I would never call my bank Howard’s Bank, but I plan to have a bank for entrepreneurs.
The death of venture capitalists has been a topic of discussion ad nauseum on the web the last 12-24 months. Bad VC’s die, great ones evolve and as is the case in any industry, some asshats that suck balls can still make a living.
The same goes for banks. You just can’t kill all the bankers.
Since I have run a fund and now am a general partner in three of them, I have a feel for what I would like to see happen. When I started Social Leverage, I had this vision of a different type of entity. The current venture fund strategy seems lacking. You hand an entrepreneur money, you bust your ass alongside the entrepreneur and the team and if you get it right you get a profitable exit. The next time you see the entrepreneur, he/she is asking for more money. WTF?
In the meantime, Joe Broker, Goldman Sachs and Barney Frank are making the real coin. Why?
If the crisis has taught me anything, it’s that responsibility rules. You can/should outsource all the math, money management and transactions, but you should not outsource the management of the responsibility once it is given to you and once you know you want it and can handle it.
If I have built the trust with the team of entrepreneurs that I am part of funding, I want to stay with that person/team and participate in all the ‘LONG TAIL’.
Yesterday I talked about the Bank of Apple and it’s a model that trusted brands that I am immersed with can have my basic banking. They can have the ‘Long Tail’ of my basic banking, transaction and saving needs. I don’t want to give it to Bank of America, Wells Fargo and Citibank.
I believe start-ups like TechStars , Betaworks and even Social Leverage can do what the early incubators like CMGI, Idea Labs and Internet Capital Group failed to do, survive and thrive long enough to evolve into a very profitable and scalable long term business of reinvesting proceeds.
Social Leverage Capital – The Circle of Entrepreneurial Life!
Are you talking about venture banking? Investment banking? Depository, traditional, etc? What?
I think Howard is talking about venture banking.
So, you'll “loan” me money for life…..for an annual interest rate and points on the businesses I create?
Not sure exactly what you are proposing here.
When I was a kid, I had a passbook savings account at a bank called The Howard. Here's a book on its downfall. Today there is another Howard Bank, which probably has no connection to the old NJ one.
there will be no meaningful change in the banking industry without change in or subversion of monetary policy. banking and all forms of finance are dependent upon money supply issues.
So, you’ll “loan” me money for life…..for an annual interest rate and points on the businesses I create?
should not have written the post on ambien. I invest like I always have as an angel , or lead , part of a syndicate that we help put together, but on the backend, we also manage money for our entrepreneurs once they are successful. full service .
Wealth management (ie, trust services, etc) does make a lot more sense than commericial banking, as wealth mgmt is built off leveraging relationships. Just keep in mind that maintaining those relationships and building that business is an intensive time suck (and highly competitive). We actually have a similar model here in town called Glenview Trust that was started right around the time of the dotcom meltdown by a successful local PE principal who realized he maintained the same connections that you mention above. He remains primarily involved in PE (though far less so), and I think the key to building the trust business was hiring a highly competent CEO from a large bank (PNC) trust environment.
I can still remember their snarky ad in the paper from a couple of years back — “It took (ancient bank trust company in town) 100 years to get to $1 bn under management, it took us only three.”_________________
I have a paqssion and massive investment in the time suck u talk about and that’s why the model will work for me and a team
Are you talking about venture banking? Investment banking? Depository, traditional, etc? What?
I think Howard is talking about venture banking.
I hope not. Charging commercial banking (or even mezz) rates for venture risk is a recipe for disaster. Silicon Valley bank aside, the road is littered with the remains of “VC banking” (an oxymoron) disasters like Sirrom Capital and PNC Venture Bank.
__________
I did not mean vc banking. This post is about keeping the wins in house and managing the reinvesting together and expanding the base team. Stronger base all the time growing
Not sure exactly what you are proposing here.
When I was a kid, I had a passbook savings account at a bank called The Howard. Here’s a book on its downfall. Today there is another Howard Bank, which probably has no connection to the old NJ one.
funny. sorry i was not clear. I am basically saying that most venture firms have their successes and that that money should than be kept in the family to be reinvested and managed rather than passed off to goldman sachs or another bank to be reinvested. It’s the total family office package with the front end of an angel or VC firm.
Interesting idea. It would give you as the angel/VC another incentive to treat entrepreneurs well, because if you didn’t, you wouldn’t get their family office business on the back end if they became successful. Knowing that you had that incentive might give entrepreneurs more reason to work with you on the front end.
Yep. I do anyway so exactly.
there will be no meaningful change in the banking industry without change in or subversion of monetary policy. banking and all forms of finance are dependent upon money supply issues.
Wealth management (ie, trust services, etc) does make a lot more sense than commericial banking, as that business is built off leveraging relationships. Just keep in mind that maintaining those relationships and building that business is an intensive time suck (and highly competitive).
We actually have a similar model here in town called Glenview Trust that was started by a PE principal who realized he maintained the same connections. He remains primarily involved in PE (though far less so), and the key to building the business was hiring a highly competent CEO from a large bank (PNC) trust environment. I still remember their snarky ad in the paper from a couple of years back — “It took (ancient bank trust company in town) 100 years to get to $1 bn under management, it took us only three.”
_________________
I have a paqssion and massive investment in the time suck u talk about and that's why the model will work for me and a team
Or invest heavily in techstars ideas. Apol or the public ed stocks should as well. Now.
I hope not. Charging commercial banking (or even mezz) rates for venture risk is a recipe for disaster. Silicon Valley bank aside, the road is littered with the remains of “VC banking” (an oxymoron) disasters like Sirrom Capital and PNC Venture Bank.
__________
I did not mean vc banking. This post is about keeping the wins in house and managing the reinvesting together and expanding the base team. Stronger base all the time growing
Banks are only being rational in not wishing to deal with your start up. You should be capitalized with equity seeking disproportionate returns to accomodate the risk of your new company. Most “regular” banks cannot charge enough to make up for that risk.
________
If banks were smart they would be invested indirectly like amex is TRYING to do with their new camapign but fuck them all and their tarp money.
Time is of the essence for my idea
There is something there that deserves to be flushed further. As a start-up, my current bank doesn't understand my needs neither wants to cater to them. Sign me up!
Who? Make the intro anytime
If that's the case, then you'll want to buy, rather than build. The bureaucratic bullscheiss regulatory hoop-jumping will put you out 18 months at least. Lucky thing is there are a lot out there, and most are cheap these days.
_______________
I will buy as an entry only. After that there is no rush. I guess u are coming to work with us :)
should not have written the post on ambien. I invest like I always have as an angel , or lead , part of a syndicate that we help put together, but on the backend, we also manage money for our entrepreneurs once they are successful. full service .
funny. sorry i was not clear. I am basically saying that most venture firms have their successes and that that money should than be kept in the family to be reinvested and managed rather than passed off to goldman sachs or another bank to be reinvested. It's the total family office package with the front end of an angel or VC firm.
Great idea. I like it. Entrepreneurs bank. This will be a very successful banking niche.
If I were $bac $wfc or $c, in addition to the current business, I would start new banks with clean balance sheets and new names. This is the fastest way for them to win back people's trust.
Here's your man. He's a pisser and talks like Al McGuire (he's a Big East Noo Yawkah, from St. John's University originally), but a real pro.
Not sure how he' feel about talking to a potential competitor, but maybe you take the bidness west of the Mississippi….
_____
Interesting idea. It would give you as the angel/VC another incentive to treat entrepreneurs well, because if you didn't, you wouldn't get their family office business on the back end if they became successful. Knowing that you had that incentive might give entrepreneurs more reason to work with you on the front end.
Yep. I do anyway so exactly.
There is something there that deserves to be flushed further. As a start-up, my current bank doesn’t understand my needs neither wants to cater to them. Sign me up!
Banks are only being rational in not wishing to deal with your start up. You should be capitalized with equity seeking disproportionate returns to accomodate the risk of your new company. Most “regular” banks cannot charge enough to make up for that risk.
________
If banks were smart they would be invested indirectly like amex is TRYING to do with their new camapign but fuck them all and their tarp money.
Time is of the essence for my idea
If that’s the case, then you’ll want to buy, rather than build. The bureaucratic bullscheiss regulatory hoop-jumping will put you out 18 months at least. Lucky thing is there are a lot out there, and most are cheap these days.
_______________
I will buy as an entry only. After that there is no rush. I guess u are coming to work with us :)
Glad u like. Lots more features/improvenments coming
Great idea. I like it. Entrepreneurs bank. This will be a very successful banking niche.
If I were $bac $wfc or $c, in addition to the current business, I would start new banks with clean balance sheets and new names. This is the fastest way for them to win back people’s trust.
Or invest heavily in techstars ideas. Apol or the public ed stocks should as well. Now.
In the 90’s the best bankers I have met demanded of the business that they funded one thing explain how you will grow your EBIT + EBITDA please. Any business or new venture that truly does not have a clear view of how they will create an exit for the investors + a very clear plan on the consequences to the employee if milestones are not met are very problematic IMO and difficult to correct after the fact. IMO good_trade Been wrong before + in the future who knows. Interesting post + thanks for stocktwits desktop it was so nice this week when twitter was NG.
Here’s your man. He’s a pisser and talks like Al McGuire (he’s a Big East Noo Yawkah, from St. John’s University originally), but a real pro.
Not sure how he’ feel about talking to a potential competitor, but maybe you take the bidness west of the Mississippi….
_____
Who? Make the intro anytime
If you’re interested in talking with someone who’s currently working at a family office firm, I can try putting you in touch with someone I know at Guggenheim Partners.
Soon. Thx.
If you're interested in talking with someone who's currently working at a family office firm, I can try putting you in touch with someone I know at Guggenheim Partners.
Soon. Thx.
Glad u like. Lots more features/improvenments coming
In the 90’s the best bankers I have met demanded of the business that they funded one thing explain how you will grow your EBIT + EBITDA please. Any business or new venture that truly does not have a clear view of how they will create an exit for the investors + a very clear plan on the consequences to the employee if milestones are not met are very problematic IMO and difficult to correct after the fact. IMO good_trade Been wrong before + in the future who knows. Interesting post + thanks for stocktwits desktop it was so nice this week when twitter was NG.
Glad u like. Lots more features/improvenments coming
In the 90’s the best bankers I have met demanded of the business that they funded one thing explain how you will grow your EBIT + EBITDA please. Any business or new venture that truly does not have a clear view of how they will create an exit for the investors + a very clear plan on the consequences to the employee if milestones are not met are very problematic IMO and difficult to correct after the fact. IMO good_trade Been wrong before + in the future who knows. Interesting post + thanks for stocktwits desktop it was so nice this week when twitter was NG.
If you're interested in talking with someone who's currently working at a family office firm, I can try putting you in touch with someone I know at Guggenheim Partners.
Soon. Thx.
Ok, so you're just extending the value chain for a typical VC/Angel model by tacking it onto a wealth management model (Investing in start-up = top of the funnel, wealth management = bottom of the funnel…capturing value in both the exit and post-exit investing returns…smart). However, you also said that “The next time you see the entrepreneur, he/she is asking for more money. WTF?”.
I think that's gonna happen anyway, regardless of how/who manages the entrepreneurs money after an initial exit. They might be able to carry their own angel round but once you're talking A or B rounds of funding, the entrepreneur will look for outside capital again.
I originally thought you were proposing copying the book publisher/record label model. You fund an entrepreneur/team and get right of first refusal to fund the next 2 – 3 start-ups they found. Is anyone doing anything like that? Has it been done with any degree of success?
No I don't want right of first refusal and I don't have to invest if I don't want to but I will buuild out the team to help manage the money on the back end.
Ok, so you’re just extending the value chain for a typical VC/Angel model by tacking it onto a wealth management model (Investing in start-up = top of the funnel, wealth management = bottom of the funnel…capturing value in both the exit and post-exit investing returns…smart). However, you also said that “The next time you see the entrepreneur, he/she is asking for more money. WTF?”.
I think that’s gonna happen anyway, regardless of how/who manages the entrepreneurs money after an initial exit. They might be able to carry their own angel round but once you’re talking A or B rounds of funding, the entrepreneur will look for outside capital again.
I originally thought you were proposing copying the book publisher/record label model. You fund an entrepreneur/team and get right of first refusal to fund the next 2 – 3 start-ups they found. Is anyone doing anything like that? Has it been done with any degree of success?
No I don’t want right of first refusal and I don’t have to invest if I don’t want to but I will buuild out the team to help manage the money on the back end.
I recently came across your blog and have been reading along. I thought I would leave my first comment. I don’t know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.
Alena
http://smallbusinessgrant.info
I recently came across your blog and have been reading along. I thought I would leave my first comment. I don't know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.
Alena
http://smallbusinessgrant.info
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Could you imagine a world without banks? At first, this might sound like a great thought! But banks (and financial institutions) have become cornerstones of our economy for several reasons. They transfer risk, provide liquidity, facilitate both major and minor transactions and provide financial information for both individuals and businesses.
Running a bank is just as difficult as analyzing it for investment purposes. A bank’s management must look at the following criteria before it decides how many loans to extend, to whom the loans can be given, what rates to set, and so on: