20 May, 2009 | by

smallpiggybank

Forbes magazine had an interesting piece about large business acting as lenders to small business. This comes right behind the biggest credit meltdown in history. This lending comes in the form of retail financing or vendor financing, and in some cases, in the form of corporate venture funding. In 2008, as per NVCA, corporate venture funding arms amounted to 19.2% of all venture deals, an amount that works out to $5.4B out of total deals worth $28B. Similarly, the Forbes article pointed to $52B raised for corporate non-venture financing.

What does this mean for the shareholders in these corporations? Let us look at a few numbers. A stock screen on Yahoo for companies with positive free cash flow, and picked companies that have positive cash balance on their balance sheets reveals about 896 stocks, and most notable among them being Berkshire Hathaway with $16440 of cash available per share. Since free cash flow does not include the cost of debt servicing by these companies, one should also look at the total debt assumed by these companies. A vast majority of these companies have very little to zero debt on their balance sheets. So, to keep matters simple, let us assume there is no debt servicing expense.

The stock screen reveals that, on an average, after excluding outliers such as BRK-A, each company has a 15% return on equity, and $1.3B of cash in the bank. There is a total cash position of $1.2 trillion. In other words, the $5.4B continue reading »

19 Dec, 2008 | by

Everyone has problems, but the real underlying problem is that nobody knows how to deal with them in a positive way to convert them into value.  Today I’m going to show you how to turn any problem into a powerful solution. Once you know how to do that you can create a business that will go from zero to a billion dollar company in two or three years.

Most of the ideas that come across customer service phone lines – and almost all of the complaints that are registered with customer service representatives every day – could be turned into multi-million or billion dollar products or services. The strange sounding but absolutely true notion that problems are the answer is a concept that goes directly to the heart of entrepreneurship. Entrepreneurs are, after all, people who figure out how to solve problems for a profit.
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