows a flow chart of the procedure followed by an investor or entrepreneur when accessing server 1. The investor or entrepreneur first accesses, for example, a general information page for the electronic marketplace of the present invention. This general information page may be, for example, a homepage on the world wide web for a provider of the method of the present invention. At step 1001 , this homepage may query the investor or entrepreneur as to their status, i.e. as to whether they are an investor or an entrepreneur. An HTML hypertext text link can, for example, perform this function. If an investor, the server then queries the investor at step 1002 whether the investor is already registered, or whether the investor is a new investor. If new, the investor must meet certain prerequisites at step 1003 to become qualified before being able to review business plans of entrepreneurs.

An example of an on-line investor qualification form which an investor might accept is as follows:

U.S. Accredited Investor Qualification Form

Private Placement Shares have not been registered under the Securities Act. They are being sold in the United States in reliance upon the exception under Section 4(2) and 3(b) of the Securities Act and the provisions of Regulation D promulgated thereunder. The offering is made and sales of

Shares via this web site will be made only to purchasers qualifying as "Accredited Investors" under Rule 501(a) of Regulation D.

The term "Accredited Investor" refers to any person or entity who comes within any of the following categories or who the Company reasonably believes comes within any of the following categories, at the time of the sale of the Private Placement Shares to such investor:

(1) Any bank as defined in Section 3(a)(2) of the Securities Act, or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary capacity; any broker dealer registered pursuant to Section 15 of the Securities

Exchange Act of 1934; any insurance company as defined in Section 2(13) of the Securities Act; any investment company registered under the Investment Company Act of 1940 or a business development company as defined in Section 2(a)(48) of the Investment Company Act of 1940; any Small Business Investment Company licensed by the U.S. Small

Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000; any employee benefit plan within the meaning of ERISA, if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of ERISA, which is either a bank, savings and loan association, insurance company, or registered investment advisor, or if the employee benefit plan has total assets in excess of $5,000,000, or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors;

(2) Any private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940;

(3) Any organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership not formed for the specific purposes of acquiring the securities offered, with total assets in excess of $5,000,000;

(4) Any executive officer, manager or director of the Issuer; (5) Any trust, with total assets in excess of $5,000,000, not formed for the specif c purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) of Regulation D;

(6) Any natural person whose individual net worth or joint net worth with that person's spouse, at the time of his purchase, exceeds $1,000,000;

(7) Any natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person's spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year; and

(8) Any entity in which all of the equity owners are accredited investors under paragraphs (1), (2), (3), (4), (5), (6) or (7) hereof.

General

The Issuer has also adopted general investor suitability standards. The Issuer requires, among other things, of the prospective investor that: (a) he/she is acquiring the Shares for investment and not with a view to resale or distribution; (b) he/she can bear the economic risk of losing his/her entire investment; (c) his/her overall commitment to investments which are not readily marketable is not disproportionate to his/her net worth, and his/her investment in the Shares will not cause such overall commitment to become excessive; (d) he/she has adequate means of providing for his/her current needs and personal contingencies and has no need for liquidity in his investment in the Shares; and (e) he/she has substantial experience in making investment decisions of this type. Each investor will be required to represent in writing that he/she satisfies the foregoing requirements. The suitability standards referred to above represent minimum suitability standards for prospective investors and the satisfaction of such standards by a prospective investor does not necessarily mean that the Shares are a suitable investment for such investor.

The Issuer and/or Placement Agent has the right to refuse subscription for Shares in its sole and absolute discretion for any reason, including the belief that the prospective investor does not meet the applicable suitability standards or the Shares are otherwise an unsuitable investment for the prospective investor.

It is anticipated that comparable suitability standards and requirements will be imposed by the Issuer in connection with any resale of the shares; any such resale is subject to various restrictions.

Restrictions on Transfer of Shares

Private Placement Shares have not been registered under the Securities Act or the securities laws of any state, and are for sale only to investors who meet the suitability standards set forth under Regulation D of the Securities Act. Each investor will be required to represent that the Private Placement Shares purchased will be acquired for his/her own account, for investment purposes and not with a view to resale or distribution. Private Placement Shares may be sold, transferred or otherwise disposed of by a shareholder only if they have been registered under the relevant federal and state (or other jurisdiction's) securities laws, or an exemption therefrom is available, with the consent of the Issuer's directors. Purchasers of Private Placement Shares will not have any rights to require registration of their shares under federal or state securities laws. It should not be expected that a trading market in any Private Placement Shares viewable on this web site will develop.

Agreement

By clicking on the "I am Qualified" button, I certify that I meet all of the requirements for a U.S. Investor as an Accredited Investor.

If the investor accepts such terms, he or she may click on a HTML button, for example, indicating acceptance of the terms. However, other qualifications are possible to confirm the investor's qualified status, such as passing a credit check or more substantial requirement, including a background check performed by the person or company maintaining the server or providing the service of the present method.

The investor also may enter an address and other contact information.

If the investor qualifies at step 1003, an identification code and password and internal e-mail address are provided to the investor at step 1004. These may be chosen by the investor or provided by the service provider of the present method. If the investor does not qualify, the investor is forced to leave the system.

The investor may then be transferred to a page where business plans of entrepreneurs may be reviewed at step 1006. In a similar manner, the registered investor at any time now may enter his or her identification code and password at step 1005 to review the business plans at step 1006.

The format for the viewing of business plans may be multi -paged. For example, an HTML page of summary information of the business plans may be provided listing the industry of the business plan, the stage of development, the money or seed capital desired by the entrepreneur. This information may appear for example as follows: Industry Stage Money Desired

Internet and New Media Early/Seed $500,000 - $999,999

Manufacturing Expansion $1 ,000,000 - $2,999,999

E-Commerce Expansion $1,000,000 - $2,999,999

Consumer Products Early/Seed $500,000 - $999,999 E-Commerce Early/Seed $5,000,000 Plus

Aerospace and Defense Early/Seed $1,000,000 - $2,999,999

The investors may view more details of the plans, through, for example, a hypertext link. The summary information is also sortable, so that investors interested in just a particular field or particular stage of development for example may view just the relevant business plans.

The more detailed business plans may be split into non-confidential and confidential sections. The non-confidential section may include, for example, the name of the company or entrepreneur, a mission statement, and a general business description. The general business description would typically include information regarding the company, its products or services, its market and competition, its advantages over the competition and long-term objectives.

The confidential section may include detailed financial information, for example, such as a annual report, balance sheet or cash flow statement. Technical information may also be provided, as may a list of present or potential clients. An indication of whether the service provider of the present method or an independent auditor has audited the financial information may be provided as well. The confidential section however may include any of the information described above as non-confidential and visa-versa. The entrepreneur may be queried when entering his or her business plan information as to which information should be classified as confidential and which infoπnation should be classified as non-confidential. As an example, a simple business plan may appear as follows:

Industry: Communications

Stage: Early/Seed

Money Desired: $1,000,000

Posted Date: 11/1/99

Company Title: ZZZ Communications

Mission Statement: ZZZ Communications seeks to become the premier provider of cable modems for high-speed Internet access Business Description: ZZZ Communications has developed a new technology for transmitting data over traditional cable lines at speeds much higher that presently possible. Competitors in this field include XXX and YYY, which are rumored to have developed cable modems transmitting speeds of 5MPS. ZZZ Communications' technology however doubles this speed. Contacts have been established with several leading telecommunications firms, and a beta testing of our product is being performed by SSS Provider Company. We presently have 10 employees, and hope to add five more in the next year. Money is sought to support beta-testing and to increase marketing.

Financial: Revenues to date are zero. Expenses for 1998 were $750,233, including $233,012 for salaries and $323,020 for research and development.

Potential Clients: SSS Provider Company, AAA Inc., BBB Inc. Technical Detail: The modems function using a packet-based encoding technology in which each alternate packet is filtered using a fast-Fourier transform, while the other packet remains unfiltered. This alternating filtering has been found to aid in quality and still produce higher transmission speeds.

At step 1006 of Fig. 2, investors may review this information. This information may be confidential or non-confidential.

If confidential information is present, the method of the present invention proceeds as described in Fig. 3. The investor reviews non-confidential section of the business plan at step 1006A. If part of the business plan has been designated as confidential, for example financial and technical information, an investor wishing to view that information is queried at step 1006B to agree to a non-disclosure agreement, stating that he or she agrees not to utilize or disclose the confidential information without the express consent of entrepreneur. This agreement can be expressed as a direct agreement between the investor and the entrepreneur and may signed digitally by both. However a simple HTML button indicated agreement by the entrepreneur may be provided instead. Such an agreement for example, may appear as the following:

X.Y., investor, and ZZZ Communications hereby agree that the following technical and financial information is the property of ZZZ Communications and is confidential. X.Y. hereby agrees not to disclose this information to any third parties. If the information however becomes public through no action of X.Y. , X.Y. may disclose the portion of the information that has become public.

At step 1006C, the investor then reviews the confidential information. At step 1007, an investor interested in a particular business plan is provided with a secure and confidential way to contact the entrepreneur of the relevant business plan. The internal e-mail system 20 is provided at server 1 , so that the investor may click on an internal e-mail contact hypertext link of the entrepreneur and send an e-mail directly to the entrepreneur. Advantageously, since the e-mail system resides on the server of the provider, the e-mail may be kept confidential behind a firewall and the password protection system of the server.

The method of the present invention preferably is such that investors only access the hypertext link of the entrepreneur after reading or accessing the business plan, and the entrepreneurs can only respond to the investors who have contacted them via the internal e-mail system. In this manner, entrepreneurs can be kept from receiving excessive e-mail or spam from a variety of entrepreneurs. Only those entrepreneurs whom the investor has contacted can contact the investor.

The internal e-mail form of the present invention may keep the internal e- mail address confidential, or may disclose it as well. The e-mail form may appear as follows:

To: entrepreneur 1 From: investor 1 message: we have reviewed the detailed financial information provided after signing the non-disclosure form and are very interested in meeting with you. Could you please send a telephone number so that I may contact you by phone? The investor then hits an HTML send button and the message is stored in storage device 10 to be accessed only by entrepreneur 1. When entrepreneur 1 logs into the server 1, he or she is notified that an internal e-mail has been received, and may reply using a similar HTML form.

Also, advantageously, the entrepreneurs and investors may access the server directly through modems for example, and need not rely on external Internet e-mail connections.

The business plans may be collected by the service provider of the present method as follows. As shown in Fig. 1, entrepreneurs access server 1 through entrepreneur access devices 101, 102, 103. As shown in Fig. 2, the entrepreneur is queried at step 1001 by a general information page as to whether he or she is an investor or an entrepreneur. By choosing, for example, a hypertext link, the entrepreneur is transferred to page asking whether the entrepreneur has already registered or is new to the service, as indicated at step 1010. If new, the entrepreneur selects an identification and password at step 101 1. At step 1012, the entrepreneur enters his or her business plan. This step may be performed in a variety of manners. The business plan may be sent as an e-mail attachment to the service provider, which then parses the data into different fields, and stores the data in step 1013 for review by the investors in step 1006.

Preferably, however, the entrepreneur is requested to enter the data into field inputs for each field, for example, Industry, State, Money Desired, Company Title, Mission Statement, Business Description, Financial Information, Technical

Information, Potential Client and Current Clients. Next to each field, the entrepreneur can identify if the information is confidential and may only be viewed subject to a confidentiality agreement agreed to by an investor.

The information of the entrepreneur then is automatically stored in step 1013 in storage device 10 of server 1, with or without the review of the service provider.

Preferably, the service provider reviews any information and confirms its accuracy.

If the entrepreneur is already registered, he or she may enter using the identification and password provided. The entrepreneur then can review e-mail from investors as in step 1014 or revise and, if desired, update the business plan in step 1015.

The present invention preferably is provided by HTML-based software residing on server 1 and with a database, for example one commercially-available from Microsoft Corporation or Oracle, for storing the business plan information, identifications, and passwords. Business plan as defined herein includes any general business description.

Investors and entrepreneurs as defined herein may be individuals or corporations.

On-line as defined herein means during a session on which the server is accessed by an access device.

The Internet as defined herein means a global worldwide information network, including the world wide web.

Claims

WHAT IS CLAIMED IS:

1. A method for financing busiuess ideas which includes the steps of: collecting business plans from a plurality of entrepreneurs; qualifying investors so as to form a plurality of qualified investors; providing the business plans on a server to the plurality of qualified investors, the server being accessible to the plurality of entrepreneurs and the investors; and providing an internal e-mail service on the server to the entrepreneurs and qualified investors.

2. The method as recited in claim 1 wherein the e-mail service only is accessible to the qualified investors after a review of a first of the business plans, and further comprising a first qualified investor e-mailing a first entrepreneur associated with the first business plan.

3. The method as recited in claim 2 wherein the internal e-mail system is accessible to the first entrepreneur only by replying to e-mail of the first entrepreneur.

4. The method as recited in claim 1 wherein the plurality of qualified inventors are qualified as a function of at least one of individual wealth, corporate value, compliance with regulations, revenue, income and organizational membership.

5. The method as recited in claim 1 further comprising providing each of the plurality of qualified investors with an identification and password.

6. The method as recited in claim 1 wherein the collecting step includes collecting the business plans in the form of electronic data.

7. The method as recited in claim 6 wherein the electronic data is collected by a service provider at a server and stored.

8. The method as recited in claim 1 wherein the collecting step includes sorting the business plans into confidential and non-confidential information.

9. The method as recited in claim 8 further comprising requiring the qualified investors to acknowledge a non-disclosure agreement before providing confidential information to the qualified investors.

10. The method as recited in claim 9 wherein the qualified investors digitally sign the non-disclosure agreement.

1 1. The method as recited in claim 1 wherein the business plans include general business information and financial information.

12. The method as recited in claim 1 wherein qualifying step is performed on-line by having the investors agree to a qualification form.

13. The method as recited in claim 1 wherein the collecting step includes providing a set of predefined fields for the entrepreneurs to provide the business plan.

14. The method as recited in claim 13 wherein the predefined fields include a business description field.

15. The method as recited in claim 13 wherein the predefined fields include a financial field.

16. The method as recited in claim 1 further comprising updating at least one of the business plans by at least one of the plurality of entrepreneurs.

17. A method for providing financing of business ideas comprising the steps of: collecting electronic data over the Internet from a plurality of entrepreneurs, the electronic data relating to business plans of the plurality of entrepreneurs; collecting other electronic data over the Internet from a plurality of investors; qualifying investors as a function of the other electronic data so as to form a plurality of qualified investors; providing the business plans on the Internet to the plurality of qualified investors, and providing an internal e-mail system to the plurality of qualified investors and the plurality of entrepreneurs.

18. An apparatus for financing business plans comprising: a storage device for storing a plurality of business plans; a server providing a plurality of information in the form of electronic pages, a first electronic page accessible only to qualified investors, the first electronic page providing information as a function of the plurality of business plans, the server containing an internal e-mail system for providing communication between the qualified investors and a plurality of entrepreneurs.

19. The apparatus as recited in claim 18 further comprising an investor access controller for limiting access to the server only to the qualified investors.