Capital Access Network ...

In this economic climate, many small businesses do not qualify for loans based on the standards imposed by banks and financial institutions. For fledgling businesses, the establishment doesn’t have enough cash flow, revenue or credit to qualify for a loan. Many times, entrepreneurs have to put up personal assets as collateral for loans, which can be problematic and risky. The fact is working capital is difficult to get from banks unless a business has perfect credit. Capital Access Network (CAN), a company that gives small businesses access to credit and working capital and helps solve the problem outlines above, is announcing this morning that it has raised $30 million from Accel Partners. As part of the transaction, Accel partner, Kevin Efrusy will join Credit Access’s board of directors, and Accel vice president, John Locke, will join as an observer. CAN constitutes the largest, non-bank alternative capital provider to small businesses in the US. The company uses its own real-time platform and risk scoring models to provide capital to small and medium-sized businesses in the US and Latin America and has funded over $2 billion in capital to SMB’s under the brands NewLogic Business Loans and AdvanceMe. This represents roughly 100,000 distinct small business finance transactions. This year alone, CAN will fund over $600 million in loans to small businesses. CAN uses a variety of data points to deem a business worthy of credit or capital apart from the traditional criteria. CAN’s proprietary underwriting algorithms will churn through its vast data stacks of historical merchant demographic, firmographic, psychographic and social and behavioral profiles seeking and seasoning new behavioral and synthetic risk indicators and recombining those indicators into new risk scorecards. For example, CAN will look at frequency of sales (not just how much), inventory access, eBay seller rating, tax returns and other information. In terms of interest, the company uses a more unorthodox, merchant-friendly way of collecting money on top of a loan. If an online violin store needs $30,000 in working capital to purchase inventory, CAN will loan the money, but the borrower will need to pay back $35,000 to CAN over 12 months. Typically, CAN will give merchants and businesses anywhere from $2,500 to $250,000 in working capital. Customers range from medical practices, to shoe stores to auto repair shops to clothing, accessory and home product online retailers. CAN CEO, Glenn Goldman, tells me that the extra amount the borrower has to pay to CAN depends on risk of the loan, how long it will take for the loan to be paid back, the amount of capital lent and other factors. But he says many times, the amount CAN charges is less than any interest rate from a bank. And 75 percent of customers renew their funding. In some cases, repayment can be fairly simple. Goldman points to the example of one online merchant who chose to automatically forward a small percentage of sales from its payment processor directly to CAN to repay the loan every month. If sales were lower than usual that month, CAN would lower the amount needed to pay. And Goldman explains that behavioral risk scoring, rather than just examining a small business owner’s FICO score, allows the company to ‘yes’ to a higher percentage of SMBs than traditional sources while mitigating losses. For Accel, the investment marks the continuation of a thesis of investing aggressively behind companies that are enabling small businesses to grow faster, says Efrusy. He cites investments in Groupon, Etsy, 99 Designs, Braintee, DropBox as just a few of the Accel-backed companies that are helping are “giving small businesses tools to thrive.” “From our work with small businesses, it’s clear that one of the most pressing issues for merchants is access to credit and working capital,” Efrusy said. “Especially today, banks are unable to play effectively in this market. Large institutions cannot reach, evaluate, or serve small businesses efficiently. Many newcomers to the finance space are constrained by limited access to and very high-cost capital combined with high portfolio losses given unseasoned risk scoring models. Capital Access Network has by far the strongest team, scale, and data-driven approach to this market.” Goldman says the new funding will be partly used for boosting and redesigning the online merchant experience on CAN. By April, the lender will feature new user interfaces, merchant portals and online approvals. As Efrusy explains, there’s a huge amount of disruption taking place in the online lending space, and CAN is in a great position to help small businesses grow with working capital. Kabbage is another startup that is also looking to provide capital to online merchants, and ZestCash is doing something similar on the consumer end of the spectrum.

Docstoc Releases New iP...

DocStoc , a document sharing site has been focusing on providing bundles of premium professional documents for businesses for some time now. But today, the startup is expanding to producing articles and videos related to starting and running a business, providing more than just form documents for professionals. Docstoc has launched four iPad apps: Legal and Copyright Small Business Toolkit ; Sales Techniques and Training Secrets ; Adwords and SEO Secrets ; and HR & Employee Management Advice to help businesses streamline operations, sales and more. As CEO Jason Nazar explains, in addition to becoming the go-to destination for documents for small businesses, Docstoc also wants to be a content resource as well. In addition to the four released this week, the startup will be releasing 30 “Teaching and Training” Apps for Small Business in Q1 of 2012. All the apps are free and include original video content with SMB and startup experts as well as articles and access to premium documents for free (for a limited time, Nazar says). Eventually, Docstoc will expand these apps to Android. Nazar explains, “We want to create a high quality Khan Academy for small businesses.” Currently, Docstoc sees around 20 million unique visitors per month and has almost 30 million registered users, with the highest concentration being small business owners and operators. Nazar says that Docstoc’s revenue has been growing 100% each year for the past three years and has been profitable for last 2 years.

You Stopped SOPA. Now L...

Note from the editor: This is a guest post from Steve Case , the co-founder of AOL (which owns TechCrunch) and founder of Revolution. Case is the chairman of the Startup America Partnership and sits on the White House Jobs Council. In recent weeks, Americans from all walks of life came together to stop SOPA from advancing through Congress, demonstrating the power of the Internet to rally people around an important cause. In the weeks ahead, we have reason to rally again. This time, the goal is not stopping something bad, but starting something good. Specifically, ensuring that America builds on its legacy of innovation, and remains the world’s most entrepreneurial nation. Earlier today, President Obama unveiled his Startup America legislative agenda and called on Congress to pass it quickly, so he can sign it promptly. It’s a very positive first step. Let’s capitalize on this moment, and call on our elected representatives to quickly pass this legislative agenda that helps entrepreneurs start and scale the companies that can change the world while creating jobs, jumpstarting our economy, and increasing our competitiveness globally. Here’s why you should join me – now – in rallying behind the President’s proposed Startup America legislation: Young high-growth companies have created 40 million American jobs in the past three decades thirty years – and accounted for all of the net new jobs produced during that period. America’s entrepreneurial economy has been the envy of the world for decades. But other nations now recognize that entrepreneurship has been America’s secret sauce, and they are now racing to replicate it. Just as we’re seeing the globalization of manufacturing, we’re also now seeing the globalization of entrepreneurship. Meanwhile, outside of some sectors (like social media) and some regions (like Silicon Valley), America’s entrepreneurial economy is sputtering. Indeed, start-ups are down 23% since 2007. The rest of the world is accelerating, while America is slowing. But we still have time to act. Enter the President’s Startup America legislative agenda. The proposed legislation, released this morning by the White House, builds on the great work that Republicans and Democrats in the Senate and the House have initiated in recent months. Here’s a short primer on some of the measures included in the President’s Startup America legislative agenda: Crowdfunding – The legislative package will allow entrepreneurs to leverage online platforms to raise small amounts of capital from a large number of people. The benefits of creating an efficient and transparent marketplace to raise capital have been established by successful platforms such as Kickstarter and IndieGoGo, and this new legislation will extend the reach of these platforms to help fund entrepreneurial companies. IPO on ramp – Well-intentioned regulations to protect investors have contributed to a decline in IPOs. The cost and complexity of initial public offerings has resulted in fewer companies going public, and more companies being sold. Public offerings of less than $50 million were 80% of IPOs in the 1990s, but only 20% in the 2000s. Sadly, IPOs typically lead to accelerated job growth – 90% of job creation typically occurs after a company goes public – while acquisitions often lead to job-deceleration. The President is embracing the recommendations of the IPO Task Force and his Jobs Council by calling for a smart, phase-in for emerging growth companies, so that they can adjust to the most costly and complex requirements of going public. Winning the global battle for talent – America is great at attracting talented immigrants to its universities, but then forces most to leave and return to their countries – taking their educations with them, and all too often creating companies in other countries that end up competing with ours. This is a critical issue that will require more attention, but the Startup America legislative package takes a positive first step by allowing more highly-skilled immigrants to stay, build companies in the U.S., and create American jobs. Investment incentives – The proposed legislation provides a capital gains tax cut when an investment is kept in a business for at least five years, incentivizing investors to put their cash behind entrepreneurs who are focused on building lasting companies. In addition, the package adds investment incentives by raising the limit for “mini-offerings” from $5 million to $50 million and increasing the Small Business Investment Company program by $1 billion. Incentives to Encourage Growth and Reinvestment – The Startup America legislative agenda would make permanent certain tax cuts for small businesses, so that once a new firm gets up and running, it has more capital available to re-invest in growing the company. The package also includes a 10% income tax credit for new small business hires, a doubling of the tax deduction for startup expenses, and an extension of the 100 percent depreciation for property through this year. I was honored to chair the high growth enterprises subcommittee of the President’s Council on Jobs & Competitiveness. (Other members included John Doerr of KPCB and Sheryl Sandberg of Facebook.) We met with the President in October and presented a series of recommendations on steps both the private and public sector should take to improve the environment for entrepreneurs. Since then, nearly a dozen bills have been introduced in Congress. The AGREE Act was introduced by Senators Rubio (R-FL) and Coons (D-DE) and the Startup Act was introduced by Senators Warner (D-VA) and Moran (R-KS). Now, the President has stepped forward with his own proposal, the Startup America legislative agenda. I’m encouraged to see our nation’s leaders focus their attention on entrepreneurship – and issue legislative proposals that will help us innovate, grow our economy, create jobs, and strengthen our competitiveness. This is a moment. While the partisan bickering in Washington is intense, and will heat up further as we head towards the November election, we can – and must – rally the entrepreneurial community to support pro-entrepreneurship legislation. It might seem as though Washington isn’t listening, but the successful effort to stop SOPA in its track proved that we can have an impact. That was about stopping misguided legislation. This is about promoting a positive Startup Agenda that moves us in the right direction. Is it a perfect package for entrepreneurs? No, but there is no such thing as perfect legislation – and we can’t let the perfect be the enemy of the good. So join the cause and tweet your support with the #StartupAmerica hashtag. Now is the time to rally together and pass a Startup America legislative agenda!

And Now for the Good Ne...

Ready for another Groupon horror story? Amy Kunkle owns Food for All Market, a specialty grocer in Philadelphia that sells food items for the very allergic. As you can imagine, it’s not the biggest store in town, it has a small, but loyal client base and up until recently, made enough to pay the bills. Then Groupon called and convinced Ms. Kunkle that she could increase her business by offering a $15 for $30 worth of merchandise coupon. Of that amount, she would get $7.50, Groupon would get $7.50 and she’d eat the rest in the name of marketing. What wasn’t agreed upon was a cap. Groupon sold 450 coupons and Food for All Market went belly up. In an interview with a local newspaper, Ms. Kunkle estimates that she lost nearly $10,000 on the deal . But remember, I said this was good news – because the store’ customers came to her rescue when they read about her plight. She was offered low-interest loans and free labor. With everyone’s help, Food for All Market will reopen for business in February. Over in Chagrin Fall, Ohio, a similar story unfolded ; a show of support for a local hardware store that had been in business since 1857. This time, it wasn’t a bad business decision that caused the problem. It was simply the economy, coupled with construction and the rise of the big box store. Jim Black didn’t want to see the family-run business go under, so he sent out an email challenging his friends to spend $20 in the shop one Saturday and it snowballed from there. On the 21st, a “cash mob” showed up at the hardware store and the register didn’t stop ringing until long after closing. No final total was announced, but for the owners of the store, it wasn’t just about the money. They were blown away by the community response and I imagine the shoppers were equally excited by what they accomplished. In these two cases, the internet giveth and the internet taketh away. One small business nearly destroyed by the daily deal phenomena, another saved by a simple, shareable email. Come on marketers, how about spreading some of your genius around? Instead of promoting your own company this week, why not offer a hand to another small business. Help someone set up a Facebook page, come up with a great gimmick or organize your own “cash mob” day. I can’t promise you that your good works will come back to you two-fold, but I like to think they will.

Future Simple Releases ...

Chicago-based but Israeli-founded Future Simple , a startup that creates products aimed at small businesses, has released an Android app which hooks into their small business CRM. It’s the first Small Business CRM with a true full native Android app and appears to be the first CRM in the Android Market. They already had an iPhone app .